"The sluggish Global recovery"
That’s the reason PKX gave for a 59% decline in 4th Quarter profits. That’s 59% LOWER than last year, which also sucked! Posco is the World’s 3rd largest steelmaker and they had issues with rising raw materials costs (duh!) that offset a 26% increase in sales because those sales are coming in at last year’s prices as the CEO says the company is unable to pass on higher costs to it’s customers (primarily car makers, train/rail and shipbuilders).
This is the REAL economy folks – it’s still very rough out there. Posco, like many others, does believe 2011 will be better but PKX is already trading back at $1111, down just a bit from $140, where they traded most of 2007, when the company earned $4Bn on $34Bn in sales. Last year, PKX earned $21M on $31Bn in sales and I don’t have the full year but analysts were looking for 634Bn Won of income in Q4 and got 525Bn (divide by about 1,100 for $$$) so a big 20% miss with 14 analysts covering one of the World’s biggest industrial firms. Do you see why I worry about expectations being a bit too rosy?
Over on that side of the World, the Shanghai Composite fell 1.3%, the BSE fell 1.7%, the Nikkei fell 0.8% but the Hang Seng, which is manipulated by the same Gang of 12 as the US markets, held flat at the week’s high of 24,283. Thank goodness for Hong Kong or we’d be worried about the 12.5% drop in the Shanghai since mid November but, thanks the the Hang Seng, we can ignore the mainland China Market and just talk up Hong Kong – as if that’s China and not just a trading vehicle used by the IBanks to paint the International tape.
Interesting little divergence between the Hang Seng (which most Americans think is the entire Chinese market) and the Shanghai Composite. Where is the China that is is driving the Global bull premise? Surely it is the golden line of the Hang Seng (Hong Kong population 7M vs. Mainland population 1.3Bn) – Pay no attention to that index behind the curtain!!!