* Q2 operating profit falls 20 pct to 565 bln won
* Prices, overseas income hit by steepest won gain in 3 yrs
* Trims 2014 sales view; says China demand to slightly rise
(Adds comment from POSCO on local prices, restructuring)
SEOUL, July 24 South Korea's POSCO
reported the steepest quarterly profit decline in three quarters
as a strong local currency made the steelmaker's prices less
competitive in an export market where demand growth has been
POSCO in April-June had to contend with a South Korean won
strengthening against the U.S. dollar at its quickest rate in
three years. That made its products expensive abroad and reduced
the value of income earned in other currencies.
At the same time, POSCO on Thursday said it has been "under
enormous pressure" to lower prices from local automakers
including Hyundai Motor Co and General Motors Co's
Korean subsidiary, who are trying to fend off imported
vehicles made cheaper by the strong won.
The world's sixth-biggest steelmaker by output also said it
expected economic stimulus measures in No.1 steel consumer China
to raise demand and prices slightly during July-September, but
not enough to remedy a long-time supply glut.
As a result, POSCO said it now targets 2014 sales of 30.0
trillion won ($29.17 billion) rather than an earlier goal of
30.3 trillion won. In April-June, sales fell 4 percent to 7.42
Operating profit in the second quarter totalled 565 billion
won compared with a 578 billion won mean estimate of 21 analysts
polled by Reuters.
The profit result was 20 percent lower than the 703 billion
won of a year earlier, marking the steepest annual decline since
July-September last year.
Shares of POSCO closed 0.8 percent higher ahead of the
earnings announcement versus a 0.1 percent decline in the
broader market. The stock has fallen 1.8 percent so far
this year, compared with a 0.8 percent rise in the benchmark.
POSCO on Thursday said it aims to raise about 2 trillion won
by the end of 2015 through restructuring, after four years of
investment and acquisitions more than doubled its debt.
The sharp rise in debt led to a series of credit-rating cuts
by international raters and the company's first domestic cut in
20 years. The higher the credit rating, the easier and cheaper
it is to borrow money.
Chairman and Chief Executive Kwon Oh-joon took office in
March pledging to shed non-core businesses and reduce debt. Last
week, POSCO said it would sell three assets including a
liquefied natural gas terminal.
Last month, POSCO also said it had decided against buying
two subsidiaries of conglomerate Dongbu Group, citing financial
burden and difference over price.
($1 = 1028.4500 Korean Won)
(Reporting by Hyunjoo Jin; Additional reporting by Kahyun Yang;
Editing by Christopher Cushing)