Posco projects 10-year high OP in Q1 on demand recovery, steel price hikes

South Korea's leading steelmaker Posco projected its operating profit for the first quarter more than doubled from a year ago to top 1.5 trillion won ($1.3 billion), its best performance in 10 years, thanks to a recovery in global steel demand with eased Covid-19 restrictions that has elevated steel prices.

Posco¡¯s pro forma operating profit on a consolidated basis for the January-March quarter jumped 120 percent on year and 79.76 percent on quarter to 1.55 trillion won ($1.4 billion), according to the company¡¯s regulatory filing on Monday. Sales were estimated at 15.99 trillion won, up 9.98 percent from a year ago and 4.80 percent from a quarter ago.

Posco¡¯s separate sales and operating profit for the three months reached 7.8 trillion won and 1.07 trillion won, respectively.

The first-quarter consolidated operating profit, which is the highest since the second quarter of 2011, also surpassed a market consensus of 1.34 trillion won.

Posco was trading 0.15 percent, or 500 won, lower at 329,000 won in the morning session on Tuesday.

The company had achieved an operating profit of over 1 trillion won for nine consecutive quarters since the third quarter of 2017, but the figure plunged to 55.76 million won in the fourth quarter of 2019 and 16.77 million won in the second quarter of 2020 after steel demand plummeted during the Covid-19-driven lockdowns across the world.

But with eased social-distancing restrictions, global steel demand has rapidly revived in automotive, shipping and construction industries, helping prices of steel products move upwards.

Posco also has hiked the price of its hot rolled steel plates consecutively this year by 80,000 won per ton in January, 100,000 won in February and 50,000 won in March, a move that has helped the company improve profitability.

The company will report detailed earnings on April 26.

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