SEOUL, Apr. 24 (Korea Bizwire) — POSCO, South Korea’s top steelmaker, said Wednesday that its first-quarter earnings dropped 28 percent from a year earlier due to a slump in the steelmaking sector and a drop in steel prices.
Net profit reached 778 billion won (US$679 million) in the January-March period on a consolidated basis, compared with a profit of 1.08 trillion won a year earlier, the company said in a regulatory filing.
Operating income reached 1.2 trillion won, also down 19.1 percent from a year earlier, with sales remaining almost flat at 16 trillion won over the cited period, it added.
On a standalone basis, POSCO’s first-quarter net profit dived 12.7 percent on-year to reach 671 billion won. Sales rose 0.7 percent to 7.82 trillion won, while operating income dipped 18 percent to 833 billion won, compare to a year ago.
The company said that rising iron ore prices also helped dent its first-quarter earnings due to partially disrupted supply from Brazil and Australia. POSCO expected this year’s average iron ore price to be $10 higher than last year.
POSCO expects a slight recovery in steel prices down the road on the back of China’s economic stimulus measures and solid growth in emerging economies, but uncertainties over the global economy, coupled with a rise in the costs of raw materials, are expected to eat into its bottom line.
“We expect earnings in the second quarter to be lower than the first quarter since it would take some time to reflect rising raw material costs in our product prices,” the company said in its earnings conference call.
For the year, POSCO set its annual sales target at 66.3 trillion won on a consolidated basis.
Meanwhile, shares of POSCO dropped 0.96 percent to 258,500 won on the Seoul bourse. The earnings results were released before the market closed.