POSCO Co., the world’s sixth-largest steelmaker, reported record earnings in 2021, adding to the bullish outlook, as China sustained a policy of output cut when demand from shipbuilding, automobile and other sectors stayed healthy.
POSCO said on Wednesday its operating profit nearly quadrupled to 9.2 trillion won ($7.7 billion) on a consolidated basis last year, the largest since 1968 when the company was founded, from 2.4 trillion won in 2020. Sales also surged 32.1% to an all-time high of 76.4 trillion won.
After the strong earnings, POSCO’s stock closed up 1.83% at 305,000 won, outperforming a 1.54% gain in the wider Kospi.
South Korea’s top steelmaker has been recovering from the COVID-19 pandemic-caused economic slowdown since the first quarter of 2021, posting quarterly operating profits of more than 1 trillion won.
POSCO dealt with rising prices of raw materials such as iron ore, coal and scrap on the global economic recovery by raising product prices for major customers to improve profitability.
CHINAImprovement in its earnings gathered pace in the second half as
POSCO reported its first quarterly operating profit of more than 3 trillion won in the July-September period. The company benefitted from China’s policy to cut steel output for carbon neutrality.
The country, which accounts for half of the global steel production, slashed molten iron by 7-20% on year every month from July to November, according to the industry. On the other hand, demand from the automobile, shipbuilding and construction sectors continued to increase, ramping up steel product prices.
From the fourth quarter, however, a slowdown in the Chinese property market debt crisis amid involving real estate developer Evergrande Group prompted concerns over a peak-out in the global steel industry.
“The decline in steel plate prices may accelerate in the first quarter, but lower iron ore prices are expected to improve profitability,” said Moon Kyeong-won, an analyst at Meritz Securities.
NEONMeanwhile, POSCO announced it succeeded in manufacturing neon, a rare gas for semiconductor production. The local chipmakers have been importing all of the gas.
POSCO will be able to meet about 16% of domestic neon demand since the company developed its own production facilities and the process of refining the extracted neon.
It completed the quality evaluation of the product through test operations at the end of last year. It plans to complete the facilities and start commercial operations later this year.
Write to Jeong Min Nam at
peux@hankyung.comJongwoo Cheon edited this article.
