* Q4 operating profit 488 bln won vs 557 bln won consensus
* Plans to invest 3.7 trln won in 2014 vs 4.3 trln won last
* Targets 31 trln won in 2014 sales, flat from 30.5 trln won
SEOUL, Jan 28 South Korean steelmaker POSCO
, backed by billionaire investor Warren Buffett,
reported a smaller-than-expected 29 percent gain in quarterly
operating profit on Tuesday as the stronger won and weak demand
sapped steel prices.
The world's fifth-biggest steelmaker, which will have a new
chief executive in March, plans to reduce investment by 14
percent this year to 3.7 trillion won ($3.4 billion) as it sees
flat revenue growth after three consecutive years of profit
A prolonged downturn in the steel industry shows no signs of
letting up, hurt by China's excess capacity coupled with slowing
demand in the world's top steel consumer.
POSCO faces a challenge of cutting higher debt following
another round of cuts in credit ratings and fending off
competition at home and abroad from Japanese and Korean rivals
like Hyundai Steel.
October-December operating profit was 488 billion won ($450
million) on a parent basis that does not reflect earnings of
affiliates, the company said.
The fourth-quarter profit was below an average forecast by
18 analysts polled by Thomson Reuters I/B/E/S of 557 billion won
and compared with an operating profit of 379 billion won a year
POSCO said its product prices fell by 100,000 won per tonne
last year from 2012, which hurt sales and profits.
The South Korean won's strength against major
currencies eroded POSCO's repatriated earnings overseas and its
export margins as Japan's Nippon Steel & Sumitomo Metal
forecast a nearly four-fold jump in annual profit, fueled by a
This adds to woes of POSCO, once an industry star performer,
which sees its domestic dominance waning as Hyundai Steel
increases supply to affiliate Hyundai Motor.
POSCO earlier this month nominated Kwon Oh-joon, president
and its chief technology officer, as its new chief executive to
succeed Chung Joon-yang who previously led aggressive
investments and acquisitions that left the steel giant with high
Moody's and Fitch cut the credit ratings of POSCO in
November and December, respectively, expecting a persistent
weakness in the industry to cap POSCO's earnings improvements.
POSCO's shares, of which Buffett's Berkshire Hathaway Inc
owns around 5 percent, ended down 0.5 percent prior to
the release of the results on Tuesday. Its shares have fallen 9
percent this year, lagging the wider market's 4.7 percent drop.