Hyundai Steel's 2024 Performance Overview: A Year of Decline and Strategic Transformation
Hyundai Steel, one of South Korea’s leading steel producers, released its financial results for 2024 on the 22nd, revealing a challenging year due to several factors, including weak construction conditions and a surge in the importation of low-cost steel materials. Despite facing these hurdles, Hyundai Steel has outlined its strategy for recovering profitability and strengthening its global position.
2024 Consolidated Financial Results
In 2024, Hyundai Steel posted consolidated sales of 23.2261 trillion won (approximately $17.8 billion), marking a decline of 10.4% compared to the previous year. The company’s operating profit fell sharply by 60.6%, totaling 31.44 billion won (around $24 million), while its net profit dropped by 72.2%, amounting to 123.2 billion won (approximately $95 million).
The downturn in sales and profits is largely attributed to sluggish construction activities, which weakened steel demand, coupled with the influx of low-cost steel imports that intensified price competition in the market.
Fourth Quarter Performance
In the fourth quarter of 2024, Hyundai Steel reported sales of 4.4835 trillion won (around $3.4 billion), with operating profit of 700 million won (approximately $530,000) and net profit of 1.8 billion won (roughly $1.4 million). The operating profit was down significantly by 31.4 billion won (about $24 million) compared to the same period in 2023. The company attributed this decrease to the higher costs of electricity, a critical input in steel production, resulting from rising energy prices.
Strategic Initiatives to Improve Profitability
To address these challenges and enhance its financial performance, Hyundai Steel is focusing on improving its profitability through higher-value steel products. This includes increasing its production of high value-added plate products, which are expected to offer better margins than traditional products. Additionally, Hyundai Steel is placing a greater emphasis on boosting the competitiveness of its long steel products, which are commonly used in construction and infrastructure projects.
Sales and Production Plans for 2025
Looking ahead to 2025, Hyundai Steel has outlined its sales and production goals, forecasting a 5.5% increase in sales to 18.01 million metric tons. The company plans to expand its output of hot-rolled products by 490,000 tons, while maintaining cold rolling and back plates at the same production levels as 2024. Additionally, Hyundai Steel expects a significant increase in its reinforced steel products by 220,000 tons, driven by a recovery in the construction sector.
Global Expansion and U.S. Steel Mill Investment
Hyundai Steel is actively exploring investment opportunities, particularly in the U.S. steel market. The company is considering establishing a steel mill in the United States, although specific details and timelines for this potential investment have not been disclosed.
Additionally, Hyundai Steel is focusing on expanding its global footprint by investing in the automotive steel sector. The company is building infrastructure in Georgia, USA, and Pune, India, to bolster its ability to supply automotive steel sheets. This investment is part of the company’s long-term strategy to enhance its global car steel plate supply capacity, with a focus on high-value-added products, such as third-generation steel plates, which offer superior performance for the automotive industry.
Anti-Dumping and Trade Policy Efforts
Hyundai Steel has filed an anti-dumping complaint to protect its interests against unfair trade practices. The company is awaiting a preliminary decision from the Trade Commission regarding its complaint, which is expected by early March 2025. At the same time, China and Japan have submitted similar complaints, with investigations possibly commencing by late February.
In response to increasing trade and carbon regulatory risks, Hyundai Steel plans to expand its sales of automotive steel products in Europe, including markets like the Czech Republic, Slovakia, and Turkey. The company is proactively addressing potential trade barriers and carbon-related regulations to ensure a steady supply of steel to these regions.
Future Outlook
Hyundai Steel remains committed to adapting to the evolving steel market and global trade landscape. By focusing on higher-margin products and expanding its international infrastructure, particularly in the automotive steel sector, the company aims to solidify its position as a leading player in the global steel industry.
As Hyundai Steel works toward these goals, it faces the dual challenge of rising input costs and the growing competition from low-cost steel imports. However, its emphasis on value-added products and strategic global expansions positions it well for future growth despite the pressures of the current market environment.
By continuing to invest in technology, infrastructure, and international partnerships, Hyundai Steel hopes to overcome the challenges of 2024 and return to profitability in the coming years.
