SEOUL, Oct. 20 (Korea Bizwire) - POSCO Co., South Korea’s largest steelmaker, said Tuesday that it swung to a net loss in the third quarter amid tough market conditions at home and abroad and a one-time charge for a patent suit settlement.
Its consolidated net loss amounted to 658.24 billion won (US$582.5 million) during the July-September period, compared with a 224 billion profit a year earlier, the company said in a regulatory filing.
Operating profit slipped 5 percent on-year to 651.91 billion won in the three-month period, and sales also retreated 7.9 percent to 13.99 trillion won.
The company said its third-quarter loss stemmed from a combination of foreign exchange losses, valuation losses on its overseas mines following a collapse in oil prices and a patent compensation settlement.
Last month, POSCO agreed to pay 300 billion won in compensation to its Japanese rival Nippon Steel & Sumitomo Metal Corp. (NSSMC) to finalize a patent infringement dispute over a steel-processing technology.
The legal dispute began in April 2012 when NSSMC filed a suit against POSCO in Japan and the United States for a possible violation of its patent for a grain-oriented electrical steel sheet, which is a high-performance steel plate used in transformers and electric vehicles.
POSCO alone logged 346 billion won in net profit in the third quarter, while posting 6.29 trillion won in sales and 638 billion won in operating earnings on the back of restructuring efforts to sell non-core units and overseas assets to cut debt.
The steelmaker last month sold a 38 percent stake in its construction unit, POSCO Engineering & Construction, to Saudi Arabia’s Public Investment Fund for 1.23 trillion won, which helped cut the company’s debt ratio by 2 percentage points to 84.9 percent at end-September.
The company also said it will have senior executives buy stocks in one of seven affiliates with over 10 percent of their salaries and push for quarterly dividends to boost its share prices.
Shares of POSCO fell 1.64 percent to 179,500 won on the Seoul bourse Tuesday, versus the broader market’s 0.45 percent surge. The earnings were disclosed after the stock market closed.
This year, its shares have dropped 36.6 percent on concerns over worsening margins amid a supply glut from Chinese manufacturers.