POSCO's year-on-year increase in profitability in the first quarter indicates that the steelmaker's "solution marketing" and premium products are being recognized in the market, officials said Wednesday.
Solution marketing refers to a service package POSCO introduced last year, in which the company is committed to enhancing customers' competitiveness by offering technology, business knowhow, marketing support and other assistance.
The firm's operating profit margin rose to 4.8 percent, up 0.1 percent from a year earlier, while its net profit jumped to 370 billion won, up from 55.6 billion won a year earlier.
"We have improved profitability with solution marketing that is applied to our customers in the fields of the auto industry, shipbuilding, electronics and construction," POSCO said in a regulatory filing. "Sales of premium products increased significantly, and it contributed to boosting profitability."
Another propeller that was profitable gas exploration in Myanmar by the company's trading arm Daewoo International. Sales of money-losing business units last year also helped boost the firm's finances.
Officials said sales of premium products surged during the January-March period due to solution marketing for its major customers in the fields of auto, shipbuilding, electronics and construction.
Sales of automotive steel jumped 6 percent due to escalating demand in Japan and Europe, it said.
POSCO sold 2.07 million tons of automotive steel during the first quarter, up 6 percent year-on-year.
Toyota, General Motor, Ssangyong Motor and several other companies have benefitted from the service package, officials said.
Toyota recently selected POSCO as the best supplier of the year, giving it the title for two consecutive years. The quality of POSCO's products was also recognized by Chinese carmakers, they said.
The package service also made a big contribution to Ssangyong's successful launch of the SUV Tivoli. POSCO formed a partnership with Ssangyong from the early stages of the vehicle's development, suggesting ideas on steel to boost the model's fuel efficiency and overall performance.
POSCO runs 23 technical service centers around the world, offering customized services.