POSCO's First Quarterly Loss... Separate Basis Operating Loss of 108.5 Billion KRW in Q2 (Comprehensive)

[Asia Economy Reporter Hwang Yoon-joo] POSCO posted its first-ever quarterly loss on a separate basis in the second quarter of this year.

On the 21st, POSCO announced that on a separate basis, excluding subsidiary performance, it recorded sales of 5.8848 trillion KRW and an operating loss of 108.5 billion KRW in the second quarter.

Sales decreased by 21.3% compared to the same period last year.

Net income on a separate basis was 6.6 billion KRW, down 98.8% from the same period last year.

This is the first time POSCO has posted a quarterly loss since it began disclosing quarterly results in 2000.

The decline was due to sluggish global demand industries and deteriorating market conditions, which led to decreases in sales volume and prices in the steel sector.

However, on a consolidated basis, second-quarter sales were 13.7216 trillion KRW, operating profit was 167.7 billion KRW, and net income was 104.9 billion KRW.

Sales decreased by 15.9%, operating profit by 84.3%, and net income by 84.6% compared to the second quarter of last year.

POSCO explained that relatively favorable results offset the steel sector's slump due to efforts to improve profitability in core industries such as strong sales from POSCO International's Myanmar gas field, improved profits in POSCO Engineering & Construction's building and plant businesses, and expansion of POSCO Energy's terminal business.

Compared to the first quarter, crude steel and product production decreased by 1.27 million tons and 870,000 tons respectively, and sales volume decreased by 850,000 tons. However, POSCO continued to operate a flexible production and sales system, adjusting casting costs and scrap steel volume to minimize the impact of production cuts.

A POSCO official said, "In the second half, we plan to improve profitability by expanding sales of high value-added products such as gigasteel for automotive steel sheets and strengthening exports to demand recovery regions such as China," adding, "Steel sales have shown a better-than-expected trend, and performance is expected to recover from the third quarter after bottoming out in the second quarter."

Meanwhile, POSCO forecasted during a conference call that demand for automotive products will increase by 10% in the second half compared to the second quarter.

A POSCO official said, "Automotive steel sheet prices in the second half will be at the same level as the first half," and added, "Demand for automotive-related products is recovering as it resumes from the fourth quarter."

He continued, "As demand for automotive-related products increases, it will recover to the first quarter level," and added, "Even if product prices such as automotive steel sheets remain the same as in the first half, a price increase effect will occur due to the base effect."

He also stated that from the third quarter of this year, the performance of subsidiaries located in China, Vietnam, Turkey, and Thailand is expected to improve.

A POSCO official said, "The Turkish government raised the existing tariff from 10% to 17%, and with product processing taking place within the region, performance improvement is expected in the second half. In Vietnam, cooperation with Japan's Yamato is being intensified, and if cost reduction and sales expansion are achieved, performance is expected to improve."

On the other hand, he added, "India is still under lockdown measures, and operating rates are expected to return to normal levels in the fourth quarter."

This content was produced with the assistance of AI translation services.