April 24, 2018 / 7:00 AM / 2 years ago

South Korean steelmaker POSCO says operating profit up 9 percent in first quarter

SEOUL (Reuters) - South Korean steelmaker POSCO (005490.KS) on Tuesday said its operating profit for the first quarter of 2018 rose 9 percent from a year ago on firm steel demand and favourable market conditions, beating analyst estimates.

FILE PHOTO - The logo of POSCO is seen at the company's headquarters in Seoul, South Korea, July 20, 2016. REUTERS/Kim Hong-Ji/File Photo

The world’s fifth-biggest steelmaker said in a statement that it expected steel demand to keep growing thanks to “sustained restructuring in China’s steel industry and expectations of recovery in emerging market growth”.

POSCO posted a consolidated operating profit of 1.49 trillion won (993.4 million pounds) for the January-to-March period, compared with 1.37 trillion won a year earlier and an average estimate of 1.37 trillion won from 16 analysts polled by Reuters.

Its first quarter revenue was up 5 percent at 15.9 trillion won, while its net profit climbed 10.9 percent to 1.1 trillion won.

The steelmaker also raised its 2018 consolidated sales target to 63 trillion won from 61.9 trillion won.

In the first quarter of this year, China’s economy grew 6.8 percent on the back of robust consumer demand and property investment.

Although U.S. steel tariffs could pose a risk to Asian producers, South Korean steelmakers were exempted from hefty steel tariffs in March in exchange for capping the country’s steel exports to the United States by 30 percent of the past three years’ average.

The company expected iron ore prices to be between $65 and $70 per tonne in the second quarter following the U.S. import tariffs, down from $74 a tonne in the first quarter.

Coking coal prices are expected to be between $180 and $190 per tonne in the second quarter, down from 229 per tonne in the previous quarter, it said.

POSCO is also looking for a new chief executive after Kwon Oh-joon tendered his resignation last week saying the company should be managed by a younger leader.

POSCO shares were up 1.1 percent, while the broader market's .KS11 dipped 0.4 percent prior to the earnings release.

Reporting By Jane Chung; additional reporting by Hyunjoo Jin; Editing by Richard Pullin and Joseph Radford

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