Dear my beloved POSCO Family! The year 2015 has dawned on us.
On behalf of POSCO, I am delighted to be able to welcome the New Year with Daewoo International, POSCO E&C, POSCO Energy, POSCO CHEMTECH, POSCO ICT, as well as all the overseas staff from around the world, including China, Japan, Indonesia, Vietnam, India, and Mexico. I wish you all a very Happy New Year! My POSCO Family!
My POSCO Family!
Last year, “MV POSCO” risked capsizing under torrential trading conditions, with the decline in profitability and stock price, the downgrade in our credit rating, and the sluggish performance of several investment projects. But, 2014 also marked a momentous year in which we embarked on our ambitious journey to become “POSCO the Great”.
In order to achieve this, we have been implementing an all-out transformation. We have made innovation an integral part of our operations by focusing on four strategic agendas: the enhancement of core competitiveness in steel, a thorough review and critical selection of new growth businesses, dramatic improvements in our financial structure, and reforms to our management infrastructure.
As we commence the New Year, I would like to express my utmost gratitude to all members of the POSCO family for supporting the company’s innovation agenda and implementing the reforms.
Through your tireless efforts and contributions, we have been able to complete the first phase of our midterm management objectives without any major issues.
I would like to take this opportunity to especially thank the employees at Indonesia Krakatau-POSCO, POSCO, and Daewoo International for their immense contribution to reaching this target.
Dear my POSCO Family!
Looking back on 2014, I would like to emphasize not only our achievement in reaching our management goals financially and quantitatively, but also the way we demonstrated the operational versatility to improvise our strategic direction, adapt to the constantly shifting industry environment, and collectively overcome the obstacles that stood before us.
As I look back, I am fearless about the challenges that lay ahead for our organization as I know that together we stand strong, determined and ready to respond with conviction
My members of the POSCO Family!
As we stand at the start of 2015, the business environment offers few signs of improvement.
Although the global economy is forecast to improve slightly with the recovery in the United States, any significant breakthrough is likely to be hindered by stagnant domestic demand, the slowdown in China, and the relative appreciation of the Won against the Yen.
Global steel demand is at a standstill, with declining prices resulting in a tighter squeeze in margins. For our subsidiaries, competition and business conditions are expected to be onerous.
I cannot reiterate enough how 2015 ought to be the Year of Perseverance to realize increased profitability and improved competitiveness.The critical phrase that I would like you to focus on as we usher in the New Year is “financial result generation.”
As we begin the second year of the Three-year Midterm Plan, it is vitally important that we demonstrate our executive ability for the key business agenda and move closer to our goal of genuinely actualizing favorable financial results.
My adored POSCO Family!
Let me share with you the five factors that will help guide us in the progressive direction of accomplishing the desired midterm financial results.
First, we must strengthen our revenue structure by providing solutions.
We have accelerated our premium product strategy in recent years by integrating technology, sales and solution marketing. This strategy was identified after due consideration as being the best way to ensure our longevity in this fiercely competitive business environment.
In the New Year, we must demonstrate progressive solution marketing by focusing on the development of World Premium products. We must expand the infrastructure of our global solutions to promote effective commercial support by TSC and other members of our solutions network. In the case of our family companies that engage predominantly in contract-based businesses, we have to mobilize our group’s capabilities and reinforce our solutions business in order to secure first-mover advantage by proposing and developing customized client-centric projects.
The second guiding factor is the acceleration of the ongoing organizational restructuring and the stabilization of our balance sheet.
Last year, we established the master plan for our group-wide restructuring and moved forward with the overhaul of our non-core operations. However, there is still a long way to go. This year, we plan to leave no stone unturned on our search to swiftly reorganize and fundamentally reinvigorate operations that are unprofitable. We must also internally minimize waste by reducing our inventory and working capital while still effectively managing our investments and any other assets that we may have neglected in the past.
Third, POSCO will advocate the proliferation and establishment of a project-based working approach.
This project-based working method is a tactic designed to explore potential projects that can deliver exceptional results and increased profitability with the short-term support of operational resources. Most importantly, the project-based system allows us to achieve quantitative financial performance. Projects that contribute to the realization of financial results will be recognized and adequately compensated. By focusing on discovering lucrative projects and producing tangible results in 2015, I look forward to the ability of project-based working to institute itself as a powerful tool in generating profits and creating a win-win scenario for both company and employees.
The fourth guiding factor is the need to realize the commercialization of our potential growth businesses.
When I became CEO last March, I suggested that our sustainable future as a business lay in fostering a thorough review and critical selection of new growth businesses. As part of this review and selection of new growth businesses, we must incorporate our competitive technological advantages. We must call for the advancement of lithium extraction technology in Argentina and nickel refining technology in Pohang to reach the commercialization phase. In addition to improving the performance of our fuel cell systems used in buildings for commercialization, we also need to stabilize our Gwangyang SNG plant’s processing operations in its stages following construction.
The fifth guiding factor is the need to expedite the fortification and augmentation of our group’s operational efficiencies and synergies.
The previous year saw the inauguration of the Value Management Department, which serves as the group’s corporate center, and the selection of key performance indicators for POSCO group’s reinforced goals centered on EVA (economic value-added). This year should be defined by the collaboration we achieve between our family companies specializing in their respective industries for greater operating efficiency, value creation, and synergy formation. We will also continue to expand the coordination and cooperation of overseas businesses by operating several regional headquarters.
My cherished POSCO Family!
I would like to respectfully insist that you maintain your alignment to the group’s strategic direction mentioned above in order that we accomplish the group’s management objectives. I cannot stress enough that now is the time to propel our operations at full tilt.
Today, “MV POSCO” is no longer fit for purpose: the way of the lone battleship is no more. The role of our subsidiaries and overseas enterprises has become critical, as sales from these two groups account for over half of POSCO Group’s total revenue. These remote vessels of POSCO must assemble as an impregnable armada in order to realize our group-wide vision. I urge you to give your full commitment to fulfilling this daunting task and exhibit superior competitiveness to reinvigorate our core competencies. That is how we will achieve our midterm goals and establish the foundation for the firm’s long-term prosperity.
My revered POSCO Family! Where do we stand and in which direction are we heading?
It is no exaggeration to state that “MV POSCO” has weathered one of the most calamitous storms since its foundation.
However, more important than the ability to endure is the capability to emerge triumphant. That is true victory.Despite the ominous predicament that stands in our way, let us unite and prevail undefeated to affirm our dignity and pride as part of the “POSCO Identity”.
I wish you all a victorious year in 2015. Once again, allow me to express my unconditional affection and appreciation for my admirable POSCO Family members.
On the first morning of 2015
CEO Ohjoon Kwon
[box] To greet the new year, CEO Ohjoon Kwon has recorded a special message. Please visit the website and take a look [/box]