April 24, 2020 / 2:41 AM / a month ago

POSCO posts 41% drop in first-quarter profits as virus curbs steel demand

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

SEOUL (Reuters) - South Korean steelmaker POSCO on Friday posted a 41.4% fall in its first-quarter operating profit, hit by a slump in steel demand amid the coronavirus pandemic, and forecast a further hit to sales.

The world’s fifth-biggest steelmaker said it expected a continued slowdown in steel demand due to the outbreak, and revised down its consolidated sales outlook to 57.5 trillion won ($46.5 billion) from its January forecast of 63.4 trillion won.

Consolidated operating profit came in at 705 billion won in the first quarter, down from 1.2 trillion won a year earlier POSCO said in a statement.

That beat an average estimate of 578 billion won from 14 analysts, according to Refinitiv SmartEstimate.

POSCO’s first-quarter revenue fell 9.2% year-on-year to 14.5 trillion won, and its net profit dropped 44.2% to 435 billion won.

The coronavirus pandemic, which has sickened more than 2.6 million people worldwide, has cut steel demand from sectors such as automobiles and construction as businesses around the world go in to lockdown to curb its spread.

In China, where the virus first emerged late last year, the world’s second-largest economy shrank 6.8% in the first quarter, declining for the first time on record, as the outbreak hit consumer spending, business activities and manufacturing.

POSCO shares were flat after the earnings announcement by 0150 GMT, while Seoul’s stock market’s KOSPI edged down 0.6%.

($1 = 1,235.7100 won)

Reporting By Jane Chung; Editing by Richard Pullin

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