Dongkuk Steel Records Operating Profit of 160 Billion Won in Q1

Relief from Burden Reflecting Sale of Brazil CSP Steel Plant

Dongkuk Steel recorded consolidated sales of 1,917.2 billion KRW, operating profit of 160 billion KRW, and a net loss of 94.2 billion KRW in the first quarter of this year, according to a disclosure on the 15th. Sales fell 5.6% compared to the previous quarter and 10.0% compared to the same period last year. Operating profit rose 67.6% from the previous quarter but fell 22.3% year-on-year. Net profit increased 30.4% from the previous quarter but turned to a loss compared to the same period last year.

On a separate basis, sales were 1,710.2 billion KRW, operating profit 136.2 billion KRW, and net profit 103.6 billion KRW. Sales decreased 5.5% from the previous quarter and 13.1% year-on-year. Operating profit increased 50.0% from the previous quarter but decreased 18.7% year-on-year. Net profit turned positive from the previous quarter but decreased 15.1% year-on-year.

Dongkuk Steel experienced a decline in sales in the long products segment due to the downturn in the construction industry market conditions, but partially improved sales of cold-rolled and color products. Profitability in the heavy plate segment, including offshore wind power, was enhanced. Additionally, steady operating profit was recorded due to the earnings impact from subsidiaries such as Intergis, Ferrum Infra, DKI, and DKC.

The difference between consolidated operating profit and net profit reflects the impact of changes related to the sale of the Brazilian CSP steel mill. Dongkuk Steel recorded an equity-method investment disposal loss in net income following the completion of the sale process in the first quarter. The company expects to expand its profit margin going forward through the resolution of payment guarantees and stabilization of equity-method capital changes.

At the end of the first quarter, Dongkuk Steel's cash and cash equivalents stood at 720.2 billion KRW, a 167.9% increase year-on-year. This was a 27.0% increase from 567.3 billion KRW in the previous quarter. Although borrowing slightly increased due to higher overseas raw material purchase costs caused by exchange rate rises, the company maintained a stable debt ratio below 100%.

Following the approval of the agenda related to the spin-off at the extraordinary general meeting of shareholders held on the 12th of this month, Dongkuk Steel will be divided into the surviving company Dongkuk Holdings, and the newly established companies Dongkuk Steel for the hot-rolled business and Dongkuk CM for the cold-rolled business. The spin-off date is set for the 1st of next month. Dongkuk Steel plans to continuously enhance corporate value through an advanced corporate structure in the future.