Business

Posco lowers sales forecast amid global slowdown

  • 23 October 2012
  • From the section Business
Steel slab
Demand for steel has been hurt by a slowdown in the global economic recovery

Posco, the world's fourth-largest steel maker, has cut its sales forecast as Europe's debt crisis and slowing growth in China continue to hurt demand.

The South Korean firm forecast sales of 36.3tn won ($33bn; £22bn) for the current financial year, down from its previous estimate of 37.5tn won.

It also reported a weaker-than-expected net profit of 723bn won in the July to September quarter.

On Monday, ratings agency Standard & Poor's cut its credit rating for Posco.

"In our view, macroeconomic uncertainties make it unlikely a global slowdown in demand for steel will turn around quickly," the ratings agency had said.

The slowdown, especially in China - the world's biggest consumer of steel - has not only hurt demand but also resulted in a fall in prices and dented the profit margins of steel makers.

Standard & Poor's warned that slowing growth in China may squeeze profit margins further at firms such as Posco.

"We expect spare steel capacity in China to be significant and, as a consequence, an overflow of steel into neighbouring countries such as Korea to continue to be the main culprit behind lower profitability in the regional steel industry," it said.

More on this story

Related Internet links

The BBC is not responsible for the content of external Internet sites