Seoul, April 20 (IANS) South Korea’s top steelmaker Posco said Friday that its operating profit dropped in the first quarter due to weak demand and high feedstock costs.
Consolidated operating profit, which includes profits from its local and overseas affiliates, reached 801 billion won ($703 million) in the three months ending March 31, down 40.9 percent from a year earlier, according to a regulatory filing.
Sales edged up 0.4 percent year-on-year to 16.31 trillion won during the first quarter, but net profit tumbled 41.2 percent to 643 billion won, reported Xinhua.
“Contraction in revenues and operating profits stemmed mainly from weak demand for steel products amid global economic downturn and input of high-priced raw materials that were purchased last year,” Posco said in a statement.
The steelmaker noted that steel demand was forecast to increase in the second quarter thanks to the expected recovery in major industries such as auto and shipbuilding sectors, but the firm cautioned that uncertainties at home and abroad will remain for the time being.
Posco planned to spend 8.9 trillion won this year in investment for securing feedstock and expanding into overseas markets, placing its 2012 sales target at 70.6 trillion won.
Posco is South Korea’s leading steelmaker, and dominates the domestic steel market with a market share of over 40 percent in most of its product mix such as hot-rolled coil, heavy plate, wire rod, cold-rolled coil, electrical steel and stainless steel.