Hyundai Steel’s second-quarter operating profit jumped 18.3 percent on-year to record 424.5 billion won ($363.5 million), buoyed by the construction market showing signs of recovery.

Although higher than a year ago, the figures released Friday fell short of projections of 446.5 billion won by seven major local stock firms, including Samsung Securities and Korea Investment & Securities. 

The steelmaker posted 3.7 trillion won in sales, down 11.3 percent, as price-competitive Chinese products caused falling global demand amid excess output. 

“The demand for construction is on a slow recovery, which helped push sales of steel rods. We’re seeing stable progress in our profit structure focusing on value-added steel products,” Hyundai Steel said in its statement Friday.

In July, Hyundai Steel completed its merger with Hyundai Hysco, which helped it enhance its capacity to quickly respond to global demand and gain more flexibility in production.

The company expects the deal to push the merged company’s annual sales to 25 trillion won ($22 billion), and make it the world’s eighth-largest steelmaker. 

Hyundai has been seeking to boost profits through cost reduction this year, which has been a challenging time for the steel industry globally.

The company said it expanded the use of low-cost raw materials and improved the energy efficiency at plants, which saved about 183.1 billion won in total in the first half of the year.

As for the automobile segment, Hyundai has boosted investment in special steel products, an area the company regards as a growth engine. Earlier this year, Hyundai took over Donbgu Special Steel to increase research and investment in special steel products. 

Earlier this month, Moody’s Investors Service revised Hyundai Steel’s Baa3 outlook to positive from stable in response to its merger with Hyundai Hysco.

By Suk Gee-hyun (monicasuk@heraldcorp.com)