Reuters reported that POSCO, backed by billionaire investor Mr Warren Buffett, has reported a smaller than expected 33% gain in quarterly profit, the latest steelmaker to post disappointing results as the slowing global economy kept it from fully passing on higher costs to customers.

The outlook is dim for the South Korean steelmaker as the euro zone crisis and China's slowing growth continue to weigh on demand, especially from shipbuilders, while input costs of raw materials remain high. POSCO said raw material costs increased more than 40% in 2011.

POSCO said that its October to December 2011 operating profit was KRW 692 billion, up from KRW 519 billion a year earlier, but well below a consensus forecast of KRW 839.3 billion from Thomson Reuters. Fourth quarter sales rose to KRW 10 trillion from KRW 9.2 trillion a year earlier.

POSCO last month estimated a KRW 4.2 trillion operating profit in 2011, down by 12% YoY. Sales rose by 20% YoY to KRW 39.17 trillion in 2011.

The company, in which Mr Buffett's Berkshire Hathaway owns an around 5% stake, is weathering the storm better than its major peers, increasing profits while Japanese steelmakers Nippon Steel and JFE Holdings suffered profit slumps and slashed their profit outlooks.

The firm cut its planned investment this year to between KRW 4.5 and 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.

Prior to the earnings announcement, shares in POSCO, which ranks behind ArcelorMittal and China's Baosteel in steel production, ended 0.36% lower in a wider market that fell 0.6%.
(Sourced from www.reuters.com)