SeAH Steel Holdings posted an operating loss of more than 50 billion won ($35.3 million) in the second quarter despite growing sales by more than 20%, as its UK offshore wind unit booked a large one-time charge that overshadowed strong pipe sales in North America. The loss came even as core subsidiary SeAH Steel lifted its operating profit by more than 50%.
SeAH Steel Holdings disclosed Friday that its consolidated second-quarter sales reached 1.17 trillion won, while it recorded an operating loss of 50.8 billion won. Sales rose 23.2% from the same period last year, but the bottom line swung from an operating profit of 65 billion won a year earlier to a loss. Net loss for the quarter came to 74.6 billion won.
Compared with the first quarter, sales climbed 35.0%. Operating profit, which had stood at 19.2 billion won in the first quarter, turned to a loss, and the net loss more than doubled from 30.2 billion won.
Growth in sales was driven by the North America pipe business. Despite ongoing uncertainty — including delays in raw material deliveries from the Middle East caused by logistics disruptions in the Strait of Hormuz stemming from the US-Iran war — sales volumes and prices for oil and gas pipes in North America both rose.
Higher prices for SeAH Steel's domestic and export products, along with increased demand for LNG pipelines, also contributed to the sales increase.
The drag on earnings came from costs at the UK offshore wind business. SeAH Wind booked as a one-time provision — at the point of contract finalization for the Norfolk Vanguard project — both initial depreciation charges on production facilities built to handle large offshore wind projects and estimated future costs expected to be incurred.
The company said the decision to recognize anticipated future costs in the current quarter pushed operating results into the red, but added that the provision should significantly reduce uncertainty surrounding large-scale expenses going forward.
SeAH Wind has begun commercial production and plans to recognize revenue from the Norfolk Vanguard project on a phased basis starting in the second half.
SeAH Steel Holdings has continued to invest in the offshore wind business. In June, SeAH Steel decided to inject an additional 71.1 billion won into SeAH Wind to stabilize its facilities and secure operating funds for the project. Following the investment, SeAH Steel's stake in SeAH Wind stands at 39.49 percent.
By contrast, SeAH Steel — which handles the domestic pipe business — improved its standalone earnings. Its second-quarter sales reached 457.7 billion won, up 19.2% year on year, while operating profit jumped 54.3% to 32.6 billion won. Compared with the first quarter, sales and operating profit rose 10.0 percent and 40.3 percent, respectively.
In the domestic market, the company passed on higher raw material costs through product price increases and improved raw material management, widening the spread between product prices and input costs.
On the export side, a weaker won against the dollar, an increase in US drilling rig activity, and higher prices for oil country tubular goods (OCTG) all contributed to improved profitability. SeAH Steel plans to expand sales of high-value-added pipes in the US oil and gas market through the second half.
SeAH Steel Holdings forecast that demand and prices for pipes in the North American market would remain relatively favorable in the second half, with sales of OCTG and line pipe expected to stay solid as US hot-rolled coil prices rise and drilling activity expands. The company also plans to upgrade equipment and quality at its US production unit, SSUSA.
In the Middle East, demand for oil and LNG infrastructure investment continues, but raw material procurement and shipping delays stemming from geopolitical uncertainty remain a risk. The company plans to secure volumes by focusing on post-war reconstruction and urgent-delivery projects.
SeAH Steel is also expanding into new demand segments. Building on its presence in energy transition areas such as LNG, carbon capture, utilization and storage (CCUS), and hydrogen, the company plans to gradually grow sales of specialty pipes — including stainless steel pipes and line pipes linked to data centers — to meet rising power demand from AI data centers.
Separately, SeAH Steel is broadening its energy transition pipe lineup. At Wire & Tube 2026, held in Dusseldorf, Germany, in April, the company showcased CCUS pipes alongside carbon steel and stainless steel pipes.
SeAH Wind is another key factor in the second-half earnings recovery. With full-scale production of the secured Norfolk Vanguard order set to ramp up, the company said it will focus on stabilizing early mass production and beginning revenue recognition. It also plans to pursue additional large project orders, backed by the UK government's offshore wind support policy.
kwater@heraldcorp.com
