August 28, 2008

Hyundai Steel Q1 profit up by 35% YoY

South Korea's second biggest steelmaker Hyundai Steel Co said that its first quarter profit surged by 35% YoY after increasing exports of steel used in autos and appliances and raised prices for construction products.

Hyundai Steel in a in a regulatory filing said that its net income rose to KRW 137.1 billion (USD 138 million) for the three months ended March 31st 2008 from KRW 101.9 billion a year earlier. That beats the KRW 133 billion median estimate of 14 analysts surveyed by Bloomberg.

Hyundai Steel's sales climbed by 28% to KRW 2.14 trillion with exports taking up 20%. Operating profit or sales minus the cost of goods sold and administrative expenses, jumped by 44% to KRW 223.5 billion. Rising demand for Hyundai Steel's products is enabling it to weather record increases in raw materials costs better than rivals such as Nippon Steel Corp. Hyundai Steel, which gets 62% of sales from construction products, raised prices as much as 46% this year.

Ms Kim Sung Woo a fund manager who helps manage USD 1 billion at Tong Yang Investment Trust Management Co said that “The steel industry in general looks in a good shape because companies are raising prices by more than increases in raw material costs.” She added that “Going forward, Hyundai's profit in the second quarter will be good as well since it is actively raising prices.''

Japan's Nippon Steel, the world's second-biggest mill, forecast last week a 41% decline in profit as material costs rise faster than it can raise prices. Annual iron ore costs jumped at least 65 percent from this month and coking coal tripled.