POSCO, South Korea's top steelmaker, said Thursday its third-quarter net profit dropped 53 percent from a year earlier, hit by high raw material costs.
Net profit reached 496.8 billion won (US$424 million) in the July-September period on a consolidated basis, compared with a profit of 1.05 trillion won a year earlier, the company said in a regulatory filing.
Third-quarter operating profit reached 1.04 trillion won, down 32 percent from a year earlier, with sales declining 2.6 percent on-year to 15.9 trillion won over the cited period, it added.
On a standalone basis, POSCO's third-quarter net profit dived 44 percent on-year to 499 billion won. Sales dropped 2.1 percent to 7.7 trillion won, while operating income slid 39.5 percent to 662.5 billion won, compared with a year ago.
POSCO blamed high raw material prices for the weak earnings of its mainstay steelmaking business. The average price of iron ore in the third quarter was $102 per ton, compared with $67 a year ago, according to industry data.
POSCO sold 8.95 million tons of steel products in the third quarter, down 0.34 percent from a year earlier.
Despite a slump in the steelmaking sector, POSCO said robust earnings from its energy and construction affiliates limited the drop in its profits.
POSCO said it expects to see a small price rise in steel plates for shipbuilding later in the year, emphasizing that increased material costs must be reflected in the price. The company is taking a similar stance in talks with automakers, although a price freeze is also an option.
POSCO expected that its fourth-quarter earnings may not see significant improvement due to the global economic slowdown, while steel prices face downward pressure.
"Through cost-cutting efforts and selling high-value products, we'll try to recover our profit margin," a POSCO official said. "We are also worried about whether the company can keep up its profitability next year."
Meanwhile, shares in POSCO rose 0.22 percent to 223,000 won on the Seoul bourse. The earnings results were released before the market closed. (Yonhap)