POSCO (NYSE: PKX) reported 1Q 2010 earnings yesterday. The South Korean company, one of the best steel manufacturers in the world, looks to have had another very solid quarter. I'm guessing that they will soon be earning at least $ 3.5 to 4.o billion/year.
Obviously, the steel business is very cyclical yet unlike many steelmakers, POSCO remained profitable in 2009. POSCO earned $ 2.82 billion in a year where most competitors lost money or struggled to break even. Impressive financial performance considering the economic stresses of 2009. In contrast, US Steel (NYSE: X) went from earning $ 2.1 billion in 2008 to losing $ 1.4 billion in 2009.
The market value of POSCO is ~$ 37 billion (@ the current ADR price of ~$ 121/share). Not cheap relative to earnings for a steel company but they appear to be a solid business within a tough industry.
Here is an article in the Wall Street Journal on POSCO's 1Q earnings. Net profit for the most recent quarter was $ 1.29 billion.
Adam
Small long position in POSCO
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Applying Newton's Fourth Law
Origin of Newton's 4th Law?
"Long ago, Sir Isaac Newton gave us three laws of motion, which were the work of genius. But Sir Isaac's talents didn't extend to investing: He lost a bundle in the South Sea Bubble, explaining later, 'I can calculate the movement of the stars, but not the madness of men.' If he had not been traumatized by this loss, Sir Isaac might well have gone on to discover the Fourth Law of Motion: For investors as a whole, returns decrease as motion increases." - Warren Buffett
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Find good businesses; buy at nice discounts to value; stay within limits & stick to what's understandable (necessarily unique for each investor); minimize trading, frictional costs, & errors of all kinds.
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"Warren and I have not made our way in life by making successful macroeconomic predictions and betting on our conclusions.
Our system is to swim as competently as we can and sometimes the tide will be with us and sometimes it will be against us. But by and large we don't much bother with trying to predict the tides because we plan to play the game for a long time.
I recommend to all of you exactly the same attitude.
It's kind of a snare and a delusion to outguess macroeconomic cycles... ...very few people do it successfully and some of them do it by accident. When the game is that tough, why not adopt the other system of swimming as competently as you can and figuring that over a long life you'll have your share of good tides and bad tides?" - Charlie Munger
Our system is to swim as competently as we can and sometimes the tide will be with us and sometimes it will be against us. But by and large we don't much bother with trying to predict the tides because we plan to play the game for a long time.
I recommend to all of you exactly the same attitude.
It's kind of a snare and a delusion to outguess macroeconomic cycles... ...very few people do it successfully and some of them do it by accident. When the game is that tough, why not adopt the other system of swimming as competently as you can and figuring that over a long life you'll have your share of good tides and bad tides?" - Charlie Munger