(2nd LD) POSCO's net doubles in Q2

All News 18:22 July 24, 2014

(ATTN: UPDATES with more information in last 3 paras)

SEOUL, July 24 (Yonhap) -- POSCO, South Korea's top steelmaker, said Thursday its second-quarter net income more than doubled from a year ago, mainly due to better earnings from its foreign operations.

Net profit stood at 487.16 billion won (US$475 million) in the April-June period, up 102.6 percent compared to 240.5 billion won tallied a year earlier, POSCO said in a regulatory filing.

Overall revenues as outlined in the consolidated report rose 7.1 percent to 16.7 trillion won in the three-month period with operating profit falling 7.0 percent to 839.11 billion won.

The dip in operating profit on-year is due to the general drop in prices for POSCO-made products, the steelmaker explained..

Compared to the first quarter, the steelmaker, which announced sweeping measures to streamline operations and focus on core business sectors under its new chairman, Kwon Oh-joon, said net income soared 775.5 percent in the second quarter compared to 55.64 billion in January-March.

Operating profit jumped 14.7 percent from 731.26 billion in the first quarter while sales rose 8.2 percent from 15.44 trillion won.

"Sales and bottom-line figures for the second quarter were up as POSCO's foreign operations, particularly stainless steel plants, in places such as China, did very well," a company official said.

The operational rate of an integrated steel mill in Indonesia that started production in the first quarter rose to 74 percent in the second quarter, the company said. Its operational rate in the first quarter at the mill stood at just 24 percent.

Total steel output reached 9.26 million tons, up 4.6 percent from 8.85 million tons produced in the previous year. Compared to the first quarter, when output was 9.30 million tons, it was down about 0.5 percent.

The latest report said income generated by the sale of steel products alone stood at 7.42 trillion won, with operating profit standing at 565 billion won.

Sales and operating profit figures represented a 0.8 percent and 9.1 percent gain from the previous quarter, but a dip from the year before.

In the second quarter of 2013, sales generated exclusively by steel products stood at 7.74 trillion won, with operating profit hitting 703 billion won.

POSCO said that global steel prices will likely go up marginally in the third quarter, helped by economic recovery in major industrialized countries such as the United States. On the domestic front, the company expects demand to dip, requiring a greater emphasis on marketing.

The steelmaker set its annual sales target for 2014 at 64.5 trillion won.

It said efforts will be made to generate 2 trillion won in non-debt funds by late 2015 through the sale of assets and holdings in facilities such as the liquefied natural gas terminal in Gwangyang.

The move to purchase a 100 percent stake in Tongyang Power Inc. will require an investment of 3.9 trillion won so that a 2,000 megawatt coal-fired thermal power plant can be built in the northeast of the country.

Shares of POSCO rose 0.79 percent to 320,500 won on the Seoul bourse versus 0.08 percent drop in benchmark KOSPI. The company released its second-quarter results after the market closed.