Flood causes 47% drop in operating profit at Posco Holdings

Posco Holdings warned of a 47 percent decline in operating profit last year, partly caused by a closing of its Pohang steel mill after it was flooded by Typhoon Hinnamnor in September.

A Posco employee produces stainless steel at the No. 1 cold-rolling facility at the Pohang plant in North Gyeongsang, on Jan. 19. [POSCO]

Posco Holdings warned of a 47 percent decline in operating profit last year, partly caused by a closing of its Pohang steel mill after it was flooded by Typhoon Hinnamnor in September.

In an earnings guidance announcement Friday, the company said it expects to report 4.9 trillion won ($4 billion) in operating profit for 2022, down 46.7 percent on year.

That is below a market consensus of 5.8 trillion won compiled by FnGuide.

Profitability in steelmaking sharply fell after Posco halted operations of its Pohang rolling facilities in North Gyeongsang on Sept. 7 due to Typhoon Hinnamnor. For Korea’s largest steelmaker, and the world’s fifth-largest, it was the first time an operating line was forced to stop in 49 years.

Sales are expected to be 84.8 trillion won, up 11.1 percent on year, in line with market expectations of 85 trillion won.

Neither segmentation nor net profit were provided in the guidance.

The consolidated earnings include those of subsidiaries Posco, Posco Chemical, Posco International and Posco Energy.

Posco Holdings is expected to report 1.3 trillion won in expenses "related to damage at the Pohang steel rolling facility including recovery costs and potential loss," it said in Friday's report.

Analysts predict good prospects for the company in 2023. The Pohang plant was fully operational starting on Friday, 135 days since the flood.

"Production and sales are expected to be normalized starting from the first quarter," said analyst Lee Yu-jin from Eugene Investment.

Posco Holdings will release full results on Jan. 27.

BY SARAH CHEA [chea.sarah@joongang.co.kr]