South Korean steelmaker Pohang Iron and Steel Co. (POSCO) has announced that in the third quarter of 2012 its net profit more than tripled to KWR 723 billion ($655 million), compared to the same quarter of the previous year and was up 55.3 percent from the previous quarter, according to its consolidated results. The increase in its net profit is backed by the improved sales of high-end products such as automotive and electric steel and currency gains.
According to its financial results, POSCO's sales revenue in the third quarter totaled KWR 15.8 trillion ($14.31 billion), down 7.2 percent year on year. Meanwhile, its operating profit for the given quarter amounted to KRW 1.07 trillion ($969.4 million), down by 17.5 percent compared to the corresponding quarter of the previous year. The company stated that discounted steel prices led to a decline in its revenue and operating profit.
In the third quarter of the current year, POSCO produced 9.66 million mt of crude steel, up 2.02 percent year on year and 2.7 percent compared to the previous quarter. In the same quarter, the company's finished steel product sales increased by 2.87 year on year to 8.92 million mt.
POSCO also stated that it has cut its sales forecast for 2012 as its third quarter performance remained below the expectations. Accordingly, sales are likely to decline to KRW 36.3 trillion ($32.9 billion) in the current year, compared with the July estimate of KRW 37.5 trillion.
Meanwhile, the international credit rating agency Standard and Poor's (S&P) has lowered POSCO's credit rating to BBB+ from A-, pointing out that the company's performance "will likely be weaker" than previously expected. S&P stated that a continuing oversupply of steel in the region amid uncertain global macroeconomic conditions will likely produce weaker profitability for the company in 2012 and 2013 than in 2011.