BOD Chairman Joo-hyeon Kim has been an outside director of POSCO since 2015. He previously served as president of the Hyundai Research Institute and chairman of the Economic Subcommittee of the Presidential Committee for Unification Preparation.  He is currently the CEO of Financial News. He Seong-jin Kim, is an expert in industrial policies. He was the Deputy Director-General of Industry in the Prime Minister’s Office, a presidential secretary for policy management, a presidential secretary for industrial policies, the administrator of the Small and Medium Business Administration, the Minister of Maritime Affairs and Fisheries, and president of Hankyong National University.  

CEO & President In-hwa Jang served as the head of multiple organizations, including the New Business Management Office of POSCO, the Steel Solution Marketing Office. and the Technology Investment Headquarters. He was also appointed as head of the Steel Production Headquarters last year, and oversaw steel production sites.

Joong-seon Jeon, served as head of the Raw Materials Purchasing Office of POSCO, head of the Management Strategy Office, and CEO of POSCO C&C. He was promoted to vice-president last month after being appointed as head of Corporate Strategy & Finance Center The shareholders approved the financial statements, reorganized expert committees and revised part of the Articles of Incorporation, including the increase of the number of outside directors.

POSCO CEO Ohjoon Kwon remarked at the general shareholders’ meeting, “POSCO celebrates its 50th anniversary this year. To make a new leap forward in 2018, we will further consolidate our world-leading position in the steel industry, reshuffle our business strategy by with a focusing on high-yield core businesses, converge create convergence businesses with group affiliates, and continuously seeking new business opportunities for our future growth.”

In addition, POSCO is planning to operate the CEO candidates nurturing program more substantially. This program establishes plans for individuals who were selected through an objective verification process from general managers and higher-ranking officials at POSCO and its affiliates, and nurtures them in a customized way. 100 people have benefitted from this program each year since March 2016. Program participants work for companies that POSCO invested in and for its overseas subsidiaries, while participating in leading domestic and overseas universities’ business management courses to foster their entrepreneurial competency and global mindset.

Meanwhile, to repay the country and citizens for their continued support for POSCO since 1968, the business announced that they are planning to construct the Science and Technology Experience Center and the Cultural Complex as part of their activities to celebrate POSCO’s 50th anniversary.

Cover photo courtesy of News World.

More drivers are making the switch from gas to electricity to fuel their cars. (Source: The Korea Bizwire)

SEE ALSO: Ask an Expert: Electric Vehicles and the Future of the Automotive Market

Why don’t more people drive EVs?

Electric vehicles (EVs) have a variety of benefits for drivers, the most obvious being cheaper electricity prices compared to gas. Not only that, EVs only have about a third of the parts of ICE vehicles, which results in maintenance-cost reductions by about 60 percent. There are also government subsidies that support EV manufacturers and consumers in numerous countries, and environmental regulations only look to strengthen. Despite all this, drivers have been slow to make the switch to EVs, and there are 3 critical reasons why.

1. Range

Today, EVs can travel about 200 to 400 miles on a single charge, and while this may be sufficient for most urban drivers, it’s still not enough coverage to relieve drivers of range anxiety. Low-capacity batteries are not the only problem – the weight of the car and the efficiency of the motor and converter also affect range. Put simply, even if a battery could hold more energy, it won’t result in increased range if the car is too heavy or the motor is inefficient and uses up too much energy. Automakers have to come up with comprehensive solutions to improve the battery capacity and motor efficiency as well as lightweight their vehicles.

Drivers are often wary of their EVs running out of juice where there are no charging stations. (Source: Sandman YouTube Channel)

2. Charging Time

EVs currently take up to several hours to fully charge, depending on the battery. Although there have been advancements in charging systems that allow for shorter charging times, the average charging duration cannot compete with the 3 to 5 minutes people spend at gas stations.

3. Charging Stations

Despite the technological leaps made in the development of EVs, charging infrastructure has not maintained the same pace. Gas stations outnumber charging stations in every country, and it will take time to figure out a model to commercialize charging stations and make the business more profitable.

Charging stations have not yet been commercialized as gas stations have. (Source: Coinfeeds)

Why EVs are still driving toward a bright future

Although there are still challenges to overcome, one of the greatest drivers of widespread EV adoption is national policy. A growing number of countries have declared they will limit or even ban ICE cars altogether by 2020. Policies are already in place to support a more environmentally sustainable auto industry, and companies are working hard to navigate and capitalize on the changing market environment.

This will bring about a wealth of new opportunities for related industries. That’s why automotive, materials, electronics and chemical companies around the world are investing heavily in technology to preempt this market, and first movers will gain a tremendous advantage.

POSCO is one of the companies looking to lead the global EV materials market and has been investing in and developing innovative solutions for EV manufacturers. POSCO has designed an ultra-lightweight yet strong chassis and developed the necessary parts to bring it to life. POSCO is also currently working with auto manufacturers, giving them access to POSCO’s EV chassis design expertise as well as its newly-developed materials.

POSCO has designed an ideal chassis for electric vehicles. (Source: News Tomato)

In addition, POSCO works closely with each of its affiliates including POSCO Daewoo, ICT, ESM and ComTech that are highly specialized in their respective fields. In cooperation with its affiliates, customers and academia, POSCO is in the process of developing innovative technologies for batteries, electric motors and charging infrastructure. As such, the EV sector has become a core business area for POSCO.  

Everything from the EV chassis and battery to the motor and charging infrastructure is codependent. Therefore, in order to develop an advanced EV that meets the needs of consumers, an integrated approach is vital. POSCO is in prime position to work with all of its affiliates under One POSCO and gear toward a future of cars running on electric motors.

Cover photo courtesy of The Wellingtonian.

In recent years, Vietnam has undergone rapid urbanization with subsequent advancements in housing, energy and infrastructure. As such, demand for structural steel is expected to reach 24 million tons by 2020. The figures represent 80 percent of Vietnam’s entire steel demand, making Vietnam a booming market for steel consumption in Southeast Asia.

As the Vietnamese construction industry is projected to see an annual growth rate of 7 percent for the next 10 years, POSCO plans to pursue preemptive solution marketing activities with local affiliates such as POSCO SS VINA and POSCO-VST.

POSCO SS VINA will supply Vietnam’s growing structural steel demand.

They also look to cooperate with local organizations to maximize benefits for their clients, by providing support for a wide range of technologies related to molding, binding, improved performance and structuralization.

Additionally, POSCO intends to promote packaged marketing services for large-scale projects to offer various products such as R.H. (ROLLED H-BEAM), BH (Built up H-Beam) and steel bars in one batch.

POSCO is organizing 3 separate departments – the Solution Planning Department, Solution Development Department and Technical Services Department – to successfully create, develop and implement a local, customized marketing strategy. A total of 25 experienced construction experts will serve as consultants.

In January, POSCO also established a “Solutions Marketing Center” under its base corporation in Vietnam and China to provide support for its increased production and sales worldwide.

With the performance increase in both steel and non-steel businesses in Korea and overseas, operating profit was highest it’s been in the last 6 years, and the operating profit to sales ratio was 7.6 percent. Year-on-year consolidated sales increased by 14.3 percent and operating profit and net profit increased by 62.5 percent and 183.7 percent respectively.

The total operating profit of POSCO’s non-steel businesses, which reached KRW 10 billion last year, also turned into a surplus. There was an overall increase in non-steel businesses including trade, energy, ICT, chemicals and materials, resulting in KRW 1.0927 trillion of profits, up KRW 1.0798 trillion from last year.

This is in line with POSCO CEO Ohjoon Kwon’s strategy to focus on group management by securing future growth engines and reforming non-steel businesses.

※ Total operating profit per sector

Indonesia-based integrated steel mill, PT. KRAKATAU POSCO, also generated a surplus for the first time since operations began in 2014. Mexico-based automotive steel sheet plant, POSCO Mexico, as well as India-based cold rolled steel corporation, POSCO Maharashtra, also achieved their highest operating profit, tripling the total operating profit of overseas steel business.

Moreover, separate sales and operating profit increased year-on-year by 17.4 percent and 10.1 percent respectively to KRW 28.5538 trillion and KRW 2.9025 trillion, and the net profit was KRW 2.5457 trillion.

Production and sales decreased year-on-year due to the repair and facility rationalization of Pohang Blast Furnace No. 3, but the sales ratio of World Premium products with better technology and higher returns increased to 53.4 percent, its higher ever.

Financial soundness was also saw improvements. POSCO’s Consolidated debt ratio decreased by 7.5%p year-on-year to 66.5 percent, the lowest since 2010. Separate debt ratio also decreased by 0.5%p year-on-year to 16.9 percent, constantly renewing the lowest record on a yearly basis.

POSCO also demonstrated a cumulative financial improvement of KRW 7 trillion with 150 cases of restructuring in the last 4 years, reinforcing the business structure as well as financial competency. Accordingly, this year the company expects to make more investments in new growth engines such as lithium and cathode materials as well as energy and construction in addition to renewing the facilities at its steel mills. Thus, there will be a budget of KRW 4.2 trillion for consolidated investment, an increase of KRW 1.6 trillion compared to last year. The consolidated sales target is KRW 61.9 trillion.

※ POSCO’s 2017 business performance

Since 2014, POSCO successfully completed 150 cases of restructuring.

Back in the 2000s, POSCO suffered its worst financial crisis due to failed investments in growing businesses. Its consolidated operating profit, which exceeded KRW 7 trillion at one time, recently fell to about KRW 2.5 trillion. POSCO’s cash on hand, which peaked at more than KRW 8 trillion, declined to nearly KRW 5 trillion, and credit ratings worsened as well.

That’s when CEO Kwon implemented the Innovation POSCO (IP) 1.0 and 2.0 projects successively to innovate the company’s financial structure and began broad-based restructuring. CEO Kwon recalls, “POSCO sold its non-core steel business, and merged similar businesses to increase efficiency and eliminate waste. We also liquidated low-yielding substandard businesses to prevent the aggravation of insolvency.”

As a result, the number of POSCO’s domestic affiliates decreased from 71 to 38, and the number of its overseas affiliates declined from 181 to 124. The company also recovered KRW 7 trillion over the 4-year period, and prevented annual losses of about KRW 400 billion.

Moreover, POSCO’s consolidated cash on hand increased to KRW 8.55 trillion at the end of the third quarter, repaid its debts by more than KRW 5 trillion and POSCO’s consolidated debt ratio dwindled to 67.6 percent, the lowest since 2010. Moody’s, an international credit rating agency, recently upgraded the forecast for POSCO’s issuer rating, Baa2, from negative to stable, and then to positive, and predicted that POSCO’s financial health will continue to improve in the next 1-2 years.

POSCO’s Future growth strategy is two-track: smartization and development of new growth engines.

CEO Kwon expressed his vision for the company In 2018 and beyond. He said, “POSCO plans to implement smartization with efforts such as combining ICT with its core businesses, ranging from steel and energy to construction and chemicals to develop newly converged businesses to lead the 4th Industrial Revolution.”

CEO Kwon delivering his new year’s message at the POSCO Family Kick-off Meeting 2018.

SEE ALSO: Building on a Year of Success: POSCO’s Top 9 News of 2017

The company will also accelerate the development of smart factories utilizing big data and artificial intelligence, and further enhance core processes for environmentally-friendly, highly-efficient and future-oriented steel mills.

In addition, CEO Kwon mentioned that POSCO will carry out new growth businesses this year in the energy and materials sectors. In the energy sector, POSCO will work to stabilize its power generation business, and expand its LNG midstream business by developing the Gwangyang LNG Terminal into the energy hub of Northeast Asia. POSCO is also planning to increase investments in renewable energy and seek business opportunities in line with government policies to reduce greenhouse gas emissions.

The company will also work to secure stable supplies of saline water and ores containing lithium in South America and Australia for its lithium business. It also plans to build accompanying infrastructure for mass production.

POSCO will also develop its own manufacturing processes for high-capacity cathode and anode materials used in secondary cells, and work to increase the sales of electric vehicles at home and abroad.

POSCO CEO Kwon Ohjoon greets employees after the kick-off meeting.

To close the event, CEO Kwon remarked, “For the next 50 years, let’s make greater efforts toward our goals with a clear and long-term perspective.”