‘Future Vision Declaration Ceremony’was held on April 1, the 50th anniversary of POSCO, POSCO CEO Ohjoon Kwon shared his philosophies of the centennial enterprises and the new mission and vision

On April 1st, the 50th anniversary of POSCO, named ‘Future Vision Ceremony’ was successfully held. The main topic of the anniversary was not only celebrating 50th years POSCO’s efforts both industrial and social fields but also suggestion of future directions of POSCO, ‘Missions and Visions’ 

‘Unlimit the limt: Steel and Beyond’

POSCO is dreaming of KRW 500 trillion in consolidated sales in 2068, the 100th anniversary of the company.

On the occasion of its 50th anniversary, POSCO held the ceremony to declare its future vision, and announced the mission and vision as a global centennial enterprise at the POSTECH gymnasium at the 50th anniversary of POSCO on April 1, and announced its mission and vision of being one of the true global centennial enterprises.

The new mission of the global centennial enterprise POSCO, which POSCO CEO Ohjoon Kwon detailed in the form of his TED Talk, is ‘Unlimit the Limit: Steel and Beyond.’ This mission, which was finalized after a few months of intensive debate among executives, means that POSCO will capitalize on its past 50-year history of challenges to become a power in the future not only in steel, but also in non-steel areas.

To this end, POSCO is seeking to change its current revenue streams, in which about 80% of the group’s profits come from steel and steel-related areas, in which profits will come evenly from the top three core business groups, i.e. steel, infrastructure and new growth engines, at a ratio of 4:4:2. POSCO aims to see its consolidated sales reach KRW 500 trillion and its operating profits reach KRW 70 trillion in 2068, its 100th anniversary.

In addition to its primary business, i.e. steel, POSCO will concentrate on such infrastructure areas as trading, construction, energy and ICT were included, and such new-growth areas as energy storage materials and light-weight materials.

The vision, which was declared along with the mission, is ‘POSCO the Great.’ ‘POSCO the Great’ was the slogan that CEO Kwon used when he was first inaugurated as CEO in 2014 to revive POSCO which faced a crisis at the time. Now the slogan has become more systematic: Great Business, Great Technology and Great Culture. It means pushing the business structure, technology and organizational culture to the highest level.

As POSCO has contributed to the country and society through steel and educational patriotism, at a time when the company is celebrating its 50th anniversary and starting its march forward toward a centennial enterprise, it decided to conduct business that will repay the country in addition to declaring its mission and vision.

POSCO supports Youth

In return for the country’s unsparing support and the citizens’ enthusiastic support which made POSCO what it is today, POSCO opted to construct the ‘Youth Creativity Center’ (tentative), which features various contents, including the Science and Experience Center in Seoul Forest, located in the center of the capital city of Korea, and donate it to the nation.

The ‘Youth Creativity Center’ will become a learning center where youths, who will lead the country into the future, can easily understand the principles of technology and science through experience, and translate their creative ideas into reality.

Also, the center will have various concert halls and exhibition halls so that anyone can easily enjoy culture and art in everyday life.

If the international design competition for world-renowned architects is held this year, it will reveal its splendor as being the best science and culture complex in Korea.

The POSCO Center in Seoul, which was erected more than 20 years ago, now features a new product exhibition hall that will familiarize citizens with steel, and show customers the future vision of steel, and added a 30-seat PR video center. The product exhibition hall displays various industries demanding steel in the future, and state-of-the-art steel products, and allows visitors to experience the various uses of steel used in our everyday lives using the cartoon and touch technique in a fun way. At the PR video center, visitors can watch POSCO PR videos, and view a steel mill in 3D imagery.

Close to people 

On its 50th anniversary, POSCO, which has contributed to the growth of the country with steel, will air a TV ad, which reflects its will to transcend beyond steel, ‘50-Year Challenge and 100-Years New Dream’ until June 10, and the POSCO Art Museum in the first lower level of the POSCO Center will host the ‘Homage to POSCO’ exhibition until May 8. The artworks embodying the growth and rebirth of POSCO will be on display. Also, the POSCO Museum in Pohang will host the ‘Half-Century Video Records of POSCO,’ which introduces various images and historical materials which recorded its 50-year history of growth, until June 30.

In addition, until the end of May, POSCO will prepare an opportunity for the CEO and employees to communicate and harmonize with one another in Seoul, Pohang and Gwangyang with the aim of strengthening the solidarity among employees marching toward a centennial enterprise.

POSCO always stands with country 

POSCO’s 50-year history is in true sync with the history of the growth of the Korean economy. POSCO has never stopped growing for half a century since its foundation, and continued to turn profits without ever running into the red and still contributes to the economic development of the country.

POSCO was established in 1968, and molten metal was first produced in 1973. Its sales amounted to KRW 41.6 billion in that year, and increased 686 times last year to KRW 28,553.8 billion. Korea’s per capita GDP was merely US$ 198 in 1968, but it increased about 140 times in 2016 to US$ 27,539.

As POSCO grew and its steel production increased, domestic industries such as automobiles and shipbuilding continuously grew as well. In 1973, when POSCO started to produce molten metal for the first time, POSCO’s steel production amounted to 449,000 tons, but in 2017, it rose to 37.2 million tons. Likewise, Korea’s shipbuilding tonnage increased from 12,000 tons in 1973 to 23.5 million tons, and automobile production rose from 25,000 cars to 4.11 million cars.

POSCO has also grown remarkably in terms of technology. The FINEX technology, which replaces the modern blast furnace with more than 100 years of history, is an environmentally-friendly and economical innovative technology. POSCO independently developed and commercialized this. Also, in 2013, the company completed the construction of Southeast Asia’s first integrated steel mill in Indonesia. Just 40 years after POSCO owned the first integrated steel mill with the help of Japanese steelmakers in 1970, it grew so big as to build an integrated steel mill in a foreign country on its own, and transformed itself from a technological follower to a technological leader.

Also, POSCO sold 9 million-odd tons of automotive steel last year, which accounts for about 25% of its total sales, the largest proportion among major global automotive steelmakers and sellers. One out of every 10 cars sold in the world is made of POSCO’s automotive steel.

Smarter POSCO 

Recently, the company built its own smart factory platform called PosFrame, leading the smartization of the global steel industry.

In recognition of its excellent business performance, competitiveness and sustainability management, POSCO has been selected by WSD as one of the ‘world’s most competitive steelmakers’ for the past 8 consecutive years since 2010, and in the global sustainability management evaluation, it has been selected as an excellent company in sustainability and as the best company in the steel industry for the past 13 consecutive years, dating back to 2005. It has remained in this honorable position for the longest time in Korea.

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

So, what do these athletes from all over the world competing in various different sports have in common? They all rely on steel to enhance their performance and keep them safe while they compete for the highest honors in their profession.

Here are some of the most prominent ways steel plays its part in winter Olympic sports:

Blades/Edges of Steel

Ice Hockey

Ice hockey is easily the main attraction of winter Olympics as hockey finals are usually the last events of the Games. The same can be said of para ice hockey as well. Athletes glide through the rink on specially-made sledges, or sleds, and have as much, if not more, full-contact than regular ice hockey.

Stainless steel is the material of choice for ice hockey skate blades. (Source: FXBX)

There are several pieces of equipment that enable hockey players to perform at their best, including their skates and sleds. The deciding factor in the quality of skates comes down to the type of steel used in the blades, or runners. Harder types of steel are preferred for less wear and tear and so that athletes do not have to sharpen the blades too often.

That’s why most opt for stainless steel, for its high-strength, hard, ductile and corrosion-resistant qualities. For para ice hockey players, their sleds make or break the game, and materials like magnesium, high-manganese anti-vibration steel and stainless steel give them the edge they need.

SEE ALSO: How POSCO’s Advanced Technology Gives Speed to Korea’s Para Ice Hockey Team

Figure Skating

Blades on figure skates look similar to that of hockey skates, but are longer and heavier. Figure skate blades also have the thickest type of blades at 4 to 5mm. These blades were most commonly made of tempered carbon steel coated with chrome, but lighter materials such as stainless steel are becoming more common. At the professional level, many athletes wear skates with high-grade steels that are much more expensive than common skates. A distinct characteristic of these blades is the spiked front toe which gives figure skaters the traction they need for rigorous jumps and spins.

Figure skates have spiked toes to assist jumps and spins. (Source: Bend Source)

Short and Speed Skating

Like blades for hockey and figure skates, short track and speed skates are also made of stainless steel. Short track skates are slightly curved and shorter than speed skates, with slightly rounded backends for safety.  

Figure skates have spiked toes to assist jumps and spins. (Source: International Skating Union)

Speed skates are different from those for short track because the back-end of the blade is detached from the boot. this reduces friction and energy loss. Also, the detached blade allows the blade to remain attached to the ice longer than attached blades.

Skiing and Snowboarding

Steel also plays a crucial part in the construction of ski and snowboard edges. With high-quality steel, athletes can sharpen the edges more frequently, and sharp edges are crucial for carving and turning on snow. Edges are most commonly made of stainless steel, and they are inserted into the body of the ski or snowboard via “teeth” or T-shaped ridges. Most edges have a Rockwell 48 hardness.

Ski and snowboard edges are made of steel to achieve maximum sharpness. (Source: YouTube)

Rock-hard Skeleton, Ultra Sharp Blades

Bobsled

There are several variations of bobsled events during the Olympics: 2-man, 4-man and women’s doubles. No matter how many people are on a team, each bobsled has a steel chassis or skeleton and four steel blades attached to the bottom of the sleds. Every team must use the same type of steel for blades used in competition. Much like a car, materials that make up the bobsled must be lightweight yet strong so the athletes have the freedom to steer through the track. During competition, sleds slide through at an average speed of 150 km/hr.

Ski and snowboard edges are made of steel to achieve maximum sharpness. (Source: Lake Placid)

SEE ALSO: Ask an Expert: How POSCO GIGA STEEL Frames the G4 Rexton

Luge

The luge is considered to be the most dangerous winter Olympic sport due to high speeds and sharp turns of the track. After push off in a seated position, the person or pair lies flat on their backs and steer the sleds with their bodies. Sleds have a pair of steel blades attached to the bottom. Olympic rules prohibit teams from heating the blades before competition as it would decrease friction against ice. Instead, athletes try to maintain the sharpest blades possible.

The Luge is one of the most dangerous winter Olympic sports. (Source: Team GB)

Skeleton

Opposite of the luge, skeleton athletes race flat on their stomachs, with no brakes. Instead of starting on the sled, the athletes have to sprint for about 40 meters before hopping on. All skeleton sled frames must be made of steel, and blades are usually made of high-quality stainless steel. As for all the “sliding” sports, there are strict rules for the size and weight of the sleds.

Skeleton athletes sprint 40 meters before jumping on their sleds stomach first. (Source: MPR News)

1. #Winning – competitiveness and sustainability

POSCO was recently named the world’s most competitive steelmaker for the eighth consecutive year by World Steel Dynamics (WSD). POSCO again took home the gold with the highest scores in five categories including innovative technology, cost reduction, skill level of labor, restructuring and investment environment.

POSCO is the world’s most competitive steelmaker.

Not only did POSCO come out on top for competitiveness, the company was ranked 35th among the “Global 100 Most Sustainable Corporations in the World in 2017,” by Toronto-based magazine and research firm Corporate Knights. The list was announced in early 2017 at the World Economic Forum in Davos, Switzerland. This is the third consecutive year POSCO made the list with outstanding scores in safety, environment and the salary levels of employees.

2. Joining the trillion club

POSCO entered the trillion club twice in 2017 as it recorded USD 1.283 billion (KRW 1.365 trillion) of operating profits in the first quarter, and USD 1.0581 billion (KRW 1.1257 trillion) in the third quarter based on its consolidated operating profit. Even in the midst of global oversupply and governments opting for protectionist policies, POSCO’s profits were unscathed. Much of the credit is owed to the company’s steel and non-steel affiliates overseas with strong sales performances. The consolidated debt-to-equity ratio was the lowest since 2010 and the non-consolidated debt-to-equity ratio was at its lowest ever.

POSCO recorded an operating profit over KRW 1 trillion in the first and third quarter of 2017.

To add, international credit rating agency S&P upgraded POSCO’s BBB-plus credit rating outlook to “stable” last February, and Moody’s also upgraded POSCO’s long-term corporate credit rating outlook to “positive” on October 26.

3. Everything’s bigger in…POSCO

Last June, after 102 days of repair, Pohang Blast Furnace No.3 became the world’s fifth-largest blast furnace. Its internal volume expanded from 4350㎥ to 5600㎥, allowing the super-sized blast furnace to put out 15,000 tons of molten metal daily. POSCO currently operates five super-sized blast furnaces, or blast furnaces sized 5500㎥ or larger.

Pohang Blast Furnace No. 3 under construction.

POSCO further upgraded Pohang Blast Furnace No.3 by adding in AI capabilities. It is now equipped with smart technology that can control the internal state of the blast furnace automatically, and smart sensors can now predict accidents before they happen, extending the lifespan of the furnace. Furthermore, POSCO plans to collect big data from the blast furnace and use it to develop fully smart blast furnaces in the future.

4. The smarter the better

Since his taking up the CEO position in 2014, POSCO CEO Ohjoon Kwon has repeatedly expressed his vision for securing future competitiveness through smart solutions. The company even started a smartization training course for employees and held the Smart POSCO Forum 2017 last July to share its insights and progress with clients and affiliates.

POSCO is gaining a competitive edge through smart solutions. (Source: Global Trade Magazine)

Moreover, POSCO also supported a smart talent training project customized for SMEs. The program included job training for AI and big data application technologies. Going forward, POSCO plans to build a “Smart Industry” to increase steel competitiveness and create new business opportunities with new, smart technologies.

SEE ALSO: How Factories Produce Steel- the Smart Way

5. Getting in on electric vehicles

The market for electric vehicles (EVs) is an exciting one with so many companies investing in new technologies. POSCO also hopes to extend its customized material and technology solutions to EV manufacturers. Last October, the company held the Global EV Materials Forum to showcase four of its core business areas: lightweight bodies, batteries, motors and charging infrastructure. More than 380 clients took part in the forum to learn about emerging trends and POSCO’s products and services including POSCO GIGA STEEL and commercially produced lithium batteries for EVs.

POSCO is a solutions provider for EV manufacturers. (Source: Bloomberg)

6. POSCO’s new marketing approach

For the first time ever, POSCO created and aired a TV commercial highlighting a specific product, instead of its corporate brand. This marks POSCO’s first B2C marketing effort and features the company’s innovative auto steel, POSCO GIGA STEEL. The commercial compares POSCO GIGA STEEL to aluminum, another widely-used lightweight material in a visual demonstration so that everyday drivers can better understand the benefits of a stronger yet lighter material.

7. Going for 10 million tons of automotive steel

On April 26, POSCO completed 7CGL, a new steel production facility in Gwangyang, Korea, designed exclusively for the production of POSCO GIGA STEEL. 7CGL has an annual capacity of 500,000 tons and is the world’s first plant capable of producing both 1.5 giga-level galva-annealed (GA) and galvanized (GI) steel sheets.

POSCO Completed 7CGL on April 26, 2017. (Source: Business Korea)

In addition, POSCO managed to reduce investment funds and secure cost competitiveness by designing and constructing 7CGL’s core facilities based on accumulated facility technologies and operating know-how. The 7CGL is POSCO’s 12th plant exclusively for automotive steel sheets, and POSCO aims to sell 10 million tons of automotive steel in 2018 globally.  

8. Setting new records with high manganese

POSCO became the first company in the world to commercialize the technology for producing high manganese using fusible ferroalloys. The technology took KRW 5.5 billion of research and development costs and four years to complete.

POSCO is the first company in the world to commercialize its high manganese production technology. (Source: Eramet)

The core part of POSCO’s high manganese production process is PosLM (POSCO Liquid Manganese), a special holding furnace that stores manganese ferroalloys in a fusible state. POSCO’s technology reduces the production time for high manganese steel by more than 50 percent as well as increases slab production efficiency. PosLM was jointly researched and developed by the Institute of Technology and POSCO M-tech.

9. Bringing home the lithium

On February 7, POSCO opened its PosLX (POSCO Lithium Extraction) plant with an annual capacity of 2,500 tons. The plant is the first plant in Korea capable of commercial lithium production. The technology took 7 years to perfect, but it was well worth it. The production process for high purity lithium now takes just 3 months, compared to the previous 12 to 18 months.

POSCO is making lithium extraction more efficient and sustainable. (Source: Mining)

In the past, Korean manufacturers imported the entire quantity of lithium they needed. With POSCO’s PosLX plant, partners now have access to a local supply of lithium. Moreover, POSCO plans to use lithium phosphate extracted from wasted secondary batteries as raw materials, in keeping with the company’s sustainability standards.

POSCO will continue building on a successful 2017 in the new year, by tackling new challenges and continuing to provide its partners with customized and optimal solutions in all business areas.

Cover photo courtesy of Hitech Building Solutions.

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.”

Casa de Patricia is a non-governmental group that supports disabled children and provides welfare for the elderly, while ABC PECEM is currently helping 150 local, underprivileged children. Brazil CSP delivered KRW 3.6 million to the organizations for facility renovation and furnishings.    

Brazil CSP is a steel mill with an annual capacity of 3 million tons. It sits in the Pecem industrial complex in the state of Ceara, located in the northeastern region of Brazil. The company is a joint venture between POSCO and Dongkuk Steel and Brazilian mining company Vale.

In June, 12 participants completed a two-week introduction course, where they got to learn about POSCO’s history, Korean culture and POSCO’s overall operations. Then, they were dispatched to each respective department for hands-on work experience.

In addition, participants can also integrate Korean language courses with work. As a result, most participants have already taken their TOPIK, a Korean language certification test, and received their certifications.

To close off the six-month program, GMP participants took part in a workshop on December 7, at the POSCO Center to share their results and discuss ways to improve the GMP.

Pedro, one of the participants from POSCO-Mexico said, “This has been an invaluable experience and my. I have a greater understanding of POSCO’s operations thanks to the GMP, and I have gained a totally new perspective on business. I will highly recommend this program to my colleagues.”

POSCO is currently in the process of selecting 30 GMP participants for 2018, a sharp increase in the numbers of participants compared to 21 employees this year so that P-level employees can participate in the program. POSCO will continue to train exemplary employees and strengthen the competitiveness of overseas affiliates through the GMP system.

On December 7, employees celebrated reaching 20 million tons and took a commemorative photo.

FINEX is an innovative, paradigm-shifting technology where molten iron is produced directly in a blast furnace. The process eliminates preliminary processing and uses cheaper powder-type iron ore and bituminous coal as raw materials. Subsequently, investment and production costs can be reduced by 85 percent compared to those of general blast furnaces of the same size. In addition, the technology reduces SOx and NOx emissions by 40 and 15 percent respectively, and fine dust particles can be reduced by 34 percent compared to general blast furnaces.

The beginnings of the technology date back to the 1990s when the Korean government chose POSCO’s smelting reduction steelmaking for a national project and contributed KRW 22.2 billion for research and development.

As a result, POSCO started operating the FINEX 2 plant with an annual production capacity of 1.5 million tons in 2007, and the FINEX 3 plant with an annual production capacity of 2 million tons in 2014, which now produces 10,000 tons of molten iron every day. Surprisingly, the Korean steel industry, which was heavily reliant on foreign technologies in 1968, now leads the world’s steel industry in terms of technology.

However, the path to success was filled with challenges.

In 1998, objections were raised against additional investment for the FINEX technology because there were no clear, tangible results even after KRW 60 billion was invested. Even so, POSCO management made a decision to construct a demo-plant with an additional investment of KRW 100 billion for technology development in order to secure long-term competitiveness rather than seeking immediate profit.   

In addition, POSCO convinced steelmaker Voestalpine, who was in possession of the world’s leading technology for molten iron production, to participate in the project as a partner. POSCO was able to do this by offering to cover the full cost of dispatched researchers and engineers should the technology become successful.

In 2003, there was a slight setback when the newly-opened core FINEX processing facility failed to operate successfully. However, after dozens of tests with 80 in-house professionals over 3 months, the facility was up and running.

Molten iron is produced directly in a furnace in the FINEX plant.

Sang-ho Lee, Director in Charge of Commercialization at POIST, said, “With less than 50 years of steelmaking experience, POSCO has managed to achieve a next-generation, innovative steel-producing technology. It feels great because even though POSCO started as a fast follower of foreign technologies, we are now a leading company in the world’s steel industry with our FINEX technology.”

POSCO currently has over 200 patents for its FINEX technology and HCI technology in Korea and 50 patents in more than 20 countries worldwide. Many overseas companies have expressed an interest in FINEX, and POSCO is in talks with world-renowned steelmakers in China to export its FINEX technology.

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Moody’s forecasted that POSCO’s financial status will improve in the next 1-2 years as a result of increased profits from the sales of POSCO’s high-value-added products and decreased borrowings due to the improvement of global market conditions. In particular, the ratings agency predicted that POSCO’s EBITDA (earnings before interest, taxes, depreciation, and amortization) will increase by 20-25 percent over the previous year, and its debt to EBITDA ratio will decline from 4.1 times to 2.8 times in the next 12-18 months.

Moody’s added that its affiliate, POSCO E&C, will also see its profitability improve in the future.

POSCO has reinforced the competitiveness of its steel business and improved its financial health and profitability since the inauguration of POSCO CEO Ohjoon Kwon in 2014, despite an unfavorable external environment marked by the global oversupply of steel and reinforced protectionism around the world.

POSCO has also been attaining its restructuring goal (149 cases) since 2014, and completed 146 cases of restructuring as of Q317, and should the company complete its restructuring by the end of this year, the number of POSCO’s domestic affiliates will be cut down to 38.

Its financial strength has also improved. POSCO’s consolidated debt ratio of Q3 dropped down by 1.5%p QoQ to 68.1%, the lowest ever since 2010, and its separate debt ratio was 16.3 percent, the lowest ever in its history.

POSCO increased its consolidated and separate sales projections by KRW 4.7 trillion and KRW 3.2 trillion, respectively, to KRW 59.5 trillion and KRW 28.8 trillion compared to its plans at the beginning of the year.

POSCO predicts that steel demand will continue to increase based on the restructuring of the Chinese steel industry, along with the anticipated robust growth of demand in emerging and developing countries. It plans to make continued efforts to generate revenues by securing financial strength, reducing costs and increasing the sales of high-value-added products.

Cover photo courtesy of CBS News.

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To start, POSCO’s Q3 consolidated sales amounted to KRW 15.361 trillion, its operating profit KRW 1.1257 trillion, and its net income KRW 906.6 billion.

It also noted that sales increased by 0.6 percent, its operating profit by 15 percent, and its net income by 71 percent QoQ. The figures reflect the improved performance of its non-steel affiliates, including its energy and ICT division, as well as the enhanced results of its domestic and overseas steel business.

To add, the improved performance of its principal overseas steel subsidiaries contributed to the overall increase in operating profit. The operating profit of its Chinese stainless steel production subsidiary, Zhangjiagang Pohang Stainless Steel, totaled KRW 53.8 billion, up 572.5 percent QoQ, and PT.KP, the integrated steel mill in Indonesia reported an operating profit of KRW 8.8 billion, marking a big turnaround. The operating loss of POSCO SS VINA, its shape steel plant in Vietnam, was greatly reduced.

POSCO’s separate sales increased by 1.7 percent QoQ to KRW 7.255 trillion, and its operating profit rose by 23.4 percent to KRW 721.8 billion. Its net income also increased by 43.3 percent QoQ to KRW 729.9 billion.

POSCO’s financial results continued to show improvements. Its consolidated debt ratio dropped down by 1.5%p QoQ to 68.1 percent, the lowest ever since 2010, and its separate debt ratio was 16.3 percent, the lowest ever in POSCO’s history.

Moreover, POSCO’s consolidated and separate sales projections increased by KRW 4.7 trillion and KRW 3.2 trillion, respectively, to KRW 59.5 trillion and KRW 28.8 trillion compared to its plans at the beginning of the year.

Steel demand looks to continue based on the restructuring of the Chinese steel industry, along with the anticipated robust growth of demand in emerging and developing countries. POSCO plans to make continued efforts to generate revenue by securing financial strength, reducing costs and increasing the sales of its high-value-added products.

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