South Korea: Hyundai Steel posts decline in revenue in Q1CY'24 amid steel market challenges

Hyundai Steel, South Korea's leading steel manufacturer released its financial report for Q1CY'24. The company's consolidated sales reached KRW 5.94 trillion with a q-o-q decline in revenue. Moreover, the sales volume decreased by 1.5% q-o-q to 4.34 mnt and the same fell by 7.6% y-o-y.

Consolidated, non-consolidated results

Revenue: The consolidated revenue for Q1CY'24 fell by KRW 156 bn ($0.11 bn) q-o-q to KRW 5,948 bn ($4 bn) against KRW 6,104 bn ($4 bn) in Q4CY'23. Moreover, the same declined by KRW 441 bn ($0.31 bn) y-o-y compared to KRW 6,389 bn ($5 bn) in Q1CY'23.

In addition, non-consolidated revenue for Q1CY'24 decreased by KRW 80 bn ($0.05 bn) q-o-q to KRW 4,819 bn ($3 bn) as compared to KRW 4,899 bn ($4 bn) in Q4CY'23. The same fell by KRW 784 bn ($0.56 bn) y-o-y against KRW 5,604 bn ($4 bn) in Q1CY'23.

Gross profit: The consolidated gross profit for Q1CY'24 hiked by KRW 208 bn ($0.15 bn) q-o-q to KRW 365 bn ($0.26 bn) as compared to KRW 157 bn ($0.11 bn) in Q4CY'23. The same declined by KRW 269 bn ($0.19 bn) y-o-y against KRW 633 bn ($0.45 bn) in Q1CY'23.

The non-consolidated gross profit for Q1CY'24 fell by KRW 256 bn ($0.18 bn) y-o-y reaching KRW 340 bn ($0.24 bn) against KRW 596 bn ($0.43 bn) in Q1CY'23.

Construction sector struggles: The Korean construction industry is facing a downfall with a significant impact on demand for long products used in construction. The unprecedented slowdown in construction has caused a significant drop in demand for essential building materials, creating a difficult situation for manufacturers and suppliers.

Light-weighting of automobiles: To address the growing demand for lighter-yet-stronger vehicles, Hyundai Steel is building a third-generation steel plate production system. This innovative system will produce automobile steel sheets that are lighter and more robust than existing options. Additionally, the company is developing parts and materials specifically for electric vehicle reducers, aligning with the industry's transition to electric cars.

Offshore wind power market: The company is actively involved in growing the offshore wind power industry. To meet the demands of these large-scale projects, it is developing new products, including large plates and specialised materials. This includes securing major contracts for projects like the Yeonggwang Nakwol offshore wind power complex in South Korea and a French offshore wind power project. By continuing to invest in this area, they aim to further solidify their position in the expanding offshore wind power market.

Outlook: Hyundai Steel acknowledges a slowdown in the steel market and plans to counteract it by finding new markets and developing valuable steel products. The company recognises global challenges like geopolitical conflicts and domestic issues such as high interest rates, exchange rates, and inflation. Weakening demand from China and real estate risks are also key concerns.

Global steel demand is expected to rise in 2024, with a potential recovery in the latter half of the year. Additionally, strong demand from key industries like automobiles and shipbuilding suggests a potential price hike after a likely dip in the second quarter. Overall, Hyundai Steel anticipates a period of slow but somewhat stable growth.