[Asia Economy Reporter Park So-yeon] Hyundai Steel announced on the 27th that its consolidated operating profit for the third quarter of this year was preliminarily estimated at 33.4 billion KRW, a 2.1% decrease compared to the same period last year. Sales amounted to 4.4616 trillion KRW, down 11.6% from the same period last year. The net loss narrowed to 44.7 billion KRW.
Hyundai Steel continued its operating profit in the third quarter following a return to profitability in the second quarter, driven by increased sales volume and improved sales mix due to the recovery of the global automobile market.
Despite a reduction in scale due to business restructuring, seasonal off-season effects, and the impact of the COVID-19 pandemic, Hyundai Steel analyzed that it achieved operating profit thanks to sales of high value-added products, recovery of overseas subsidiaries' operating rates, and intensive cost reduction efforts.
Hyundai Steel explained that while the electric furnace division's profitability was sluggish due to a decline in selling prices caused by weakened construction demand from adverse weather and rising scrap steel prices, the blast furnace division was able to maintain profitability through increased production and sales supported by the recovery of domestic and overseas automobile demand.
A Hyundai Steel official said, "In the fourth quarter, we expect to realize profits through normalization of automobile steel sheet sales volume and price increases in distribution channels. Additionally, we will secure profitability in long products through optimal production and sales management, and gradually recover performance by reducing losses in low-profit areas through business restructuring."
Improvements in profitability are also expected from the ongoing business structure reform. Hyundai Steel has been carrying out business restructuring since early this year. In April, 'Hyundai IFC Co., Ltd.', which was spun off from the forging business division, achieved profitability in the second quarter through early normalization.
The 'thin plate hot rolling' at Dangjin Steelworks, an electric furnace hot rolling operation, has contributed to profit improvement by producing high value-added products after suspension of operations. Additionally, the color steel sheet facility, which was at a competitive disadvantage compared to rivals, has been shut down, expecting to reduce business losses.
Alongside this, Hyundai Steel is focusing the company's capabilities on achieving qualitative growth centered on profitability by accelerating the pursuit of high value-added product markets, enhancing the performance of production facilities company-wide, and building smart factories.
In particular, to respond to the high value-added market in the plate division, a hot stamping plant was newly established in the Czech Republic, laying the foundation for rapid response to global sales through local production. Furthermore, Hyundai Steel is accelerating its high value-added market penetration by developing high-profit new steel grades targeting global automakers and expanding steel grade certifications for large automakers.
Moreover, Hyundai Steel is expanding steel materials for renewable energy projects by developing ultra-thick materials and high-strength steel for offshore wind power.
In the long products division, Hyundai Steel plans to respond to demand for construction steel such as ultra-thick steel by completing the rationalization of large rolling at the Incheon plant, which involved an investment of 100 billion KRW, by the end of this year. In October, Hyundai Steel became the first in Korea to develop a new seismic rebar steel grade (SD700S), proactively responding to demand for seismic steel and leading efforts to ensure building safety.
Hyundai Steel has also improved key production indicators such as quality and operating rates through company-wide HIT innovation activities to strengthen business competitiveness. Based on successful cases in smart factory-related divisions, the company is expanding these initiatives company-wide and accelerating smart factory construction.
Meanwhile, Hyundai Steel is accelerating the expansion of its hydrogen business by presenting a mid- to long-term hydrogen vision to build a hydrogen ecosystem in line with Hyundai Motor Group’s transformation into a future mobility solutions company. It plans to increase hydrogen production capacity from the current 3,500 tons to up to 37,200 tons annually and promote eco-friendly power generation using fuel cells. Hyundai Steel also intends to establish a mutually beneficial business model through cooperation with various operators across the supply chain, including production, transportation, and sales.
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