SEOUL, April 25(Reuters) - South Korean steelmaker POSCO , backed by billionaire investor Warren Buffett, posted a 23 percent gain in January to March profit, meeting a consensus forecast, but its gains were capped by the weak global economy and demand that depressed prices, especially for automotive steel.
Its operating profit rose to 581 billion won ($519.8 million) on a parent basis in the first quarter, in line with a consensus forecast of 578 billion won from Thomson Reuters I/B/E/S, POSCO said on Thursday.
This compared with 471 billion won in operating profit a year earlier and 379 billion won the preceding quarter. Its sales slumped 19 percent to 7.7 trillion won from a year earlier.
Asia’s steel sector is in a prolonged downturn as China’s economy is losing momentum because of the euro zone’s recession and a fragile U.S. economy, squeezing demand and prices for the alloy used in the automobile, shipbuilding, construction and home appliances.
POSCO, which supplies steel to the likes of Hyundai Motor and the South Korean unit of General Motors, cut domestic prices of automotive steel by 50,000 Korean won per tonne in the first quarter of this year because of weak auto market conditions, Nomura said in a recent report.
Prior to the earnings announcement, shares in POSCO, in which Buffett’s Berkshire Hathaway owns around 5 percent, ended up 0.9 percent in line with the market’s 0.8 percent gain.