1. Daechang Steel H1 2025 Earnings: Key Highlights

Daechang Steel reported revenue of KRW 104.7 billion, an operating loss of KRW 0.9 billion, and a net loss of KRW 2.4 billion for the first half of 2025. Revenue slightly decreased year-over-year, while both operating and net income turned negative.

2. Analyzing the Downturn: Steel Sector Struggles and Rising Costs

The primary drivers of this downturn are declining capacity utilization and falling sales prices within the steel segment. Low capacity utilization rates at the Incheon (42.35%) and Seosan (17.31%) plants increased fixed cost burdens. Additionally, rising SG&A and other expenses, coupled with non-operating losses, contributed to the decline in profitability.

3. Positive Signals: Improved Financial Health and New Business Ventures

  • There are positive aspects to consider. Operating cash flow turned positive at KRW 18 billion, and the debt-to-equity ratio remains healthy at 25%. This improvement is attributed to better inventory turnover and the reversal of bad debt provisions.
  • Furthermore, Daechang Steel is actively pursuing future growth drivers. These include the growth potential of the double flooring business, the potential restart of the aluminum business, and new ventures in batteries and industrial robots.

4. Investment Strategy: Watch and Wait, Proceed with Caution

While Daechang Steel possesses a stable business foundation and growth potential, the short-term decline in profitability is a concern. Investors should carefully monitor the steel industry’s recovery, the growth trajectory of the double flooring business, and the performance of new ventures before making any investment decisions.