POSCO Posts Weak 2012 Results - Analyst Blog
30 January 2013 - 8:20PM
Zacks
Korean steel maker,
POSCO (PKX) reported its fourth quarter and 2012
financial results on Jan 29, 2013. Results were weak in 2012 as net
income fell 35.8% year over year to KRW 2,386 billion (US$2.2
billion) or KRW 27,347 per share (US6.30 per ADR).
Revenue
POSCO’s consolidated revenue in
2012 was KRW 63,604 billion (US$58.6 billion), down 7.7% year over
year. Non-steel sectors performed well during the year, registering
a revenue increase of 2.3%. These were more than offset by a 6.1%
decline in steel sector revenue.
Crude steel production was at its highest level at 37.986 million
tons and represented a 1.8% increase over 2011. Finished product
sales were up 1.6%; export ratio of finished product sales was at
41.7% versus 38.6% in 2011. Demand for finished products was strong
from the Automobile end-market while weaknesses were noticed in
Home Appliances and Shipbuilding markets.
Margins
As a percentage of revenue,
increase in consolidated cost of goods sold has been noticed over
the years; from roughly 82.9% in 2010 to 86.8% in 2011 and 88.3% in
2012.
Selling and administrative expenses in 2012 soared 4.4% year over
year to KRW 3,808 (US$3.5 billion). Operating margin for the year
has gone down by 290 basis points to settle at 5.7%.
Balance Sheet
Exiting 2012, POSCO’s cash and cash
equivalents balance stood at KRW8, 527 billion (US$8.0 billion),
reflecting a year-over-year increase of 3.3%. Long-term liabilities
declined 5.6% and reached KRW 17,061 billion (US$16.0 billion).
Outlook
For 2013, management expects
consolidated revenue to be approximately KRW 66 trillion. Finished
product sales are estimated to be roughly 34 million tons; crude
steel production about 37 million tons while consolidated
investments are likely to be approximately KRW 7 to 8 trillion.
Global steel demand is likely to grow by 3% year over year in 2013;
being largely pushed by restocking activities in China and strong
demand from U.S, India and Southeast Asian countries.
POSCO currently has a Zacks Rank #1 (Strong Buy). Other stocks to
watch out for are Gibraltar Industries, Inc.
(ROCK) with a Zacks Rank #1 (Strong Buy) and ArcelorMittal
South Africa (AMSIY) and Commercial Metals
Company (CMC), both with a Zacks Rank #2 (Buy).
(AMSIY): ETF Research Reports
COMMERCIAL METL (CMC): Free Stock Analysis Report
POSCO-ADR (PKX): Free Stock Analysis Report
GIBRALTAR INDUS (ROCK): Free Stock Analysis Report
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