Reuters reporter that POSCO cut its planned investment for 2012 to about KRW 5.1 trillion from KRW 5.7 trillion in 2011, while forecasting 2012 sales at between KRW 37.7 trillion and KRW 41.2 trillion.

The company, in which billionaire investor Warren Buffett's Berkshire Hathaway owns a stake of around 5%, managed to increase profits while Japanese steelmakers Nippon Steel and JFE Holdings suffered profit slumps and slashed their profit outlooks. Weak demand from shipbuilders and repercussions from Europe spell a grim outlook for the sector, though any steps by biggest consumer China to boost domestic consumption would offer a ray of hope.

Mr Chung Joon yang CEO of POSCO said that "While many steelmakers cut production, POSCO achieved its record high production and sales in 2011 and maintained the highest level of profitability in the industry."

But he sketched a bleak outlook, saying the current quarter would be the company's most difficult earnings period, although results would improve in the second quarter, helped by the United States and China.

POSCO, which expects to go ahead with one of the firm's three steel mill projects in India, said raw material costs increased more than 40% in 2011. The slowing global economy weighed on demand, especially from shipbuilders, keeping it from fully passing on the higher input costs to customers.

Ms Lee Dong jin, a fund manager at KTB Asset Management, said that "I am worried about the health of the industry as a whole as euro zone problems remain. POSCO is the best in terms of profit in the industry, but this year will be a difficult year even for POSCO. It is true that steelmakers are in difficult situation. However, the global economy won't be so bad as we thought. There are hopes that China can soften its tightening moves."

(Sourced from www.reuters.com)