POSCO Q1 net drops 33 pct on higher costs, low prices

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SEOUL, April 22 (Yonhap) -- POSCO, South Korea's leading steelmaker, said Friday that its first-quarter earnings sank 33 percent from a year earlier due to increased costs of raw materials such as iron ore and freezes in steel prices.
Net profit reached 927 billion won (US$858 million) in the January-March period, compared with a profit of 1.37 trillion won a year earlier, the company said.
Sales surged 31 percent to 9.11 trillion won over the cited period, while operating income plunged 36 percent to 921 billion won, it said.
Shares of POSCO closed at 481,000 won on the Seoul bourse, up 0.52 percent. The first-quarter business results were released after the market closed.
The steelmaker has held domestic steel prices flat for two consecutive quarters and has come under pressure from the South Korean government to contain prices due to rising inflation.
"POSCO has been struggling to cope with rising costs of raw materials, which should be reflected in prices," Byun Jong-man, an analyst at LIG Investment & Securities, said. "However, it did not pass along costs to customers."
Asia's fourth-largest economy, heavily dependent on energy and other commodity imports, is battling to curb inflation stoked by high prices of raw materials such as crude, grains, metals, coal and iron ore.
POSCO said its crude steel output increased 8.6 percent on-year to 8.94 million tons in the first quarter, with sales of steel products gaining 9.7 percent to 8.2 million tons.
POSCO said it set its sales target for this year to 40 trillion won, compared with last year's 32.6 trillion won, and aims to churn out 37 million tons of crude steel, up 10 percent from last year.
The steelmaker also said it is targeting 34.7 million tons in sales of steel products this year, up 10 percent from last year.
The company said it plans to spend 7.3 trillion won on facility investment and acquisitions this year, down from last year's 9.4 trillion won.
sam@yna.co.kr