Posco Q3 profit falls 1.2%, missing forecast

Posco Q3 profit falls 1.2%, missing forecast

Seoul: Posco, the world’s fourth-largest steel maker, reported an unexpected 1.2% fall in quarterly profit on Tuesday, 16 October, as weak stainless steel prices offset strong global demand for steel.

The South Korean steel maker, which has been forging alliances to fend off feared hostile takeover bids, earned a net profit of 871 billion won ($949 million) for the three months to 30 September, against a revised profit of 882 billion won in the same period a year ago and 1.11 trillion won in the second quarter.

The result fell short of a consensus forecast of 922 billion won by seven analysts surveyed by Reuters.

Posco said reduced output of stainless steel and a maintenance shutdown of its main blast furnace in July-September quarter led Posco’s steel products sales to fall 2.1% to 7.4 million tonnes from previous quarter.

Analysts, however, expect strong prices for carbon steel products and rebounding stainless steel prices will support its fourth quarter.

Posco announced last week it would raise the prices of its steel plates for shipbuilding by 9.9%, effective 25 October, due to rising demand and higher raw material costs.

Shares in Posco, South Korea’s second-largest company with a market value of $65 billion, gained 51.7% in the third quarter, outperforming an 11.6% rise in the Kospi.

Posco was the world’s fourth-largest steel maker by output in 2006, following Arcelor Mittal, Nippon Steel Corp and JFE Holdings, according to the International Iron and Steel Institute.