Steel Producer Poscos First-Quarter Net Profit Plunges 68.5%

South Korea's top steelmaker Posco said Friday its net profit plunged 68.5% year-on-year in the first quarter to 325 billion won (US$244 million) due to the global downturn. Operating profit for January-March slumped 70.7% to 373 billion won as demand from automakers and construction companies declined sharply. "Both sales and output dropped sharply as a global economic slowdown reduced demand from automakers and electronic companies," the world's fourth largest steelmaker said in a statement. "A weaker won and high raw material costs also increased production costs, hitting operating profit." Posco cut crude steel production in December for the first time since it began operations in 1973. It said Friday's result was still creditable. "While its European and Japanese competitors are cutting production by more than 40% and are expected to post operating losses for the first quarter, Posco managed to remain in the black," it said. "This is because Posco has secured price competitiveness through cost cuts, renovations and technological development." The firm said it cut overall costs by 415.3 billion won in the January-March quarter by injecting low-priced raw materials and improving fuel efficiency in blast furnaces. Posco has set its 2009 production target at 28 million metric tons of crude steel, down 15% year on year, and targets 25 trillion won in sales, down 18%. Copyright Agence France-Presse, 2009