Oct. 24 (Bloomberg) -- Posco, South Korea’s biggest steelmaker, cut its 2013 sales forecast for a second time after reporting a 22 percent slump in third-quarter profit.
The company’s full-year sales estimate on a group basis was lowered to 63 trillion won ($59.4 billion), from a July prediction of 64 trillion won, Pohang-based Posco said today in an e-mailed statement.
The lower forecast, which followed an April reduction, comes after an economic slowdown in China, the world’s biggest steel user, and Europe’s debt crisis cut consumption and prices. Posco said today it would make “all efforts” to improve earnings as global steel demand is expected to recover this quarter.
“Posco’s third-quarter operating profit was lower than I presumed,” said Will Byun, an analyst at Woori Investment & Securities Co. in Seoul. “Steel prices will be generally weak until the end of this year. I expect a rise in prices at the end of the fourth quarter, but I don’t think it will be huge.”
Net income excluding minority interest was 567 billion won in the three months ended Sept. 30, from 730.8 billion won a year ago, the company said. That missed the 650.3 billion won average of 13 analysts’ estimates compiled by Bloomberg.
Posco, which has lost 7.9 percent this year, rose 0.5 percent to end at 321,500 won in Seoul trading, while the benchmark Kospi index added 0.5 percent. The announcement came after the stock market closed.
Operating profit slumped 38 percent to 632.8 billion won, missing the 699.2 billion average of estimates compiled by Bloomberg. Sales fell 3.7 percent to 15.2 trillion won. Operating margin shrank to 4.2 percent last quarter from 6.5 percent a year earlier.
“Third-quarter results were below market expectations,” Shim Tong Wook, a senior vice president at Posco, said today on a conference call. “But we expect to have a significantly better performance in the fourth quarter.”
Posco will seek to raise some steel prices this quarter as international prices look like recovering, said Kim Jae Yeol, senior vice president for marketing. Global steel consumption may grow 3 percent next year as Chinese demand picks up, the company said.
Posco’s average selling price fell 12 percent to 773,000 won a metric ton in the third quarter, it said. Crude steel output dropped 7.6 percent to 8.9 million tons in the quarter from a year earlier, while sales fell 7.3 percent to 8.3 million tons.
Earnings may improve in the current quarter as profits are booked from unit Daewoo International Corp.’s Myanmar gas project, according to Bang Min Jin, a steel analyst at HI Investment & Securities Co. Daewoo began selling gas from Myanmar in July.
The stock has “limited upside potential” because of weak prices amid oversupply and continued market-share losses to Hyundai Steel Co. and Hyundai Hysco Co., Chung Sung Yop, a steel analyst at Daiwa Securities Co., wrote in an Oct. 16 report. Chung has a hold rating for Posco.
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