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Posco International’s Myanmar gas business sees sharp profit drop First-half operating profit from Myanmar gas field declines to the lowest ever

Translated by Ryu Ho-joung 공개 2021-07-28 07:52:30

이 기사는 2021년 07월 28일 07:48 더벨 유료페이지에 표출된 기사입니다.

Posco International Corp’s Myanmar gas business has recorded a sharp decline in operating profit as the South Korean trading company, part of industrial conglomerate Posco, faces growing concerns about its possible financial links with Myanmar’s military junta.

Overall, the company reported a strong second quarter, with revenue growing 62% year-on-year to 8.5 trillion won ($7.4 billion) – the highest quarterly revenue in its history – and operating profit up 26% to 170 billion won, according to its preliminary results released last Wednesday.

The company’s first half revenue and operating profit also rose to 15.6 trillion won and 297 billion won, respectively, up by 3.3 trillion won and 35.6 billion won year-on-year.

The gas business in Myanmar has represented a significant portion of the company’s total operating profit in recent years. Posco International started to sell gas from the fields in 2013. Since then, its annual operating profit has grown to more than 300 billion won, compared to the preceding six-year average of 162 billion won.

About 72% and 64% of the company’s 2019 and 2020 total operating profit, or 441.7 billion won and 305.6 billion won respectively, came from Myanmar’s gas fields, highlighting the importance of the business to the company’s ongoing revenue growth and profitability.

However, the gas business's operating profit plummeted to 30.4 billion won and 37.7 billion won in the first and second quarter of this year, with its contribution to the company’s first-half operating profit dropping to 22.93%, the lowest level since 2014.

A sharp decline in operating profit from the gas business was mitigated by strong results from the company’s other businesses. Posco International explained that revenue from the gas sales slightly decreased in the second quarter for seasonal reasons and increased collection of investment costs also reduced the gas business’s operating profit.

Sluggish results for the gas sales came as concerns are growing about the company’s possible financial links with Myanmar’s junta, which has been condemned globally for the coup and the deadly crackdown on pro-democracy groups. Posco International stressed that its gas business in the country is not directly related to the military government and all profits from the business are deposited with one of Myanmar’s state-controlled banks.

“A decrease in operating profit from our Myanmar gas business in the first half has nothing to do with the country’s political situation,” a Posco International representative said. “The decline was offset by increased profit from the trading business.” (Reporting by Sang-hee Park)
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