POSCO Holdings' Q3 profit tumbles on steel mill shutdown

Korea's top steelmaker’s holding firm says operating losses and rising expenses due to the plant's disruption cut profit by $308 mn

POSCO’s steel mill in Pohang, South Korea, was flooded on Sept. 6, 2022 (Courtesy of POSCO)
POSCO’s steel mill in Pohang, South Korea, was flooded on Sept. 6, 2022 (Courtesy of POSCO)
Seo Woo Jang 1
2022-10-19 19:43:24 suwu@hankyung.com
Earnings

POSCO Holdings Inc., the holding company of the world’s sixth-largest steel maker, missed market estimates for its quarterly profit as last month's typhoon disrupted one of its plants in South Korea and the global economic slowdown has hit demand.

POSCO Holdings on Wednesday posted a preliminary operating profit of 900 billion won ($630.3 million) in the third quarter on a consolidated basis, down 71% from a year earlier. Compared to the previous quarter, profit fell 57.1%.

Analysts had forecast the holding company of South Korea's leading steelmaker to report an operating profit of 1.5 trillion won on average for the July-September period, according to financial data provider FnGuide Inc.

“Operating losses stemming from the suspension of production at Pohang Steel Works and rising one-time costs were estimated to have slashed the operating profit by some 440 billion won,” the company said.

DARK OUTLOOK

In early September, POSCO Holdings shut down all of its three furnaces at the steelworks for the first time in nearly a half-century due to Typhoon Hinnamnor. The disruption was estimated to have cut POSCO’s steel sales volume by 14% to 7.7 million tons from a year earlier.

The outlook for the company remained murky as the steel mill is expected to return to normal operations in the first quarter of next year at the earliest, analysts said.

A global economic downturn with growing risks of a recession is also unlikely to help steel demand rebound anytime soon, they added.

“Uncertainties remained over costs related to the plant’s recovery and repairs, as well as shipment volumes,” said Kim Yoon-sang, an analyst at HI Investment & Securities. “The global economy will continue to face unfavorable conditions.”

Write to Seo Woo Jang at suwu@hankyung.com
Jongwoo Cheon edited this article.
#Korean steelmakers #POSCO #Pohang Steel Works #steel mills #shutdown #typhoon #recession

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