S.Korea POSCO Holdings sees record Q1 profit as Ukraine crisis drives up steel prices

The logo of POSCO is seen at the company's headquarters in Seoul, South Korea, July 20, 2016. REUTERS/Kim Hong-Ji

SEOUL, April 25 (Reuters) - South Korea's POSCO Holdings (005490.KS) reported on Monday a better-than-expected 44% surge in first-quarter operating profit as higher revenue from rising steel demand in the opening months of 2022 outpaced stiff raw material costs.

Global steel demand is projected to grow 2.7% this year, higher than a 2.2% estimate from October, but the forecast is subject to uncertainties amid record global inflation and the war in Ukraine, the World Steel Association said this month.

POSCO, the holding company of South Korea's largest steelmaker said consolidated operating profit, including earnings from POSCO International and POSCO Chemical, rose to a record 2.3 trillion won ($1.84 billion) in the January-March quarter from 1.6 trillion won a year earlier.

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Analysts expected 1.72 trillion won in operating profit, according to Refinitiv SmartEstimate.

Revenue rose 33% to 21.3 trillion won.

The world's sixth-biggest steelmaker said in a conference call that its first-quarter profit rose as it "hiked prices starting in March to reflect the skyrocketing raw material costs such as nickel and coal."

Explosions at a steel mill in Ukraine crisis triggered concerns over supplies and drove up steel prices in Europe and the United States, the company said.

It has reached an agreement with automakers to raise steel prices for the next quarter but price negotiations with three major South Korean shipbuilders have not finished, it said.

POSCO Holdings shares fell 3% after the earnings announcement, while the wider market (.KS11) fell 1%.

POSCO Holdings shares closed at 286,000 won, down 3.2%.

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Reporting by Byungwook Kim and Joyce Lee; Editing by Christian Schmollinger and Louise Heavens

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