Achieved sales of KRW 8.2823 trillion, operating profit of KRW 349.7 billion, and operating profit margin of 4.2%
Reached the highest quarterly profit margin ever, with operating profit exceeding market expectations by 25% due to strong performance in the energy sector
Maintained stable profits through a diversified business model despite challenging market conditions
POSCO INTERNATIONAL (CEO Lee Kye-In) publicly announced its business results for the second quarter of 2024 on the 25th.
The company reported ▲sales of KRW 8.2823 trillion (6.7% quarter-on-quarter increase), ▲operating income of KRW 349.7 billion (31.8% increase), and ▲operating profit margin of 4.2% (0.8% pt increase). (based on IFRS consolidated figures)
The operating profit for the second quarter exceeded the mean market forecast (consensus) of KRW 279.2 billion by 25%, marking the second consecutive quarter of strong performance driven by the energy sector beyond the market forecast. Additionally, the operating profit margin reached a record 4.2% this quarter, up from the previous record of 4.0% in the same period last year.
For the first half of this year, the company reported total sales of KRW 16.428 trillion and operating profit of KRW 615.1 billion, raising expectations for a full-year operating profit of over KRW 1 trillion just like the last year.
Financial strength has also improved. In the second quarter, continued debt repayments resulted in debt of KRW 5.8755 trillion and a net debt-to-equity ratio of 71%, each decreasing by KRW 499.6 billion and 8.9 % pt from the previous year. Consequently, the company maintained stable cash flow for investment, supported by earnings before interest, taxes, depreciation and amortization (EBITDA) of KRW 484.2 billion.
Examining the performance in detail, the energy sector generated operating income of KRW 199.6 billion, significantly boosted by increased sales volume from overseas gas fields. The power generation business also performed well, showing considerable year-on-year improvement in power utilization despite the off-season.
The materials business achieved an operating profit of KRW 147.6 billion in areas such as steel and *eco-friendly sectors. Despite challenges in the raw materials market and limited growth in the electric vehicle (EV) sector, the company continued to generate stable profits by diversifying its portfolio into ▲eco-friendly mobility parts, ▲palm oil, ▲secondary battery materials, and ▲high-performance steel materials.
*Including eco-friendly industrial steel, ferrous scrap, and secondary battery materials
Additionally, the traction motor core business faced delays in deliveries due to sluggish EV demand, but still reported sales of KRW 81.2 billion by globally selling the products for 430,000 units.
In the second half of the year, the company aims to strengthen its foundation for future growth by balancing strategic and new businesses, including energy and materials, in light of the unstable external conditions characterized by geopolitical risks, falling commodity prices, and sluggish product demand.
Particularly, the company plans to expand its value chain by leveraging its unique E&P capabilities as the only private company in Korea engaging in the exploration, development, production, and sale of deepwater natural gas fields overseas.
As its subsidiary in the energy sector, Senex Energy is expected to accelerate the goal of ‘tripling production by 2025,’ following the environmental approval received from the Australian federal government. Additionally, new exploration efforts in Malaysia and Indonesia are stably progressing.
In the terminal business, POSCO INTERNATIONAL aims to increase storage capacity through the entire completion of Gwangyang LNG Terminal 1 and the construction of LNG Terminal 2, while establishing a strong presence in the new market of sea trial and bunkering.
The traction motor core business will work to boost its market share by expanding its global production infrastructure, despite a contraction in demand for EVs. In the second quarter alone, the company secured an order of additional 2.7 million units, bringing the total number of secured orders to 28.36 million units until 2030.
The new Mexican plant, which began operations this year, will focus on producing and receiving orders for electric and hybrid vehicles, while the Polish plant, set to be completed in the middle of next year, will cater to Hyundai Motor Group and Kia’s demand for EVs in Europe.
“We achieved the highest quarterly operating profit margin in our history due to strong performances in our energy, mobility, and agro sectors, as well as in traditional trading,” said an IR official at POSCO INTERNATIONAL. “We will continue to actively enhance shareholder value by consistently generating profit in the second half of the year.”