Dongkuk Steel, 1Q Operating Profit 109.4 Billion KRW... 95% Increase YoY (Update)
Operating Profit Reaches Highest Level in 19 Quarters
[Asia Economy Reporter Choi Dae-yeol] Dongkuk Steel announced on the 17th that its consolidated operating profit for the first quarter of this year reached 109.4 billion KRW, a 95% increase compared to the same period last year. This is the highest level in 19 quarters since the second quarter of 2016 (117.6 billion KRW).
First-quarter sales rose about 14% to 1.3958 trillion KRW compared to the same period. Net profit turned positive at 27.6 billion KRW. The company explained, "Steel demand in construction and home appliances increased, and product prices rose in line with raw material price hikes, resulting in simultaneous growth in sales and operating profit."
The turnaround to net profit was largely due to a significant reduction in equity method valuation losses from the Brazilian CSP steel mill. The operating profit of the Brazilian CSP steel mill in the first quarter of this year was recorded at 154.1 billion KRW, about eight times higher than the fourth quarter of last year. This is the highest level since its operation began in June 2016. Furthermore, the company completed all investments in the Brazilian CSP steel mill by the first quarter of this year, expecting positive valuation gains through CSP going forward.
On a separate financial statement basis, sales increased 17% year-on-year to 1.3016 trillion KRW, and operating profit rose 113% to 102.3 billion KRW. Net profit turned positive at 60.4 billion KRW.
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Considering the recent increase in steel demand, the company stated that it plans to focus on stable supply of its main products in the second quarter as well. The company expects sales and profits to increase as the expansion of the Busan color steel sheet line is completed in July. The company added, "With excellent management performance in both Korea and Brazil, we expect to continuously generate results and anticipate credit rating upgrades this year."
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