Moscow. October 20. The largest South Korean steel company Posco in the third quarter of 2015 received its biggest net loss since at least 2010, as the growth of steel exports from China has led to lower world prices, reports Bloomberg.
Posco’s net loss after deduction of minority stakes amounted in July-September 534,2 billion won ($474 million), compared with a net profit of 237,8 billion won in the same period last year.
Analysts polled by Bloomberg, expected a much smaller loss – an average of 156 billion won.
Posco expects the net loss by the end of 2015. As expected, consolidated index (including minority stakes) amounts to 300 billion won.
The loss of the South Korean company in the third quarter largely reflect the losses from exchange rate differences in the amount of 380 billion won related to the revaluation of dollar-denominated bonds, as well as impairment of mining assets at 263 billion won. In addition, in September, Posco has paid out 30 billion yen ($250 million), the largest steel company of Japan and Asia as a whole, Nippon Steel & Sumitomo Metal Corp. in the framework of an extrajudicial settlement of the claim of the latter for patent infringement and illegal acquisition of technology.
Posco’s operating profit in July-September decreased to 651,9 billion won with 878,7 billion won a year earlier. Analysts on average had forecast a profit of 710,7 billion won.
Quarterly revenue decreased by 14.1% – up to 14 trillion won if the consensus forecast of 14.9 trillion won.
China in September increased supply of steel abroad by 16%, to a record high of 11.25 million tons for 9 months of 2015 – by 27% to 83,1 million tons. Prices for steel reinforcing bars in China fell by 29% over the past 12 months, approaching the lowest level since 2003.
Thus, according to the October forecast, the World Steel Association, global steel demand this year will shrink by 1.7%, while in April-expected growth of 0.5%. In 2015 is expected to decline in steel consumption in China by 3.5% in 2016 and by another 2%.
Posco shares fell Tuesday by 1.6%. In October, their quotes fell to a minimum in 11 years. Earlier this month, the company unveiled a plan to restore profitability, including abandonment of non-core operations and focus solely on the production of steel.
According to the World Steel Association, last year, Posco was among the top five largest steel producers in the world.