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Posco’s Fiscal 2020 Hit by Virus but in Line With our Expectation; FVE Increased to KRW 270,000

Ken Foong, CFA Equity Analyst

Analyst Note

| Ken Foong, CFA |

Posco’s 2020 full-year results were slightly better than management guidance but in line with our expectation. Group revenue declined by 10.2% year over year to KRW 57.8 trillion, higher than the guidance by KRW 2.4 trillion, while EBIT fell by 37.9% year over year to KRW 2.4 trillion. The lower results were mainly driven by weaker earnings at its parent company (predominantly steel business), where EBIT fell by 56.1% year over year to KRW 1.1 trillion due to sluggish steel demand and lower steel prices amid COVID-19. Production and shipment of steel products dropped by 4.1% and 4.8% year over year, respectively, due to low utilization rate and the revamp of blast furnace number 3 at Gwangyang Works.

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Company Profile

Business Description

POSCO is the largest steel producer in South Korea and one of the top steel producers globally. It mainly produces flat steel and stainless steel from its two integrated steel facilities. It is exposed to the auto, shipbuilding, home appliance, engineering, and machinery industries. Posco controls around 40% of South Korean domestic market share and exports around 45%-50% of its steel products overseas, mainly to Asian countries. Through diversification, around 15%-20% of its revenue comes from non-steel and non-trading-related businesses.

Contact
POSCO Center, 440 Teheran-ro, Gangnam-gu
Seoul, 06194, Korea, Republic of
T +82 234571386
Sector Basic Materials
Industry Steel
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type
Employees 35,261

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