China Baosteel's H1 net profit tumbles, hurt by coronavirus, rising iron ore prices

Credit: REUTERS/© China Stringer Network / Reut

Baosteel's H1 net profit down 36.87% y/y

Net profit recovered in Q2 from the first quarter

Earnings drop due to the coronavirus, iron ore prices

BEIJING, Aug 27 (Reuters) - Baoshan Iron & Steel Co Ltd 600019.SS, China's top listed steel producer, said on Thursday net profit slumped 36.87% in the first six months of 2020, pressured by the coronavirus pandemic and climbing raw material prices.

The company, known as Baosteel, reported a net profit of 4.0 billion yuan ($581.45 million) for the period, compared to 6.34 billion yuan a year earlier, according to a filing to the Shanghai Stock Exchange.

"Due to impact from the coronavirus, downstream demand for steel plunged in the first quarter ... (while) iron ore prices fluctuated within high range," the company said in a statement, adding that the steel sector gradually recovered in the second quarter though prices for imported ore continued to dent profits.

For April-June period, Baosteel earned 2.47 billion yuan, Reuters calculations showed. That jumped 60.6% from the first quarter, but was still well below a net profit of 3.46 billion yuan it logged in the same period a year earlier.

China's benchmark iron ore futures prices DCIOcv1 have surged more than 60% so far this year on supply-side disruptions due to the pandemic as well as resilient demand amid Beijing's stimulus measures to shore up a slowing economy.

Most listed steel firms reported big drops in net profits for the first half, with some down more than 40% on an annual basis.

In the first six months of the year, Baosteel produced 22.43 million tonnes of steel products, compared to 24.3 million tonnes in the same period a year earlier.

The company expected China's steel output to remain at high levels in the second half of the year, while raw material prices could also stay elevated.

Baosteel's first half revenue was 129.8 billion yuan, down 7.9% from Jan-June 2019.

The steelmaker also plans to issue short-term bonds, it said in a separate filing.

($1 = 6.8794 Chinese yuan renminbi)

(Reporting by Min Zhang and Tom Daly; Editing by Kim Coghill)

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