POSCO, Korea’s largest steelmaker, posted operating profit of 921 billion won (about $900 million) in the first quarter, a 36 percent decrease from the same period last year, amid continuing high raw material prices.
In its earnings report released Friday, the company said it recorded sales of 9.1 trillion won, up 31 percent from the same period last year.
The steelmaker attributed the sluggish earnings to dull global industry and high costs.
“The steelmaking industry in and outside the country was not very favorable in the fourth quarter last year and we had purchased high-priced raw materials during that time,” a POSCO official said.
Yet the steelmaker said it is upbeat about a rebound in the April-June period as it plans to cut costs and boost sales of products with higher added values. The firm has saved 317 billion won from cost-cutting during the first quarter, it added.
The steelmaker has been reporting a quarterly operating profit of more than 1 trillion won for the past three years but posted 917 billion won in sales and 653 billion won in earnings during the October-December period last year.
Analysts also predicted that the steelmaker’s earnings would recover in the second quarter due to the March 12 earthquake and tsunami in Japan and recovering global industry.
“The firm is projected to record sales of over 10 trillion won for the first time and operating profit of 1.5 trillion won in the second quarter,” Eom Jin-seok, a Kyobo Securities analyst, said.
The firm’s recent decision to raise the prices of its major products by 16-18 percent will also positively influence its performance for the coming periods, market watchers said.
POSCO said Tuesday that it decided to increase the price of its products such as hot-rolled, cold-rolled and thick plates by 160,000 won a ton for orders coming from April 22. This was the first hike in 10 months and higher than the market expected.
By Koh Young-aah (email@example.com