Posted on 25 Jul 2023
POSCO Holdings said Monday that it will generate higher revenues and operating profits from its flagship steelmaking business during the latter half of this year, thanks to China’s economic recovery and the stabilization of global raw material prices.
Such an optimistic outlook came as the company’s quarterly operating profit returned to above 1 trillion won ($780 million) for the first time in a year, causing a sharp rise in the stock prices of its six listed affiliates during Monday’s trading session.
The holding firm of POSCO Group announced its second-quarter sales rose 3.8 percent quarter-on-quarter to 20.1 trillion won and its operating profit soared 88.1 percent to 1.3 trillion won during the same period, following the finished restoration of its main steel mill in Pohang, North Gyeongsang Province, which was flooded after Typhoon Hinnamnor poured heavy rain onto the region last September.
After the announcement raised the stock price of POSCO Holdings by 16.52 percent on Monday, the steelmaker became the fourth-largest company on the benchmark KOSPI market in terms of market cap. Most other POSCO Group affiliates also showed double-digit growth in their stock prices that day.
In particular, the stock price of POSCO International, which posted a record quarterly operating profit of 357.2 billion won, hit the daily price ceiling.
“During the second half of this year, our sales are expected to grow slightly as we have been able to spend less on maintaining facilities and Chinese steelmakers are expected to cut their production in line with the country’s stimulus measures,” the POSCO Holdings chief financial officer said. “Our use of low-cost raw materials from the third quarter will be helpful in reducing costs, and once the steel market bottoms out in the fourth quarter, we will be able to raise our product prices.”
The company noted that the weaker Japanese yen will have a limited impact on the Korean market, as the use of Japanese products is limited by certain industries, such as shipbuilding.
“Thanks to the continuous growth in sales and exports of automobiles, we expect higher earnings in the sector again in the second half,” a POSCO Holdings executive in charge of marketing strategy said.
During the conference call, POSCO Holdings also mentioned its blueprints for battery materials production, reiterating that it seeks to be one of the world’s top three lithium companies by 2030.
In response to a question about its plan to raise money for its 121 trillion won capital expenditures by 2030, the company answered it has enough money for the short-term investment, but it may consider borrowing money in the long run, without downgrading its credit rating.
It also denied the speculation that the recent hike in the stock prices of the group’s affiliates may lead the holding firm to partially unload its shares in subsidiaries.
Source:Korea Times
