South Korea: POSCO's steel production, sales edge up y-o-y in Q1CY'24

South Korean steel giant, POSCO, released its Q1 CY'24 results on 25 April 2024. The company's annual crude steel production and sales volume showed marginal growth y-o-y.

1) Crude steel production increases y-o-y: The company's crude steel production stood at 8.661 million tonnes (mnt) in Q1CY'24, up 2% as against 8.499 mnt in Q1CY'23. However, on a q-o-q basis, the same dropped by 4% against 9.019 mnt in Q4CY'23.

2) Sales edge up y-o-y: The company's sales edged up by 1% y-o-y to 8.229 mnt in Q1CY'24 in comparison with 8.162 mnt in the previous year (CY'22). However, the same edged down by 1% q-o-q from 8.330 mnt in Q4CY'23.

Despite a reduction in crude steel production, because of the maintenance schedules undertaken by blast furnace mills, use of semi-finished inventory helped to keep production and sales at levels seen in the previous quarter.

Other highlights:

Revenue declines y-o-y: The company's revenue from steel sales declined by 7% y-o-y to KRW 18,052 billion ($13 billion) in Q1CY'24 from KRW 19,381 billion ($14 billion) in Q1 CY'23. In addition, the same dropped by 3% q-o-q from KRW 18,664 ($13.5 billion) billion in Q4CY'23.

POSCO's revenue fell compared to the previous year as global markets worsened. The significant drop in finished goods prices during the first quarter caused a substantial decrease in revenue, impacting the company's performance.

POSCO International performance: POSCO International reported decline in steel revenues at KRW 7,761 billion ($5.6 billion) in Q1CY'24, down by 2% q-o-q against KRW 7,909 billion ($5.7 billion) in Q4CY'23. However, operating profit in Q1 increased by 24% q-o-q to KRW 266 billion ($0.19 billion) against KRW 215 billion ($0.15 billion) in Q4CY'23.

Krakatau POSCO: The joint venture between Krakatau and POSCO, Korea reported a significant decline in operating profits whereas a slight upward trend in sales volume was seen. Operational profits of the company declined by 89% q-o-q from $27 million in Q4CY'23 to $3 million in Q1CY'24. Sales volumes were recorded at 758,000 tonnes (t) in Q1 against 737,000 t in Q4CY'23. Although the company saw an increase in sales volume during Q1, profits were negatively impacted by a rise in raw material prices and the cost of repairing the steel plate line.

POSCO Maharashtra performance: POSCO's Maharashtra-based unit recorded a decline in revenues by 29% q-o-q to $20 million in Q1CY'24 against $28 million in Q4CY'23. However, sales saw an increase of 3,000 t q-o-q to 374,000 t in Q1 compared to 371,000 t in Q4CY'23. While sales volume increased, a slowdown in the global steel market and a subsequent price drop led to a decrease in revenue for the quarter.

Outlook

POSCO's crude steel production and sales volumes saw modest y-o-y growth in Q1 despite maintenance shutdown. However, global market weakness and falling finished product prices led to a significant decline in revenues compared to the previous year. In addition, the company is planning to secure manufacturing and cost competitiveness by transitioning to a low-carbon production system.