POSCO has announced its financial reports at Investor Relation (IR) conference call on April 24th that its first quarter consolidated sales were up to 14.7 billion dollars and its consolidated operating profit was 1.4 billion dollars. The consolidated net profit was approximately 1 billion dollars.

POSCO’s consolidated profits indicates positive sign for both domestic and overseas

Reach to 14.7 billion dollars consolidated sales, 1.4 billion dollars in consolidated operating profit

Sales, operating profit and net profit has elevated by 5.2%, 9% and 10.9% compared to the previous year. This impressive achievement is done by the improvement of both domestic and overseas steel production and non-steel affiliates.

Non-consolidated sales of 7.7 billion dollars and 946 million dollars of operating profit.

PT. KRAKATAU POSCO, which is an integrated steel mill in Indonesia also turn into profit from the third quarter. Despite of decrease of steel bar and shaped steel plant from POSCO SS VINA in Vietnam, operating profit has increased gradually. This great performance of oversea steel subsidiaries gives positive indication of growth in sales.

Its non-consolidated sales rate has increased by 9.8% year-on-year to 7.7 billion dollars. Also, the proportion of the sales of World Premium products went up by 1.4% year-on-year to 54.9%.

Increased sales of high-value-added products, cost reduction, continued improvement of profitability, and the increased price of steel were the driving force of increasing operating profit margin from 1.8%p year-on-year to 13.1%.

Future is even brighter

POSCO expects that demand of steel will continuously increase on the back of steady restructuring of the Chinese steel industry and recovery of emerging economies. POSCO still also continue to secure financial soundness, reducing costs, and expanding high value-added sales.
All those efforts of POSCO brought impressive result of increasing consolidated and non-consolidated sales to 58.4 billion dollars and 27.9 billion dollars.

Since 2014, sales of products combined with Solution Marketing have tripled, and sales of POSCO’s World Premium Products (WPP) have increased by 56 percent.

It Wasn’t Always Smooth Sailing

When the 2008 global financial crisis hit, the global economy as a whole suffered. The steel industry experienced stagnant growth, even in its subsequent recovery. From 2012 to 2016, annual steel sales remained fixed at 35 million tons.

The 2008 Financial Crisis was felt in markets all over the world. (Source: South China Morning Post)

The main culprit for the slow recovery was overproduction, mostly from the heavily-subsidized Chinese steel industry. Between 2000 and 2014, steel production doubled from 800 million to 1.6 billion tons, exceeding the global demand for steel by 100 million tons.

As a result, steel markets around the world saw prices falling, layoffs and steel mill closures.

SEE ALSO: Asian Steel Watch: Megatrends Shaping the Future of the Steel Industry

A Strategy for Success

In order to stay competitive in a stagnant market, POSCO made the decision to focus on Solution Marketing and the sales of its World Premium Products (WPP) such as POSCO GIGA STEEL for cars and PosMAC for solar panels.

Solution Marketing involves hyper-customization for POSCO’s partners to deliver optimal material solutions for their products. Some notable projects this year have been with automakers GM Korea and Ssangyong Motors for the launch of their new models made of POSCO GIGA STEEL. POSCO gave them full support from development and R&D to testing and post-production evaluations, redefining the role of a steel supplier.

GM Korea and POSCO worked together to incorporate POSCO GIGA STEEL into the 2017 All New Chevy Cruze. (Source: GM Korea)

As a result, POSCO’s operating profit margin (individual basis) was 10.8 percent in 2016, making it one of the highest performing steel companies in the world. Its recovery and growth continued into 2017.

SEE ALSO: 6 Reasons Why POSCO GIGA STEEL is Ideal for Automakers

Cultivating the Industry

Following its continued success with Solution Marketing, POSCO is now determined to share its insights and technology with up and coming small and medium-sized enterprises (SMEs). POSCO has completed 32 shared-growth projects through which they work with SMEs to develop ways to cut costs, improve the quality of their work, provide financial assistance and education and training.

One of the most recent projects for shared growth is a collaborative business model called “System Construction” that provides a framework for effective technical cooperation among POSCO’s partners in the construction industry. The model was developed jointly with NI Steel and entails systemizing composite materials such as beams, floor decks, exterior panels and roofing materials, all based on joint R&D from both parties.

Under System Construction, workers from various sectors come together for joint development.

POSCO is continuing its efforts to advance its competitiveness by providing material and technical solutions to its partners, and along the way, fostering the growth of SMEs in various industries to ensure a more stable and robust economy.