KG Dongbu Steel, 3Q Operating Profit 33.9 Billion KRW... Up 158.1% YoY

[Asia Economy Reporter Hwang Yoon-joo] KG Dongbu Steel recorded third-quarter earnings that far exceeded the consensus (market average expectations).

KG Dongbu Steel announced on the 16th that its consolidated operating profit for the third quarter of this year was 33.9 billion KRW, an increase of 158.1% compared to the same period last year. During the same period, sales decreased by 2.8% to 586.9 billion KRW, and net profit fell by 23.3% to 23.3 billion KRW.

The cumulative operating profit from January to September increased by 64.3 billion KRW compared to the same period last year, reaching 90.5 billion KRW, and net profit rose by 87.8 billion KRW to 55.5 billion KRW.

Despite the worsening difficulties caused by the global economic downturn due to the COVID-19 pandemic, the reason KG Dongbu Steel has been able to achieve earnings surprise-level results every quarter is that the effects of the "corporate restructuring activities" pursued since joining the KG Group are now fully emerging.

As part of its corporate restructuring activities, KG Dongbu Steel boldly reorganized its pipe business division, which had been suffering chronic losses, and focused on selling high value-added products that can generate high profits. In particular, representative high value-added products such as NF fire-resistant color steel sheets (No Fire) and antibacterial coated steel sheets (BioCOT) have seen continuous sales growth, coinciding with social issues such as large-scale fires and COVID-19.

Additionally, due to the boom in the U.S. home appliance market, sales of color home appliances have surged significantly, increasing the sales proportion of the core product, color steel sheets. Furthermore, as the COVID-19 pandemic prolonged, demand for preserved foods increased, leading to more than an 8% year-on-year increase in sales of thin steel sheets used for food containers, which is also analyzed as a major factor in the improvement of third-quarter performance.

Along with this, the establishment of new specialized and distinctive subsidiaries through mergers and splits to reduce unnecessary costs has also been one of the key factors improving the company's profitability. KG Dongbu E&C (formerly the Building Materials Division), which had suffered operating losses for five consecutive years, turned its operating profit positive after becoming independent and splitting in June this year, through improvements in work methods such as maximizing production efficiency and reducing manufacturing costs.

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