Strong North America energy pipe sales drive results
Highest quarterly sales since 2018 holding company conversion
Operating profit reaches 93.3 billion won; up 134%
Net profit falls 58% from a year earlier
SeAH Steel Holdings posted record quarterly sales in the third quarter, driven by strong demand for energy steel pipes in North America. Operating profit more than doubled from a year earlier, and the company swung back to a profit after just one quarter as losses from its British offshore wind business narrowed.
SeAH Steel Holdings disclosed Wednesday that its consolidated sales for the third quarter reached 1.22 trillion won ($910 million), with operating profit coming in at 93.3 billion won.
Sales rose 32.3 percent from 923.1 billion won in the same period last year and were up 4.6 percent from 1.17 trillion won in the second quarter. The result marks the highest quarterly sales since the company converted to a holding company structure in 2018.
Operating profit surged 134.4 percent from 39.8 billion won in the third quarter of last year. The company had posted an operating loss of 50.8 billion won in the second quarter before returning to profit in the third. The operating profit margin rose to approximately 7.6 percent, up 3.3 percentage points from 4.3 percent in the same period a year ago.
Net profit for the period, however, fell 58.2 percent to 6.8 billion won from 16.2 billion won a year earlier. While the company recovered from a net loss of 74.6 billion won in the previous quarter, the improvement in net profit was limited compared with the gains in operating profit.
The North American energy market was the primary driver of the improvement. Sales volumes of steel pipes used in US oil and gas development increased, and higher product prices boosted profitability at the company's Americas sales subsidiaries.
Growing demand for steel pipes tied to AI data center construction also contributed to sales growth. Structural steel pipes and stainless steel piping materials are used in data center projects. Even as logistics uncertainty persisted in the Middle East, pipe sales for North American energy and data center applications underpinned the overall results.
A reduction in losses from the British offshore wind business also helped. SeAH Wind, SeAH Steel Holdings' UK subsidiary, had weighed on the holding company's overall profitability in the second quarter after booking provisions related to offshore wind projects.
In the third quarter, however, those losses shrank, contributing to the swing back to a consolidated operating profit. SeAH Wind is still ramping up output and utilization rates following large-scale capital investment, and it is expected to take time before the unit achieves stable profitability.
Key subsidiary SeAH Steel also returned to profit. SeAH Steel's consolidated sales for the third quarter reached 477.2 billion won, up 43.8 percent from the same period last year. Operating profit came in at 20.2 billion won, reversing an operating loss of 5.2 billion won a year earlier.
Domestic pipe sales volumes increased, and higher raw material costs were passed through to product prices, improving margins. On the export side, pipe shipments to the United States recovered, while higher selling prices for North American oil-country tubular goods and increased data center pipe sales added to the earnings improvement.
US trade policy remains a key variable for future performance. The US Department of Commerce finalized a dumping margin of 9.80 percent for SeAH Steel in an administrative review of antidumping duties on Korean oil-country tubular goods in September. A 50 percent US tariff on steel products also continues to weigh on the company, potentially affecting export volumes and selling prices.
In response, SeAH Steel Holdings plans to upgrade equipment at its US manufacturing subsidiary SeAH Steel USA and expand the supply of high-value-added products. The company said it will adjust its sales strategy to focus on higher-margin products, taking into account the burden of tariffs and logistics costs.
In the North American energy market, demand for oil-country tubular goods and line pipe is expected to continue into the fourth quarter. Demand for piping materials used in AI data center construction is also projected to grow.
The company is also pursuing expansion in the Middle East. It plans to leverage local production facilities as orders for major gas field and offshore projects that had been delayed begin to materialize. SeAH Steel Holdings said it expects revenue from high-value-added projects — particularly the Middle East Dorra gas field project — to begin flowing in earnest.
SeAH Wind in the UK will continue producing offshore wind substructures under existing orders while gradually raising factory utilization rates. The subsidiary aims to stabilize its production system while also pursuing new project orders.
kwater@heraldcorp.com
