SeAH Besteel Q2 Operating Profit 18.8 Billion KRW... 25.2% Decrease YoY

[Asia Economy Reporter Hwang Yoon-joo] SeAH Besteel announced on the 10th that its consolidated operating profit for the second quarter of this year was 18.8 billion KRW, a 25.2% decrease compared to the same period last year. During the same period, sales dropped 28.6% to 564.7 billion KRW, and it recorded a net loss of 600 million KRW, turning to a deficit.

A SeAH Besteel official stated, "Due to the global economic recession caused by the COVID-19 pandemic and the downturn in demand industries, performance declined compared to last year," adding, "Since the third quarter of last year, operating profit has been gradually improving due to cost improvements and price defense of SeAH Changwon Special Steel."

In fact, SeAH Besteel's operating profit has shown an increasing trend, with -400 million KRW in Q3 2019, 2.8 billion KRW in Q4 2019, and 10.8 billion KRW in Q1 2020. Regarding net loss, although a net loss occurred in the second quarter due to corporate tax expenses recorded after reviewing the realizability of deferred tax assets, a cumulative profit of 17.7 billion KRW was recorded for the first half of this year.

On a separate basis, operating profit was 7 billion KRW, down 30.6% year-on-year, and sales shrank 42.9% to 276.9 billion KRW. Net profit increased by 314.1% to 22.7 billion KRW.

The poor separate performance is attributed to the contraction of front-end demand industries due to production stoppages at global automakers and logistics restrictions caused by export-import controls. The company explained that this led to a sharp decline in special steel sales and revenue. However, although the profit decline compared to the same period last year was inevitable due to the worsening external economy, active roll margin defense and cost improvement efforts led to a turnaround to profit after three consecutive quarters of losses.

Meanwhile, SeAH Changwon Special Steel's operating profit recorded 20 billion KRW, a 51.8% increase compared to the same period last year. Sales decreased by 9.6% to 276.1 billion KRW, and net loss increased by 251.7% to 15.3 billion KRW.