Hyundai Steel Forecasts Lower Sales on Waning Car, Ship Demand

Hyundai Steel Co. (004020), facing slumping prices and demand from shipbuilders and carmakers, forecast lower full-year sales after posting a 20 percent decline in fourth-quarter profit.

Sales on a parent basis for 2013 may drop to 13.4 trillion won ($12.3 billion) from 14.1 trillion won last year, South Korea’s second-biggest steelmaker said today in a regulatory filing. Net income at Incheon-based Hyundai Steel fell to 216.6 billion won in the three months ended Dec. 31. The average profit of 13 analyst estimates compiled by Bloomberg was 182.1 billion won.

China’s economic slowdown and Europe’s fiscal crisis have reduced demand for steel used in houses, cars and ships, crimping profits at global steelmakers. Bigger domestic rival Posco this week forecast sales may fall this year after reporting a worse-than-estimated fourth-quarter profit.

Hyundai Steel, an affiliate of the Hyundai Motor Group, has fallen 5.6 percent this year in Seoul trading, underperforming a 1.8 percent loss in the local benchmark Kospi (KOSPI) index. The stock rose 0.6 percent to close at 82,900 won, while the Kospi fell 0.1 percent. The results were announced after the stock market closed.

Operating profit at the biggest construction-steel maker in South Korea fell 46 percent to 163.1 billion won in the last quarter, missing the 220.2 billion average of 17 analyst estimates compiled by Bloomberg. Sales decreased 15 percent to 3.31 trillion won, while operating margins shrank to 6.2 percent in 2012 from 8.4 percent in 2011, Hyundai Steel said today.

The average selling price of Hyundai’s products probably dropped by 60,000 won per metric ton of steel in the fourth quarter, Chris Kim, a steel analyst with Samsung Securities Co., said in a Jan. 14 report.

Hyundai’s earnings may rebound in the first and second quarters should prices recover and shipments normalize, according to Samsung’s Kim. The steelmaker today said it plans to sell 16.7 million tons this year.

To contact the reporter on this story: Sungwoo Park in Seoul at spark47@bloomberg.net

To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.