[Click eStock] "POSCO, Expecting Demand Normalization in the Second Half"

[Asia Economy Reporter Eunmo Koo] SK Securities analyzed that the worst phase for POSCO has passed and it is worth expecting a normalization of demand in the second half of the year.

According to SK Securities on the 22nd, POSCO's consolidated sales for the second quarter of this year recorded 13.7 trillion KRW, down 15.9% from the same period last year, and operating profit fell 84.3% to 167.7 billion KRW. On a separate basis, sales decreased by 21.3% to 5.9 trillion KRW, and operating loss turned to a deficit of 108.5 billion KRW.

SK Securities researcher Sunwoo Kwon explained in the report on the same day, “The separate performance recorded an operating loss due to a combination of factors including decreased sales volume and reduced production caused by the impact of COVID-19, increased fixed costs, and a decline in sales prices due to a worsening product mix from sluggish sales of high value-added products.” However, he evaluated positively that “despite the poor performance, inventory was reduced from about 4.8 trillion KRW in the first quarter to about 4.2 trillion KRW in the second quarter in preparation for the period after the second quarter.” Furthermore, despite the deterioration in the steel division’s performance, the consolidated results showed stable performance in global infrastructure sectors such as trade and construction, increased cash-centered management to raise cash on hand, and lowered the debt ratio.

The second quarter, which reflected the negative impact of COVID-19 all at once, has passed, and gradual demand recovery is expected from the second half of the year. Researcher Kwon said, “In particular, the recovery of automobile production is expected to contribute to improving POSCO’s product mix and profitability,” adding, “Although the increased cost situation remains a burden in the third quarter, it is also necessary to consider the price increase due to the expanded proportion of WTP and the fixed cost reduction effect due to increased volume.” He also added, “The low valuation based on PBR and the 1 trillion KRW scale of share buybacks, of which only about 8.6% has been executed, are also positive factors for the stock price.”

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