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POSCO swings to 1 trillion won FY'16 profit

POSCO on Jan. 25 said it swung to a full-year 2016 net profit of 1.048 trillion South Korean won, compared to a year-ago loss of 96 billion won.

Revenue dropped to 53.084 trillion won from 58.192 trillion won in 2015, while operating profit increased to 2.844 trillion won from 2.410 trillion won.

Consolidated EBITDA likewise improved year over year to 6.1 trillion won in 2016 from 5.6 trillion won in 2015.

The steelmaker achieved some 5.8 trillion won worth of financial improvement through restructuring its business portfolio in 2016. Crude steel output hit 37.5 million tonnes in 2016 and is forecast to fall to 37.0 million tonnes this year, with product sales falling to 34.6 million tonnes from 35.9 million tonnes in 2016.

For this year, POSCO targets consolidated revenue of 54.8 trillion won and planned CapEx of 3.5 trillion won, which is higher than 2016 CapEx of 2.5 trillion won.

The company expects its net debt to reach 13.4 trillion won in 2017, down from 15.1 trillion won at the end of 2016.

POSCO noted that global steel demand will grow 0.3% year over year to 1.51 billion tonnes in 2017 as Chinese demand will fall 1.0% to 675.5 million tonnes.

The company forecasts prices for iron ore fines to average between US$60 per tonne and US$70 per tonne this year as new supply is expected to enter the market from new projects, as well as the expansion of small and medium-sized mines.

Meanwhile, the company expects hard coking coal prices to average between US$180 per tonne to US$190 per tonne in 2017, depending on the Chinese government's coal capacity-cutting measures.

As of Jan. 24, US$1 was equivalent to 1,164.19 South Korean won.