POSCO returns from pandemic blues with record quarterly profit

South Korea’s largest steelmaker POSCO is returning even stronger from the pandemic-caused economic slowdown, with an all-time high revenue and operating profit for the first quarter.

POSCO Holdings Inc. said on Thursday its preliminary operating profit for the quarter ending March 31 reached 2.3 trillion won ($1.87 billion), up 44% from the year-earlier period on a consolidated basis. Sales increased 33% on year to 21.3 trillion won.

Both results are the company’s record performance for the January-March period.

The consolidated profit, which includes the results of its affiliates such as POSCO Chemical and POSCO International, came as a surprise as it beat market expectations by a big margin. The market consensus was 20 trillion won in sales and 1.7 trillion won in operating profit.

The company provided no details for the preliminary quarterly results. Final figures, including its net profit, will be announced later this month.

Earlier this month, the steelmaker launched a holding company and placed its steel business and non-steel units under its wing as subsidiaries to develop the group into an eco-friendly future materials producer.

POSCO Group Chairman and Chief Executive Choi Jeong-woo said the company aims to increase its operating profit from the non-steel business to 50% of the entire group’s profit from the current 20%, tripling its corporate value to some 130 trillion won by 2030 from 43 trillion won last year.

DEMAND FROM CARMAKERS KEY TO Q2 RESULTS

POSCO’s stellar first-quarter performance came in the face of rising prices of raw materials such as iron ore and steel scrap.

Iron ore prices increased to $140.78 a ton in the first quarter, up 27.1% from $110.74 in the fourth quarter of last year, boosting steelmakers’ costs.

POSCO dealt with raw material price hikes by raising product prices for major customers.

Higher steel demand from shipbuilders and strong performances at its non-steel affiliates have also contributed to POSCO’s robust first-quarter earnings, it said.

Industry watchers said one of the key factors that can sway POSCO’s earnings in the second quarter is the result of its talks with automakers over steel price increases.

The steelmaker is currently in talks with Hyundai Motor Co. and other carmakers over its steel product supplies.

Shares of POSCO Holdings were trading 0.7% lower at 284,000 won in early Friday trade in line with the broader Kospi market’s 0.6% fall.

Write to Ik-Hwan Kim at lovepen@hankyung.com
In-Soo Nam edited this article.