BEIJING (Reuters) - China’s Baoshan Iron and Steel Co Ltd posted a 46 percent fall in net income in the first quarter from a year ago, its first drop in profit since 2015, and said it expects lower revenue in 2019 citing China’s sluggish auto industry.
The country’s largest listed steel maker, also known as Baosteel, reported a net profit of 2.73 billion yuan ($406.21 million) in the first three months of 2019, a statement filed to Shanghai Stock Exchange showed late on Wednesday. That compared to 5.02 billion yuan in the same period in 2018.
Revenue in the first quarter fell 3.1 percent from a year ago to 65.38 billion yuan, the company said.
“Demand from auto market was weak in the first quarter...Meanwhile iron ore prices hiked 15.5 percent from the prior quarter, which narrowed profit margins,” Baosteel said.
Rising iron ore prices was fueled by concerns over tight supply following a tailings dam burst at Brazilian miner Vale SA, killing hundreds of people, and a tropical cyclone in Western Australia, causing disruption to operations at iron ore mines and damage to port facilities.
China’s automobile sales fell 11.3 percent in the first quarter from a year earlier, the China Association of Automobile Manufacturers (CAAM) said earlier this month.
In the first three months of the year, Baosteel produced 11.22 million tonnes of iron and 11.84 million tonnes of steel.
In a separate filing on Thursday morning, Baosteel said it expected annual revenue to fall to 273.1 billion yuan. That compares to 304.78 billion yuan in 2018.
“Strong steel demand is expected in 2019 amid booming infrastructure demand...But we would face big challenges on auto sheet (metal), a major profit-making sector in our company, due to impacts from weak auto demand, electric vehicle transition and policy changes on auto imports tariffs,” Baosteel said.
The company said it planned to produce 45.46 million tonnes of iron and 48.18 million tonnes of steel in 2019.
Baosteel shares slid nearly 3 percent on Monday morning to 7.34 yuan, their lowest level in a month.
Reporting by Muyu Xu and Shivani Singh; editing by David Evans and Kenneth Maxwell