POSCO Q2 net drops 71 pct on weak steel prices, output cut

SEOUL, July 13 (Yonhap) -- POSCO, South Korea's leading steelmaker, said Monday
that its second-quarter profit tumbled 71 percent from a year earlier due to weak
demand and falling steel prices.
Net profit reached 431 billion won (US$328 million) in the April-June period,
compared with 1.48 trillion won a year earlier, POSCO said in a regulatory
filing. Sales fell 15 percent to 6.34 trillion won over the cited period, with
operating income dropping 54 percent to 171 billion won.
Shares of POSCO closed at 430,000 won on the Seoul bourse, down 1.26 percent. The
second-quarter earnings were released after the market's close.
"The market has expected weak business results for the second quarter," said Lee
Chang-mok, an analyst at Woori Investment & Securities. "But POSCO is expected to
see rising steel demand and its profitability will improve as well from the third
quarter."
POSCO said a fall in steel prices and weak demand are attributable to the weak
performance.
The economic downturn reduced steel demand by builders and automakers, forcing
POSCO to slash production in December for the first time in its 41-year history.
The figures come amid concerns that the global steel industry is still facing a
drop in demand resulting from the global economic crisis, causing difficulties
among automakers, electronics companies and shipbuilders.
In May, the steelmaker slashed prices for all its steel products such as
hot-rolled steel by up to 20 percent to reflect falls in the cost of raw
materials, saying the price cut would trim its annual sales by around 2.7
trillion won.
sam@yna.co.kr
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