South Korean steelmaker POSCO said on Thursday it estimated its first-quarter operating profit likely jumped more than four-fifths, topping analysts' expectations, underpinned by solid steel demand in China amid rising prices.
For 2019, the world's fourth-biggest steelmaker said it expects to nearly double its annual operating profit to 5 trillion won compared with last year, fuelled by higher-margin premium products and improvements in non-steel businesses.
Disclosing preliminary earnings guidance for the first time, the company said operating profit for January-March was about 1.2 trillion won (US$1.07 billion), climbing 82% from 659.8 billion won a year ago and beating a consensus forecast for 816 billion won from 16 analysts' views.
Steel prices in China, the world's biggest consumer, have risen 16% so far in 2017, extending last year's sharp recovery from a six-year decline as Beijing implements efforts to spur infrastructure spending and cut excess manufacturing capacity.
POSCO, which estimated revenue climbed 17% to 14.6 trillion won in the period while net profit more than doubled to 800 billion won, expects to report final first-quarter numbers next month.
Chairman Kwon Oh-joon, who has restructured affiliates and cut debts at the steel giant to help cope with intense competition from China and once-sagging product prices, was appointed for another three-year term early this month.
The estimates were disclosed after POSCO shares closed down 0.9% on Thursday while the broader market fell 0.1%. The company's shares have risen 10% this year, outpacing the market's 7% rise, after snapping six consecutive years of declines last year.