Posco, the world's third-largest steelmaker, said Thursday its first-quarter net profit rose 38 percent following price hikes for some of its key steel products and cost cuts.

Posco earned 982.31 billion won (US$1.1 billion; €784 million) in the three months ended March 31, the Pohang, South Korea-based company said in a statement. It posted net profit of 713.25 billion won in the same period last year.

The result was better than expected. The average estimate of 11 analysts surveyed by Dow Jones Newswires forecast that the company would record net profit of 842.63 billion won (US$906 million; €672 million).

Sales during the quarter rose 22 percent to 5.70 trillion won (US$6.1 billion; €4.5 billion), also better than expected. Analysts had forecast sales of 5.42 trillion won (US$5.82 billion; €4.32 billion).

"Rising domestic demand and our cost-cutting efforts by using more low-priced iron and coal helped boost our earnings in the first quarter," said Ko Min-jin, a Posco spokeswoman.

Posco's earnings were also helped by an 8.3 percent price hike in its mainstay hot-rolled coil to 520,000 won (US$559; €415) per metric ton in July last year, Ko said.

In the first quarter, the steelmaker also raised prices of hot-rolled stainless steel, another of its mainstay products, three times to 4.3 million won (US$4,621; €3,431) a ton from 3.51 million won (US$3,772; €2,801).

Posco, which mainly produces hot-rolled coil, automotive steel plates, thick steel plates and stainless steel, sells 70 percent of its products in South Korea.

Shares in Posco, which released earnings results after the stock market closed, fell 0.5 percent to 386,000 won (US$415, €308).