Posco, South Korea’s leading steelmaker, reported Thursday that its second-quarter earnings rose compared to the same period last year, backed by sturdy performances of nonsteel sectors including trading, construction and energy.

The company posted 14.9 trillion won ($13.2 billion) in revenue and an operating profit of 979.1 billion won between April and June this year, rising by 16.2 percent and 44.3 percent, respectively on-year.

They were, however, a drop from the previous quarter by 0.88 percent and 28 percent for revenue and operating profit respectively, on less steel production and lower raw material prices.

“The company’s revenue weakened across steel, construction and energy segments, so its second-quarter performance declined compared to the first quarter. But we expect favorable market conditions in the second half of this year,” said Choi Jeong-woo, head of Posco’s Corporate Strategy & Finance Center, during the steelmaker’s second-quarter earnings conference call.

Due to reconstruction of its third blast furnace in Pohang, North Gyeongsang Province, last June, Posco produced and sold less crude steel.

A total of 8,801 tons of steel were produced in the cited period compared to 9,081 tons made in the same period last year, the company said.

A drop in raw material prices-- iron ore and coal-- in the second quarter also led to decreased operating profit, the company said.

This means Posco was not able to factor in the higher raw material prices of products made in the first quarter into the final price.

Regarding US President Trump’s moves to review Section 232 of the Trade Expansion Act of 1962, which allows imposing tariffs or quotas on imports that threaten national security, Posco said, “The company will partly be affected if the provision is applied. But since the US slapped high anti-dumping and countervailing duties on South Korean steel products, exports to the US joint venture UPI have been cut off. So the US stands for a mere 1 percent of total exports.”

Posco Engineering & Construction, which recorded a loss of over 600 billion won last year alongside Posco Daewoo and Posco Energy, saw a surplus in the second quarter.

Sales of Posco’s world premium giga steel made up a record high of 56 percent of steel sales, up 10.7 percentage points year-on-year between April and June.

Posco highlighted that improved sales of the premium products boosted financial soundness and profitability, with the debt ratio dropped to 69.6 percent, the lowest since 2010.

“We anticipate a continued increase in demand for steel as a result of China’s steel industry restructuring and economic recovery of advanced countries,” Posco said.

On rosy prospects, Posco raised its yearly revenue outlook to 59.3 trillion won, up 4.5 trillion won from earlier this year.

The company’s shares that reached a 52-week high, closed at 327,000 won per share Thursday, up 2.99 percent from a day earlier on expectations that it will reap its best performance in six years this year. 

By Kim Bo-gyung (lisakim425@heraldcorp.com)