Despite raising prices twice this year, Posco failed to pass on to customers the full extent of the cost increases in its ore and coal purchases, and disappointed the markets with its profits for the three months to the end of September. If Posco, one of the industry’s more efficient producers, is facing a profit squeeze so are other makers. Expect more missed forecasts.
As Reuters reports from Seoul, Posco on Tuesday reported a weaker-than-expected 9 percent rise in quarterly profit, posting a 1.1 trillion won ($985 million) in operating profit for the July-September quarter, compared with a consensus forecast of 1.27 trillion won from Thomson Reuters. That is down 40 percent from the previous quarter, and up 9 percent from a year earlier.
Posco’s profit is expected to slide further and hit a bottom this quarter before rebounding early next year. But concerns remain due to weak demand and an oversupply in China, the world’s top producer and consumer of steel. says Reuters.
Posco shares have fallen about 14 percent this year, compared to a 12 percent gain in the Korean market.
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