POSCO Reports Operating Profit of 666.7 Billion KRW in Q3... Returns to Profitability with Increased Steel Sales (Update)

Steel Industry Recovers to Pre-COVID-19 Production and Sales Levels, Returns to Profit in One Quarter
Separate Basis Sales of 6.5779 Trillion KRW, Operating Profit of 261.9 Billion KRW

[Asia Economy Reporter Hwang Yoon-joo] POSCO announced on the 23rd that its consolidated operating profit for the third quarter increased by 297.5% compared to the previous quarter, reaching 666.7 billion KRW. During the same period, sales rose by 3.9% from the previous quarter to 14.2612 trillion KRW. On a separate basis, operating profit turned positive to 261.9 billion KRW. Sales recorded 6.5779 trillion KRW, up 11.7% from the previous quarter.

In the steel sector, production and sales volumes recovered to pre-COVID-19 levels, reducing fixed cost burdens. Despite the rise in iron ore prices, profitability significantly improved due to falling coal prices and extreme internal cost-cutting efforts. In the global infrastructure sector, steady performance was seen with POSCO Engineering & Construction’s strong results in the building division, POSCO Energy’s expansion of direct LNG imports, and increased sales volumes of anode and cathode materials by POSCO Chemical.

Following the refurbishment and restart of the No. 3 blast furnace at the Gwangyang Steelworks and recovery of order volumes to levels seen in the same period last year, crude steel and product output increased by 1.7 million tons and 1.05 million tons respectively compared to the previous quarter. Sales volume rose by 1.13 million tons to 8.89 million tons, driven by maximum order activities amid recovering demand industries. Notably, sales of high-margin products such as cold-rolled and coated steel, mainly for automotive use, increased significantly.

Despite the challenging environment of soaring iron ore prices, POSCO has realized higher profitability compared to global competitors by applying operational technologies to expand the use of low-cost raw materials and reducing manufacturing costs through smart factories. Additionally, with 16 raw material investment projects across 8 countries worldwide, POSCO ensures stable procurement of raw materials, enhances purchasing negotiation power to reduce purchase prices, and secures investment returns. These raw material investment projects generate an annual profit increase effect of approximately 400 billion KRW.

POSCO continues to strengthen financial soundness through cash flow-focused management in preparation for the unstable business environment caused by COVID-19. By reducing inventory assets such as products and raw materials, the consolidated debt ratio improved by 0.7 percentage points from the previous quarter to 71.8%. On a separate basis, cash and cash equivalents increased by 840.3 billion KRW from the previous quarter to 12.9048 trillion KRW, while consolidated cash and cash equivalents rose by 994.2 billion KRW to 17.8866 trillion KRW.

POSCO expects both sales volume and profitability to improve in the fourth quarter due to the recovery of industrial production following the resumption of global economic activities and government stimulus measures worldwide.

Furthermore, with the rapid advent of the eco-friendly era, POSCO proactively established a dedicated sales division for eco-friendly vehicles earlier this year. Alongside this, POSCO plans to reorganize its sales portfolio focusing on eco-friendly industries such as electric vehicles, wind and solar energy, and hydrogen vehicles, and strengthen sales activities. The company also intends to actively consider expanding production capacity for anode and cathode materials used in secondary batteries, continuing efforts to secure future new growth engines.

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