(Corrects net income estimate in second paragraph, operating profit estimate in sixth paragraph.)
April 27 (Bloomberg) -- Hyundai Steel Co., South Korea’s second-biggest steelmaker, posted a lower-than-estimated 39 percent drop in first-quarter profit after waning demand for the metal used in cars, ships and houses dragged prices lower.
Net income was 157.5 billion won ($138.7 million) in the three months ended March 31, compared with 258.3 billion won a year earlier, the Incheon-based company said in a regulatory filing today. That missed the 188.4 billion won average of 12 analyst estimates compiled by Bloomberg. Sales were little changed at 3.55 trillion won.
Hyundai and other steelmakers including Posco and Baoshan Iron & Steel Co. are reporting lower profit after the European debt crisis curbed global economic growth and demand for the metal. Earnings may improve this quarter as raw material costs decline and construction steel demand increases, Lee Won Jae, an analyst at SK Securities Co., said in an April 16 report.
Sales may gain 7 percent to 3.8 trillion won this quarter from the previous quarter as orders from builders rise and new car models spur demand from the auto industry, Hyundai said.
Hyundai Steel, an affiliate of the Hyundai Motor Group, rose 1.3 percent to 99,200 won in Seoul. The earnings were announced after the stock market closed. The stock has gained 3.7 percent this year, underperforming an 8.2 percent increase in the local benchmark Kospi stock index.
Operating profit fell 49 percent to 156.6 billion won in the quarter from a year earlier, missing the 223.8 billion average of 14 analyst estimates compiled by Bloomberg.
Hyundai’s selling prices for its hot-rolled coils probably dropped about 3 percent to 811,000 won in the quarter from a year ago, while those for steel plates, used mostly in shipbuilding, fell 6 percent to 911,000 won, SK’s Lee said.
The biggest maker of construction steel in South Korea produced 3.94 million metric tons of steel products in the quarter, up 1.4 percent from year earlier, Hyundai Steel said today.
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