Posco, the world's third-largest steelmaker, on Thursday reported a 44 per cent jump in first-quarter profit, helped by higher international steel prices.
The South Korean steelmaker said net profits in the first three months of this year rose to Won982bn ($1bn), the highest in six quarters, compared with Won681bn a year ago. Sales increased 22 per cent to Won5,701bn.
The better-than-expected results prompted the South Korean steelmaker to raise its 2007 sales and operating profit forecasts by 6 per cent and 4.8 per cent to Won22,600bn and Won4,300bn respectively.
The company forecast global demand for steel this year to increase by 5.9 per cent, driven by rising steel consumption in emerging markets such as China, India, Brazil and Russia. It also expected strong domestic sales in 2007 on steady growth of steel consumers such as the shipbuilding and automobile industries.
Analysts estimated Posco’s average steel export prices jumped more than 60 per cent to $50 per tonne in the first quarter. Posco raised domestic prices for stainless steel products four times this year to reflect surging nickel prices.
Steel prices are expected to remains strong until the second quarter amid strong demand from China and the global economic recovery, although increased supply may depress steel prices in the second half, according to analysts.
“A correction is possible in the second half, but there won’t be a drop in steel prices,” said Moon Jung-up at Daishin Securities. “Full-year profits could increase more than expected, if domestic prices are increased further.”
Posco recently said it would raise steel plate prices by 3 per cent from April 19 and stainless steel prices by 8 per cent from April 23.
The company yesterday said it would continue price-cutting efforts to boost profitability. It saved Won157bn in the first quarter through such efforts and aims to save Won604bn for the full year.
Posco yesterday tried to dispel concerns about delayed investment in the planned $12bn integrated steel complex in India. The company said it expected to win India’s approval for its mining rights and complete the land purchase to start the ground and port construction by the second half of the year.
