South Korea’s SeAH Steel’s improvement in sales and profits in CY’21 are largely influenced by an increase in sales and increase in the share of high value-added products. The company’s improvement in performance last year was due to the economic recovery and increase in selling prices.
Demand up for pipes
Sales volume increased y-o-y owing to strong demand from major domestic and overseas downstream industries. Profits rose on the back of increased sales of high-margin products such as energy-oriented steel pipes thanks to the rise in international oil prices, and a flexible pricing policy that took into account the volatility of raw materials and exchange rates.
In fact, SeAH Steel’s sales and operating profits surged by 30.2% and 146.3%, respectively, last year, according to the 2021 business report submitted by the company to the Financial Supervisory Service.
Accordingly, the operating profit margin increased by 4.2% from 4.7% in CY’20 to 8.8% in CY’21.
The purchase price of hot-rolled (HR) products were recorded at KRW 993,000/tonne (t) ($803/t), a 62.8% increase from the previous year. However, the selling price of steel pipe products also increased by 41% to KRW 1,389,000/t ($1,123/t).
Considering that the production performance was recorded at 851,039 t, which decreased by 0.2% from the previous year, it seems that the increase in sales of high-margin products had a greater impact on sales and profits.
Outlook
In the case of SeAH Steel, it is expected that the growth in exports for oil wells and pipelines will bring significant improvement in profits following the surge in international oil prices, along with the increase in demand for steel pipes for energy such as LNG.
Note: This insight has been published in accordance with an article exchange agreement between SteelMint and SteelDaily.
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