POSCO net down 11.6% in 2011

POSCO, Korea's leading steelmaker, said Friday that its earnings in 2011 dropped 11.6 percent from a year earlier due mainly to low steel prices and increased costs of raw materials.

Net profit reached 3.7 trillion won ($3.31 billion) on a consolidated basis last year, compared with a profit of 4.19 trillion won a year earlier, the company said in a regulatory filing.

Sales rose 44 percent on-year to 68.9 trillion won during the period, while operating income slipped 0.3 percent to 5.41 trillion won, it said.

The figures encompass results from POSCO's domestic and overseas affiliates.

Shares of POSCO closed at 417,000 won on the Seoul bourse, down 0.36 percent. The 2011 business results were released after the market closed.

Costs of raw materials, including iron ore and coal, increased nearly 46 percent last year, but the increased costs were not fully reflected in steel prices, the steelmaker said.

"Price hikes helped boost overall sales, but costs of raw materials surged by a wider margin, hurting profitability," a company official said.

POSCO's crude steel output reached 37.32 million tons last year, up 10.7 percent from a year earlier, while steel product sales came in at a record 34.49 million tons last year, a gain of 9.6 percent from a year earlier.

For this year, the steelmaker aims to post sales of 70.6 trillion won on a consolidated basis, and plans to invest up to 9.5 trillion won on facilities and technologies.

The steelmaker also said it wants to make 38.3 million tons of crude steel this year, and sell around 35.4 million tons of steel products.

Chief Executive Chung Joon-yang said in an investor relations session that the first quarter will be the most difficult period for the steel industry.

"Overall, the first half will be difficult, but starting in the second half, (the business environment) will likely gradually improve," he added. (Yonhap)