POSCO's steel profit recovers as its battery materials unit breaks ground in Vietnam

South Korea's POSCO group is asking investors to read two stories at once: a steel business climbing out of a slump, and a battery-materials unit spending abroad to become something other than a steelmaker.

The evidence landed on the same day. Holding company POSCO Holdings reported third-quarter operating profit of 940 billion won ($703 million), up 47.9 percent from a year earlier and its third straight quarter of improvement, on revenue of 19.1 trillion won ($14.3 billion).

POSCO Future M, which makes cathode and anode materials, reported operating profit of 70.9 billion won ($53 million), up 162.5 percent from the previous quarter and 22.5 percent from a year earlier, on revenue of 724 billion won ($542 million). Revenue was still 7.3 percent below the year-earlier quarter.

POSCO International, the group's trading and energy arm, reported operating profit of 401 billion won ($300 million), up 24 percent from a year earlier, on revenue of 9.03 trillion won ($6.75 billion). Its first-half figures show where the money comes from: the materials division took 86.6 percent of revenue but the energy division, at 13.4 percent of revenue, booked 397 billion won ($297 million) of operating profit against the materials unit's 380 billion won ($284 million).

The Vietnam project is where the two stories meet. POSCO Future M won approval in April, during a state visit to Vietnam, for a 357 billion won ($267 million) project to build the country's first electric-vehicle battery anode plant, and broke ground in July. The Ministry of Trade, Industry and Energy cites the plant as a showcase case at a meeting on Nov. 2 of a task force it convenes quarterly with five business associations and the Korea Trade-Investment Promotion Agency to turn presidential economic diplomacy into signed export and order contracts.

Trade Minister Park Jung-sung told the meeting that the priority is following through so that opportunities opened by economic diplomacy lead directly to actual exports and orders, describing the effort as a public-private team.

What the day's numbers do not show is whether POSCO Future M's quarterly jump is a trend or a bounce. Its revenue fell year on year even as profit rose, and its nine-month operating profit of 110 billion won ($82.1 million) is small beside the holding company's 2.47 trillion won ($1.85 billion). The Vietnam plant, approved in April and started in July, has yet to produce a cell.