Korean steel producer POSCO (PKX - Free Report) reported improved year-over-year results for second-quarter 2016. The company’s net income grew 88.9% year over year to KRW 221 billion ($0.19 billion). The improvement was driven by cost reduction and increase in gains derived from the share of profit from equity-accounted investees.
Net earnings per share were KRW 633.2 or US$0.54 per American Depository Receipt (“ADR”).
Revenues
POSCO generated revenues of KRW 12,857 billion ($11.1 billion) in second-quarter 2016. The top line exceeded the year-ago tally by 15.4%.
Crude steel production in the quarter totaled 9.007 million tons, down from 9.316 million tons in the year-ago quarter. Finished product sales inched down 0.8% year over year.
Margins
In the quarter, POSCO’s cost of sales declined 16.2% year over year. As a percentage of total revenue, cost of sales was 87.8% versus 88.7% in the year-ago quarter. Gross profit margin expanded 90 basis points (bps) to 12.2%. Selling and administrative expenses decreased 13.9% to KRW 891 billion ($0.77 billion).
Operating profit inched down 1% year over year to KRW 679 billion ($0.58 billion) while operating margin was up 80 bps to 5.3%.
Balance Sheet and Cash Flow
Exiting second-quarter 2016, POSCO had cash and financial goods balance of KRW 8,405 billion ($7.3 billion) versus KRW 8,514 billion (US$7.5 billion) recorded at the end of the preceding quarter. Non-current liabilities increased 4.2% to KRW 15,385 billion ($13.4 billion).
Outlook
The company maintained its 2016 financial guidance. For the year, POSCO expects consolidated revenues to be approximately KRW 58.7 trillion. Finished product sales are estimated at roughly 35.3 million tons, while crude steel production is projected to be nearly 37.2 million tons. Consolidated investments are likely to be KRW 2.8 trillion.
Zacks Rank & Stocks to Consider
With a market capitalization of $15.3 billion, POSCO presently carries a Zacks Rank #3 (Hold). Some stocks in the steel industry have been performing better than POSCO and, hence, have gained high investment values. Some better-ranked stocks in the steel industry include Olympic Steel Inc. (ZEUS - Free Report) , Schnitzer Steel Industries, Inc. and ThyssenKrupp AG (TYEKF - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy).
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Korean steel producer POSCO (PKX - Free Report) reported improved year-over-year results for second-quarter 2016. The company’s net income grew 88.9% year over year to KRW 221 billion ($0.19 billion). The improvement was driven by cost reduction and increase in gains derived from the share of profit from equity-accounted investees.
Net earnings per share were KRW 633.2 or US$0.54 per American Depository Receipt (“ADR”).
Revenues
POSCO generated revenues of KRW 12,857 billion ($11.1 billion) in second-quarter 2016. The top line exceeded the year-ago tally by 15.4%.
Crude steel production in the quarter totaled 9.007 million tons, down from 9.316 million tons in the year-ago quarter. Finished product sales inched down 0.8% year over year.
Margins
In the quarter, POSCO’s cost of sales declined 16.2% year over year. As a percentage of total revenue, cost of sales was 87.8% versus 88.7% in the year-ago quarter. Gross profit margin expanded 90 basis points (bps) to 12.2%. Selling and administrative expenses decreased 13.9% to KRW 891 billion ($0.77 billion).
Operating profit inched down 1% year over year to KRW 679 billion ($0.58 billion) while operating margin was up 80 bps to 5.3%.
Balance Sheet and Cash Flow
Exiting second-quarter 2016, POSCO had cash and financial goods balance of KRW 8,405 billion ($7.3 billion) versus KRW 8,514 billion (US$7.5 billion) recorded at the end of the preceding quarter. Non-current liabilities increased 4.2% to KRW 15,385 billion ($13.4 billion).
Outlook
The company maintained its 2016 financial guidance. For the year, POSCO expects consolidated revenues to be approximately KRW 58.7 trillion. Finished product sales are estimated at roughly 35.3 million tons, while crude steel production is projected to be nearly 37.2 million tons. Consolidated investments are likely to be KRW 2.8 trillion.
Zacks Rank & Stocks to Consider
With a market capitalization of $15.3 billion, POSCO presently carries a Zacks Rank #3 (Hold). Some stocks in the steel industry have been performing better than POSCO and, hence, have gained high investment values. Some better-ranked stocks in the steel industry include Olympic Steel Inc. (ZEUS - Free Report) , Schnitzer Steel Industries, Inc. and ThyssenKrupp AG (TYEKF - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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