South Korea's top steelmaker Posco has reported a 40.9 per cent drop in consolidated operating profit at 801 billion won ($703 million) for the quarter ended March 31, against the same period last year.
The company said the drop was due to weak demand and high feedstock costs.
"Contraction in revenues and operating profits stemmed mainly from weak demand for steel products amid global economic downturn and input of high-priced raw materials that were purchased last year," Posco said in a statement.
Sales edged up 0.4 per cent year-on-year to 16.31 trillion won during the first quarter, but net profit tumbled 41.2 per cent to 643 billion won, reported Xinhua.
The steelmaker noted that steel demand was forecast to increase in the second quarter thanks to the expected recovery in major industries such as auto and shipbuilding sectors, but the firm cautioned that uncertainties at home and abroad will remain for the time being.
Posco planned to spend 8.9 trillion won this year in investment for securing feedstock and expanding into overseas markets, placing its 2012 sales target at 70.6 trillion won.
Posco is South Korea's leading steelmaker, and dominates the domestic steel market with a market share of over 40 per cent in most of its product mix such as hot-rolled coil, heavy plate, wire rod, cold-rolled coil, electrical steel and stainless steel.
With IANS inputs