Vienna- Austrian steelmaker voestalpine AG reported lower profits in its first business quarter of 2008 on Wednesday, as the consolidation of its specialized steel division outweighed rising revenues.

Net profit for the period from April to June was down 0.7 per cent to 240.3 million euros (352.6 million dollars), the company said.

Not taking into account the consolidation of Boehler-Uddeholm, which was acquired in 2007, first-quarter net profit stood at 304.6 million euros, up from 242.1 million euros in the same period last year.

Operating profit rose to 357.7 million euros, an increase of 13.8 per cent.

The steelmaker's five divisions posted revenue increases between 7.7 and 21.8 per cent, mainly driven by stable growth in Central and Eastern Europe, voestalpine said in its letter to shareholders.

Voestalpine's revenues climbed to 3.26 billion euros, due to the consolidation of Boehler-Uddeholm, which contributed 1.02 billion euros to sales.

The quarterly results were "the most convincing evidence that it was possible to more than compensate the enormous cost increases for raw materials" through cost-cutting and by adopting appropriate pricing models, the company's management board said in the letter.

With voestalpine projecting strong growth in its steel and automotive divisions, the company said it would likely be able to match last year's profit of 751.9 million euros.

However, rising raw materials costs, the global economic slowdown, and the increased risk of inflation added some uncertainty for the first three months of 2009, it said. (dpa)