[Click eStock] "Hyundai Steel, H2 Profitability by Process... Blast Furnace Up, Electric Arc Furnace Down"

[Asia Economy Reporter Eunmo Koo] KB Securities expects Hyundai Steel's third-quarter earnings this year to meet market expectations, anticipating improved profitability in blast furnace operations and stabilized downward trends in electric furnace operations in the second half of the year.

On the 23rd, KB Securities analyst Seongwoo Hong stated in a report that Hyundai Steel's third-quarter K-IFRS consolidated revenue is expected to be 4.3594 trillion KRW, a 13.6% decrease compared to the same period last year, while operating profit is projected to increase by 2.7% to 35 billion KRW, aligning with consensus estimates. On a separate basis, revenue is expected to be 3.9234 trillion KRW and operating profit 31.5 billion KRW.

Profitability by process in the second half is expected to improve due to enhancements in blast furnace operations and a stabilized downward trend in electric furnace operations. Analyst Hong explained, "The improvement in blast furnace operations is mainly due to increased sales volume, but the extent will fall short of expectations due to rising iron ore input prices," adding, "Regarding electric furnaces, the sharp spread increase in the first half was driven by a decline in operating rates across the industry, so it is judged that this is structurally unsustainable." In the first half, domestic electric furnace operators recorded operating rates in the 70% range, the lowest ever.

Meanwhile, profitability is expected to improve through the sale of non-profitable businesses. Analyst Hong said, "Hyundai Steel is undergoing a comprehensive business structure reorganization to improve its fundamentals," and added, "In the first half of this year, the forging division was spun off as Hyundai IFC, and the company plans to sequentially sell non-profitable lines, which is expected to contribute to profitability improvement going forward."

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