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POSCO International (047050.KS) has reported third-quarter financial results that exceeded market expectations, bolstered by the robust performance of its energy and palm oil divisions. According to market analysts, the company is effectively broadening its revenue streams through a new long-term contract for U.S. liquefied natural gas (LNG), securing a balance between earnings stability and future growth potential as its operations now encompass gas production, storage, and global trading.
In a recent report, IBK Investment & Securities noted that POSCO International's operating profit for the third quarter reached 400.7 billion won ($275 million), outperforming the market consensus of 388.8 billion won. The energy division alone generated 239.1 billion won in operating profit, marking a 5.8% increase from the previous quarter. This growth was driven by higher output from Australia-based Senex and enhanced profitability in the power generation sector, which together offset a dip in earnings from gas fields in Myanmar.
Specific performance metrics highlighted that Senex doubled its operating profit year-on-year to 55.1 billion won, while the power generation business climbed to 85.2 billion won from 37.5 billion won in the prior quarter due to higher electricity pricing. Crucially for the agricultural sector, the company’s palm oil operations in Indonesia recorded an operating profit of 83.7 billion won. This success is attributed to strategic plantation acquisitions and refined production management. Analysts emphasized that the diversification of profit sources within the energy and agri-business segments is strengthening the firm's resilience against volatility in any single sector.
Trading of U.S. LNG has emerged as a significant new revenue pillar. POSCO International recently commenced shipments under a 20-year agreement with Cheniere for approximately 400,000 tons annually. By linking procurement to U.S. Henry Hub prices and utilizing free-on-board (FOB) terms, the company can pivot deliveries to higher-margin markets in Europe or Asia. Furthermore, the completion of a second LNG terminal in Gwangyang and the acquisition of U.S. shale gas assets—expected to close this month—are projected to generate significant long-term returns, with Mirae Asset Securities forecasting 80 billion won in operating profit from these assets by 2028.
However, the outlook for the fourth quarter suggests a potential temporary decline. Eugene Investment & Securities projects an operating profit of 306 billion won for the final quarter, citing scheduled maintenance at power facilities and gas fields. The report also flagged Indonesia’s drought conditions as a critical variable that could disrupt palm oil production. Despite these short-term headwinds, industry experts believe the structural growth factors underpinning POSCO International's diversified portfolio remain strong.
Source: Seoul Economic Daily