[Asia Economy Reporter Kum Bo-ryeong] Korea Zinc posted strong third-quarter earnings, driven by rising metal prices and improved performance of its subsidiaries.
According to Korea Zinc on the 28th, consolidated operating profit for the third quarter reached 267.362 billion KRW, up 28% year-on-year. Sales during the same period increased by 14.2% to 1.976169 trillion KRW.
Despite the decline in the KRW-USD exchange rate and a drop in spot treatment charges (Spot T/C) for zinc concentrate smelting, the rise in major metal prices had a positive impact. Compared to the previous quarter, zinc rose 19.4%, lead 12.4%, gold 11.8%, and silver 49.7%.
Kim Yoo-hyuk, a researcher at Hanwha Investment & Securities, explained, "Sales by metal were 419.3 billion KRW for zinc, 259.2 billion KRW for lead, 147.7 billion KRW for gold, and 474.3 billion KRW for silver, with silver sales growth standing out." Compared to the previous quarter, sales grew 3.7% for zinc, 14.4% for lead, 0.2% for gold, and 30.6% for silver.
This trend is expected to continue into the fourth quarter. Hana Financial Investment estimates Korea Zinc's fourth-quarter operating profit to increase 53% year-on-year to 270.6 billion KRW. Park Sung-bong, a researcher at Hana Financial Investment, analyzed, "Even for precious metals prices, which experienced a sharp rise until mid-August followed by a short-term correction, a renewed upward trend is expected due to factors such as a weak US dollar, the resurgence of COVID-19, and expectations for additional US economic stimulus measures. At the same time, considering the annual sales volume guidance, zinc and gold sales recovery is expected to be prominent in the fourth quarter."
Subsidiaries also contributed to the improved performance. Profits normalized as sales volumes recovered for SMC and Zinc Ox Corporation. Seorin Corporation contributed an operating profit of 28.9 billion KRW as metal gains were recognized due to rising zinc prices.
Lee Jong-hyun, a researcher at Kiwoom Securities, said, "Along with the recovery of the Chinese economy, the strong prices of non-ferrous metals such as zinc and lead have continued since the second quarter, and precious metal prices have clearly risen compared to last year and the first half of this year, so the company's stable profitability is expected to be maintained after the third quarter," adding, "Even if short-term momentum weakens, attention should be paid to stable earnings and dividend attractiveness."
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