Korean steel maker,
) reported its fourth quarter and 2012 financial results on Jan
29, 2013. Results were weak in 2012 as net income fell 35.8% year
over year to KRW 2,386 billion (US$2.2 billion) or KRW 27,347 per
share (US6.30 per ADR).
POSCO's consolidated revenue in 2012 was KRW 63,604 billion
(US$58.6 billion), down 7.7% year over year. Non-steel sectors
performed well during the year, registering a revenue increase of
2.3%. These were more than offset by a 6.1% decline in steel
Crude steel production was at its highest level at 37.986 million
tons and represented a 1.8% increase over 2011. Finished product
sales were up 1.6%; export ratio of finished product sales was at
41.7% versus 38.6% in 2011. Demand for finished products was
strong from the Automobile end-market while weaknesses were
noticed in Home Appliances and Shipbuilding markets.
As a percentage of revenue, increase in consolidated cost of
goods sold has been noticed over the years; from roughly 82.9% in
2010 to 86.8% in 2011 and 88.3% in 2012.
Selling and administrative expenses in 2012 soared 4.4% year over
year to KRW 3,808 (US$3.5 billion). Operating margin for the year
has gone down by 290 basis points to settle at 5.7%.
Exiting 2012, POSCO's cash and cash equivalents balance stood
at KRW8, 527 billion (US$8.0 billion), reflecting a
year-over-year increase of 3.3%. Long-term liabilities declined
5.6% and reached KRW 17,061 billion (US$16.0 billion).
For 2013, management expects consolidated revenue to be
approximately KRW 66 trillion. Finished product sales are
estimated to be roughly 34 million tons; crude steel production
about 37 million tons while consolidated investments are likely
to be approximately KRW 7 to 8 trillion.
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Global steel demand is likely to grow by 3% year over year in
2013; being largely pushed by restocking activities in China and
strong demand from U.S, India and Southeast Asian countries.
POSCO currently has a Zacks Rank #1 (Strong Buy). Other stocks to
watch out for are
Gibraltar Industries, Inc.
) with a Zacks Rank #1 (Strong Buy) and
ArcelorMittal South Africa
Commercial Metals Company
), both with a Zacks Rank #2 (Buy).