POSCO (NYSE:PKX) Posts Quarterly Earnings Results, Misses Expectations By $0.57 EPS

Key Points

• POSCO missed quarterly earnings expectations: EPS was $0.59 versus the $1.16 consensus, while revenue of $14.10 billion exceeded estimates of $13.51 billion.
• Operating performance improved: Q3 operating profit rose 48% year over year to KRW 945 billion, driven primarily by stronger steel results, higher selling prices, improved utilization and cost reductions.
• Headwinds remain in lithium and production: Falling lithium prices caused losses in the battery-materials business, while maintenance at Pohang Blast Furnace No. 2 is expected to reduce steel production and sales by about 430,000 tons through Q1 2027.

POSCO (NYSE:PKX - Get Free Report) released its quarterly earnings data on Monday. The basic materials company reported $0.59 earnings per share for the quarter, missing the consensus estimate of $1.16 by ($0.57), FiscalAI reports. The business had revenue of $14.10 billion for the quarter, compared to analyst estimates of $13.51 billion. POSCO had a return on equity of 1.99% and a net margin of 1.79%.

Here are the key takeaways from POSCO's conference call:

• Q3 operating profit rose to KRW 945 billion, up 15% quarter over quarter and 48% year over year, marking three consecutive quarters of improvement. Revenue was KRW 19.1 trillion, with steel the primary earnings driver.
• POSCO’s steel operating profit increased to KRW 455 billion as higher selling prices, stronger production utilization, and energy and labor cost reductions offset a 4.4% quarter-over-quarter rise in key raw-material costs. Infrastructure also improved, including a 24% year-over-year operating-profit increase at POSCO International.
• The lithium-materials businesses posted losses as lithium prices fell, inventory valuation losses reached KRW 29 billion, weather and maintenance reduced Argentina output, and high-cost feedstock pressured margins. Management expects some lithium operations to reach profitability next year, but Argentina Plant 2 is not expected to contribute operating profit during its initial ramp-up.
• Scheduled relining and related maintenance at Pohang Blast Furnace No. 2 will reduce crude-steel production and sales by roughly 430,000 tons through the fourth quarter and first quarter of 2027, although management expects operations to normalize after Q1.
• Net debt fell KRW 4.3 trillion quarter over quarter, reducing the net debt-to-equity ratio to 18.4% after asset sales and operating cash generation. POSCO also advanced its growth strategy through LFP cathode expansion, completion of Argentina’s second lithium plant, and the acquisition of Marcellus shale-gas assets.

POSCO Stock Up 5.5%

NYSE PKX opened at $52.42 on Monday. POSCO has a 1-year low of $48.50 and a 1-year high of $92.40. The company has a market capitalization of $15.86 billion, a price-to-earnings ratio of 19.77 and a beta of 1.75. The stock's 50 day moving average is $57.54 and its two-hundred day moving average is $61.13. The company has a current ratio of 1.98, a quick ratio of 1.37 and a debt-to-equity ratio of 0.30.

Wall Street Analyst Weigh In

A number of research analysts recently commented on PKX shares. Wall Street Zen upgraded shares of POSCO from a "hold" rating to a "buy" rating in a research note on Saturday, August 1st. Weiss Ratings lowered shares of POSCO from a "hold (c-)" rating to a "sell (d+)" rating in a research note on Friday, October 9th. Finally, Zacks Research lowered POSCO from a "strong-buy" rating to a "hold" rating in a report on Tuesday, September 29th. One research analyst has rated the stock with a Buy rating, one has assigned a Hold rating and one has issued a Sell rating to the stock. According to MarketBeat, the stock presently has an average rating of "Hold".

About POSCO

POSCO is a South Korean steel producer and one of the world's major integrated steelmakers. The company manufactures a broad range of steel products, including hot- and cold-rolled steel, heavy plate, wire rod, stainless steel, galvanized steel, automotive steel and electrical steel.

POSCO operates large integrated steelworks in Pohang and Gwangyang, South Korea. Its products are used in automobiles, shipbuilding, construction, energy infrastructure, appliances and other industrial applications.

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