POSCO’s Net Profit Shrinks by 68.5% for 1Q

POSCO, South Korean top steel maker, announced on Friday the firm’s non-consolidated net profit decreased by 68.5% to 325 billion won in the first quarter of January-March from the same period of 2008. The firm’s crude steel output and steel sales volume decreased by around 25% year-on-year. The profits were impacted by high raw material costs, cheap exchange rate of won and lower output. POSCO expanded cost cut target to 1.3 trillion won per year for 2009 from the previously announced target of 958.4 billion won.

POSCO succeeded in 415.3-billion-won productive cost cut by improvement of energy efficiency of blast furnaces or application of operation technology for low cost during January-March. The firm also reduced raw material and fuel costs by lower consumption of iron ore pellet and hard caking coal.

The firm will continue investment such for construction of a new steel making plant in Pohang iron works or a new plate mill in Kwang-yang iron works to expand high value added steel production preparing for the demand recovery.

POSCO lowered crude steel output plan to 28 million tonnes in 2009 from the initial plan of 29-32 million tonnes, down by 15% from 2008. The firm revised down the sales target to 25 trillion won from the original target of 27-30 trillion won, down by 18% from 2008.