South Korea’s largest steelmaker Posco saw its operating profit in the first quarter drop 19.1 percent from a year earlier as the slowing global economy dampened demand for its mainstay steel.

The company in its regulatory filing Wednesday reported its operating profit on a consolidated basis was 1.2 trillion won ($1.04 billion) in the first quarter, down 19.1 percent against the year-ago period and 5.4 percent from the previous three months.

On Wednesday, Posco shares finished 0.96 percent lower at 258,500 won.

Sales totaled 16 trillion won, up 1 percent on year but down 3.7 percent on quarter. Net profit plummeted 28.2 percent from a year earlier to 778.4 billion won.

The company in a conference call said its non-steel revenue helped it deliver a net profit margin of 7.5 percent and an operating profit of over 1 trillion won for the seventh straight quarter. Its trading arm Posco International is reaping stable profits from the development of Myanmar gas fields while Posco Energy continues to benefit from the increased sales price of liquefied natural gas, according to the company.

Posco’s separate financial statements showed an operating profit of 832.5 billion won, down 18 percent on year and 5 percent on quarter due to reduced prices. Sales reached 7.82 trillion won, adding 0.7 percent on year and 7.2 percent on quarter.

Posco added that it was able to prevent a further dent on its bottom line through expanded value-added offerings, whose sales jumped 13.5 percent from the previous quarter, and aggressive cost-cutting measures.

The company projected second-quarter earnings to worsen amid subdued global demand and rising commodity prices. But it also expected steel prices to pick up once China’s stimulus measures kick in.

The steelmaker plans to invest 6.1 trillion won on a consolidated basis this year, with 450 billion won already spent in the first three months.

Overall, the company said it planned to invest a total of 24 trillion won over the next three years, allocating 10 trillion won in steel and 3 trillion won in new growth areas.

By Kim Hyo-jin

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