The Pak Banker - - COMPANIES/BOSS -

Posco, South Korea's big­gest steel­maker, posted its small­est an­nual profit ever af­ter a del­uge of Chi­nese ex­ports pushed global prices to their low­est in at least a decade. The re­sult still beat an­a­lysts fore­casts. The con­sol­i­dated net in­come, ex­clud­ing mi­nor­ity in­ter­ests, was 181 bil­lion won ($150 mil­lion) in 2015, down from 626.1 bil­lion won a year ear­lier, the Po­hang-based com­pany said Thurs­day. An­a­lysts ex­pected a profit of 85.5 bil­lion won, ac­cord­ing to the av­er­age of 21 es­ti­mates com­piled by Bloomberg. Prices have plum­meted as de­mand in China, which makes half the world's steel, con­tracts for the first time in a gen­er­a­tion, cre­at­ing a sur­plus and spurring mills to sell record amounts over­seas. The coun­try's ex­port price fell 42 per­cent in 2015, touch­ing the low­est since at least 2006, as ship­ments climbed 20 per­cent to 112.4 mil­lion met­ric tons, an all-time high and more than a year's pro­duc­tion in Ja­pan, the se­cond-big­gest maker.

"We're strug­gling mostly be­cause China is flood­ing the mar­ket with ex­tremely cheap prod­ucts with the sup­port from the govern­ment," Posco Chief Ex­ec­u­tive Of­fi­cer Kwon Oh Joon told a briefing in Seoul. "We can­not help but com­plain about their low prices as it's im­pos­si­ble for us to pro­duce at the same level and be com­pet­i­tive." The steel­maker recorded an an­nual loss in­clud­ing mi­nor­ity in­ter­ests of 96.2 bil­lion won, the first ever neg­a­tive num­ber in this cat­e­gory, and com­pared with a profit of 556.7 bil­lion won a year ear­lier. Con­sol­i­dated op­er­at­ing profit fell to 2.4 tril­lion won from 3.2 tril­lion won and was the low­est since 2002. The com­pany's shares lost 36 per­cent in the past year in Seoul and reached the low­est since 2004 this month. The stock that hit a record 765,000 won in 2007 when Chi­nese de­mand was boom­ing closed at 174,500 won Thurs­day.

There are signs that the worst of the Chi­nese del­uge may be over. Mills churned out less last year for the first time since at least 1991. Out­put con­tracted 2.3 per­cent to 803.83 mil­lion tons, with De­cem­ber pro­duc­tion fall­ing more than 5 per­cent from a year ear­lier. Sup­ply may shrink to 781 mil­lion tons in 2016, Li Xinchuang, head of the China Met­al­lur­gi­cal In­dus­try Plan­ning and Re­search In­sti­tute, said in De­cem­ber. Posco has re­sponded to the over­sup­ply by re­struc­tur­ing and fo­cus­ing on higher value prod­ucts. The steel­maker pledged last year to cut the num­ber of do­mes­tic units to 22 from 42 by 2017, and re­duce over­seas busi­nesses to 117 from 167. The com­pany re­struc­tured 34 units last year, im­prov­ing fi­nances by 2.1 tril­lion won, and plans to re­model 35 more in 2016, it said on Thurs­day. The pro­ducer, which has op­er­a­tions from Ar­gentina to Mon­go­lia, earned about half its rev­enue from steel pro­duc­tion in the third quar­ter with most of the rest com­ing from trad­ing and con­struc­tion, ac­cord­ing to the lat­est com­pany data.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.