Photo: AP
Photo: AP

Posco posts smallest ever profit as Chinese steel floods market

The consolidated net income, excluding minority interests, was 181 billion won in 2015, down from 626.1 billion won a year earlier

Seoul: Posco, South Korea’s biggest steel maker, posted its smallest annual profit ever after a deluge of Chinese exports pushed global prices to their lowest in at least a decade. The result still beat analysts forecasts.

The consolidated net income, excluding minority interests, was 181 billion won ($150 million) in 2015, down from 626.1 billion won a year earlier, the Pohang-based company said Thursday. Analysts expected a profit of 85.5 billion won, according to the average of 21 estimates compiled by Bloomberg.

Prices have plummeted as demand in China, which makes half the world’s steel, contracts for the first time in a generation, creating a surplus and spurring mills to sell record amounts overseas. The country’s export price fell 35% in the past year, touching the lowest since at least 2006, as shipments climbed 20% to 112.4 million tonnes in 2015, an all-time high and more than a year’s production in Japan, the second-biggest maker.

“Posco has suffered from shrinking margins," Park Kwang Rae, a Seoul-based analyst at Shinhan Investment Corp., said by phone before the earnings. “This year doesn’t look too bright either as there’s a lack of momentum to boost demand in China, which is critical to earnings."

The company’s shares lost 36% in the past year in Seoul and reached the lowest since 2004 this month. The stock that hit a record 765,000 won in 2007 when Chinese demand was booming closed at 172,500 won Wednesday. Bloomberg

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