South Korean steelmaker Posco Holdings reported a 7.1% year-on-year decrease in its third-quarter net profit, which fell to $409.3 million. This underperformed the consensus forecast compiled by FactSet. The company's revenue also declined by 10% to KRW18.961 trillion.
The company attributed the downbeat quarterly earnings to decreased steel demand, lower product prices, and diminished shipments. These issues were further exacerbated by a disruptive storm in 2022 that impacted operations at its steel mill. According to InvestingPro data, the company's revenue growth for the second quarter of 2023 was -7.43%, with a quarterly decrease of -12.55%, reflecting these challenges.
Despite the overall decline, Posco's operating profit surged by 30% to KRW1.196 trillion, in line with preliminary estimates. The natural-gas and eco-friendly material businesses within the company recorded solid performances. The company's operating income, adjusted for the second quarter of 2023, was $1900.81M USD, according to InvestingPro data, which aligns with this surge.
In response to these challenges, Posco confirmed its strategy of expanding investment in sectors such as battery materials and electric-vehicle components, indicating a potential shift towards more sustainable and high-demand industries. This strategic move is in line with one of the InvestingPro Tips, which highlights Posco as a prominent player in the Metals & Mining industry.
InvestingPro Tips also suggest that despite the recent downturn, the company's strong earnings should allow for continued dividend payments. Indeed, the company has maintained dividend payments for 31 consecutive years. This is supported by InvestingPro data showing a dividend yield of 1.76% as of 2023.
For those interested in further insights, InvestingPro offers an additional 12 tips for Posco, providing a more comprehensive understanding of the company's position within the market.
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