Seoul: POSCO Holdings Inc., South Korea's leading steelmaker, reported a significant decline in its second-quarter net profit, which plunged 85.5 percent compared to the previous year. The company attributed this sharp decrease to the imposition of steep U.S. tariffs and a general slowdown in global demand for steel products.
According to Yonhap News Agency, the net profit for the three months ending June 30 fell to 80 billion won (US$57.6 million), down from 550 billion won a year earlier, as disclosed in a regulatory filing by the company. A company spokesperson explained that the declining bottom line was primarily impacted by U.S. tariffs, weak demand for steel products, and increasing protectionism.
The United States has been maintaining a stringent 50 percent item-by-item tariff on all steel and aluminum imports, which has severely affected POSCO Holdings' profitability. Although South Korea recently reached a trade agreement with the U.S. to lower tariffs on several imports, including automobiles, from 25 percent to 15 percent, the agreement does not extend to steel and aluminum products. Furthermore, South Korea has committed to investing US$350 billion in the U.S. as part of the trade deal.
In addition to the net profit drop, POSCO Holdings experienced an 18.7 percent decline in operating profit, which fell to 610 billion won in the second quarter from 750 billion won a year ago. Sales also decreased by 5.1 percent, totaling 17.56 trillion won, compared to 18.51 trillion won during the same period last year.
The spokesperson noted that decreased equity gains from affiliates in rechargeable battery materials, such as POSCO Future M, further exacerbated the company's earnings challenges. This was due to rising operating costs and a decline in lithium prices amid a sustained slowdown in the electric vehicle (EV) sector.
In the first half of the year, POSCO Holdings' net income fell by 63.5 percent, reaching 420 billion won, down from 1.15 trillion won in the same period last year.