January 31, 2020 / 6:15 AM / a month ago

UPDATE 1-POSCO Q4 operating profit down 56.1%; sees lower 2020 sales

* Q4 operating profit 558 bln won -Reuters’ calculations

* Expects 2020 revenue at 63.8 trln won vs 64.5 trln won in 2019

* Sees global steel demand slowing on weak economic growth rate

SEOUL, Jan 31 (Reuters) - South Korean steelmaker POSCO posted a 56.1% drop in its fourth-quarter operating profit as higher raw material costs squeezed its margins, and said it expected lower sales in 2020 on weaker global steel demand growth.

The world’s fifth-biggest steelmaker reported 2019 earnings on Friday without disclosing numbers for October-December.

Reuters calculations showed consolidated operating profit for the fourth quarter dropped to 558 billion won ($478 million) from 1.3 trillion won during the same period a year earlier.

That was below an average estimate of 731 billion won from 20 analysts, according to Refinitiv SmartEstimate.

In 2019, prices of iron ore, key raw material for making steel, soared more than 140% from 2018 due to Brazilian supply cuts following a dam collapse at one of Vale’s mine in Brazil.

For 2020, the steelmaker said it expects lower consolidated sales at 63.8 trillion. It also said its capital expenditure and other investments are expected to be 6 trillion won in 2020.

POSCO shares were down 1.3% by 0558 GMT after the earnings release, while the wider market was 0.7% lower.

$1 = 1,167.2000 won Reporting By Jane Chung; Editing by Kim Coghill and Tom Hogue

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