SeAH Besteel Holdings Posts Q3 Operating Profit of KRW 14.4 Billion, Down 46.4% YoY
Revenue rises 14.1% to KRW 1.0563 trillion
Cost pressures erode profitability
SeAH Besteel Holdings seeks to improve profitability by focusing on high-value-added products
SeAH Besteel Holdings' operating profit nearly halved due to intensifying competition from low-priced Chinese imports and cost pressures, despite an increase in revenue in the third quarter of this year.
SeAH Besteel Holdings said in a regulatory filing on Oct. 29 that it recorded consolidated revenue of KRW 1.0563 trillion and operating profit of KRW 14.4 billion in the third quarter of this year. Revenue rose 14.1% from the same period last year, while operating profit fell 46.4%.
Revenue increased as product sales volumes at SeAH Besteel and SeAH Changwon Special Steel grew, and some of the rise in raw material prices was reflected in selling prices. However, the company was unable to fully pass on higher raw material costs because of intensifying competition from low-priced imports. In addition, increased logistics costs amid instability in the Middle East and greater exchange-rate volatility narrowed the roll margin, or the difference between selling prices and raw material costs.
Among its major affiliates, SeAH Besteel posted a 16.0% increase in revenue year over year, supported by demand in the eco-friendly vehicle, defense, and heavy equipment sectors. However, operating profit fell 34.4% due to a greater influx of low-priced Chinese special steel and higher prices for raw and auxiliary materials, including steel scrap.
SeAH Changwon Special Steel also saw revenue rise 17.8% as sales of high-value-added stainless steel products to the artificial intelligence (AI) semiconductor and energy and power generation sectors expanded. However, operating profit fell 27.8% due to higher prices for raw materials such as nickel.
SeAH Aerospace & Defense Materials recorded declines of 3.6% in revenue and 31.8% in operating profit, respectively, as shipments were delayed following adjustments to production schedules by major customers.
SeAH Besteel Holdings expects whether anti-dumping duties will be imposed on Chinese bar steel to be a key factor in the domestic special steel market. The Trade Commission recommended imposing provisional anti-dumping duties after issuing a preliminary determination last September, and the government is scheduled to decide whether to impose the duties in mid-November.
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SeAH Besteel Holdings plans to improve profitability by expanding sales of high-value-added products, focusing on industries with steady demand, including eco-friendly vehicles, semiconductors, defense, and energy and power generation, and by improving process efficiency and cutting costs.
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