(LEAD) Hyundai Steel Q2 net plunges 67.6 pct on construction downturn

SEOUL, August 3 -- Hyundai Steel Co., South Korea's second-largest steelmaker, reported a staggering 67.6% drop in net profit for the second quarter, plummeting to 12.1 billion won (US$8.5 million) as construction activity languished. This sharp decline contrasts sharply with a net profit of 37.4 billion won in the same period last year. The company attributed the slump to the prolonged downturn in the construction sector, which significantly impacted its earnings.

Despite the challenging market conditions, Hyundai Steel managed to surpass market expectations with its net profit. Analysts had forecast a profit of 10.1 billion won, based on a survey conducted by Yonhap Infomax, the financial unit of Yonhap News Agency. Operating profit also experienced a decline, falling by 43.3% to 57.7 billion won, down from 101.8 billion won the previous year. However, revenues grew modestly by 2.7% to 6.1 trillion won, up from 5.94 trillion won during the prior quarter.

In an effort to improve profitability, Hyundai Steel is increasingly focusing on supplying steel products for key projects such as the nation's energy and artificial intelligence (AI) data center initiatives. The company's press release revealed this strategic shift. For the first half of the year, the company reported a net loss of 27.2 billion won, up from 17 billion won in the comparable period a year earlier.

Operating profit also declined by 11.2% to 73.4 billion won, compared to 82.7 billion won in the first half of the previous year. Nevertheless, sales remained positive, increasing by 2.9% to 11.84 trillion won, up from 11.5 trillion won.

Moreover, Hyundai Steel is in the process of constructing a 2.7 million-ton-per-year electric arc furnace (EAF) steel mill in Louisiana, set to be operational by 2029. This new facility will supply automotive steel to plants operated by Hyundai Motor Co. and Kia Corp. The company announced a $5.8 billion investment plan in March 2022 as part of Hyundai Motor Group's broader strategy to expand its presence in the United States.