More than 290 people attended the presentation ceremony, including Ohjoon Kwon, chairman of the POSCO TJ Park Foundation; Chang-hee Kang, former chairman of the National Assembly; Hong-goo Lee and Deok-soo Han, former prime ministers of Korea; Gong-il Sa, chairman of the Institute for Global Economics; Nak-in Sung, president of Seoul National University; and prize winners from previous years.

Ohjoon Kwon, POSCO CEO and chairman of the POSCO TJ Park Foundation, said, “For the past 10 years, the POSCO TJ Park Prize has been a way to recognize those who tackle the never-ending challenges of today’s world. In the next 10 years, we aim to make the POSCO TJ Park Prize an even more noteworthy honor.”

This year, the POSCO TJ Park Prize was awarded to the following honorees:

• Excellence in Science: Prof. Jong-heun Lee, Department of Materials Science and Engineering at Korea University
• Excellence in Education: Attached Middle School at Kyungpook National University
• Excellence in Community Development & Philanthropy: Jimmy Pham of Vietnam, CEO of KOTO
• Excellence in Technology: Myeong-hwan Kim, head of the Battery Research Institute at LG Chem.

POSCO CEO Ohjoon Kwon (far right) stands with recipients of the POSCO TJ Park Prize. The award recognized their noteworthy achievements in science, education, community development, and technology.

The Excellence in Technology award was added this year to highlight how technology has contributed to the renewal of the Korean economy. Eligible candidates for this category include persons or organizations that contributed to national and global market development.

Prof. Jong-heun Lee of Korea University, winner of the TJ Park Science prize, was honored for his work on the oxide nano hierarchical structure in which nano building blocks are regularly self-assembled, and the p-type oxide semiconductor, which has a high level of catalytic activity that allows for gases to be detected quickly and selectively. His achievements are expected to be widely utilized in various areas such as safety, environment, medical science, and IoT.

Kyungpook National University Attached Middle School, winner of the Excellence in Education prize, was awarded for its model of creative public education. Unlike a typical learning environment, the middle school introduced project-based learning in 2012, which allowed students to switch roles with teachers and also collaborate with one another on a deeper level.

Jimmy Pham, winner of the Excellence in Community Development and Philanthropy prize, established KOTO (Know One, Teach One), the first social enterprise in Vietnam. For 17 years, the organization has been giving at-risk youth a chance to stand on their own by teaching various life-skill classes.

Myung-hwan Kim, head of the Battery Research Institute at LG Chem, received the foundation’s very first Excellence in Technology prize. Kim began to oversee battery R&D in 1996 when the secondary battery business was first starting to become active. Through much trial and error and over 20 years of experience in the field, Kim successfully developed the first lithium-ion battery for electric vehicles. He is considered to have greatly contributed to making Korea a leader in the secondary battery industry.

Chang-hee Kang, former chairman of the National Assembly, delivered a congratulatory address, saying, “I would like to thank POSCO for contributing not only to the development of science and technology, but also for actively recognizing scholars and citizens who made a great impact in their respective fields.”

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POSCO CEO Ohjoon Kwon (left) shakes hands with Tom Schuessler, president of ExxonMobil Upstream Research Company, at the signing ceremony between ExxonMobil and POSCO.

ExxonMobil, the world’s largest oil company, upholds strict standards when choosing materials, and for the last five years has been working with POSCO to manufacture and test slurry pipes at worksites. Last year, a 1.2 m long slurry pipe – made with POSCO’s high manganese steel – was installed at ExxonMobil’s Kearl Oil Sands Project in Canada. It demonstrated a resistance to wear five times higher than conventional materials.

With its abrasion-resistant properties, POSCO’s high manganese steel can greatly reduce overall operating costs and increase oil production. “Seamless collaboration has led to the quick commercialization of this new high manganese steel technology, which will set a new standard for oil sands mining operations,” said Tom Schuessler, president of the ExxonMobil Upstream Research Company, who attended the ceremony.

POSCO and ExxonMobil employees pose for a commemorative photo shoot after inking a high manganese steel supply contract at the POSCO Center.

In response to president Schuessler, CEO Kwon suggested furthering their partnership by utilizing high manganese steel in various other businesses within the oil sands industry.

POSCO also plans to use its high manganese steel in the making of heavy construction and bulletproof military equipment as well as steel pipes and facilities to move various minerals including oil sand slurry.

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CEO Kwon of POSCO greets Chairman & CEO Jeffrey Immelt of GE to discuss ways to integrate GE’s smart factory solutions into POSCO’s steel and non-steel factories

In late February, Kwon made trips to Germany and the US to visit Siemens and GE factories. He met with executives to discuss best practices and share thoughts on potential collaborations. At that time, Kwon and Immelt were not able to meet so they took advantage of Immelt’s time in Korea for a face-to-face meeting.

Kwon and Immelt discussed different ways that smart technologies could be incorporated into POSCO’s steel and non-steel factories. By combining GE’s strength in equipment manufacturing and POSCO’s expertise in the steel industry they hope to create more advanced smart industrial solutions. POSCO, in particular, was looking to introduce smart features to their material, energy, and construction businesses through this partnership.

Executives from POSCO, including CEO Ohjoon Kwon, discuss smart factory solutions with GE Chairman & CEO Jeffrey Immelt

After meeting with Immelt, Kwon left for Indonesia to attend the Korea-Indonesia Economic Development Forum in Jakarta. Kwon also visited PT Krakatau POSCO, located in Cilegon, and encouraged field employees to continue their hard work to strengthen their competitiveness in the region.

PT Krakatau POSCO is POSCO’s first overseas integrated steel mill and is capable of producing a total capacity of 3 million tons. Since 2013, it has cut down on operating losses and increased its competitiveness through innovative cost-reduction activities and new technology integration.

Last year, the overseas steel business division’s operating profit reached KRW 218.2 billion, up by KRW 648.1 billion from 2015. This is a result of increased sales of high-margin products and intentional efforts to cut costs.

POSCO plans to focus on strengthening its financial structure by increasing the sales of its World Premium Products. Through this effort, they hope to continuously expand their presence in overseas steelmaking while optimizing the process of locally sourcing product materials.

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In addition, President In-hwan Oh and Vice President Jeong-woo Choi were re-elected as inside directors at the general shareholders’ meeting, and Vice Presidents In-hwa Chang and Seong Yu were newly appointed as inside directors. Those appointed as new outside directors were Shin-bae Kim, former vice chairman of SK Group; Seung-hwa Jang, a professor of law at Seoul National University, and Moon-ki Jung, an associate professor of Business Administration at Sungkyunkwan University.

During his first three-year term that began in 2014, Ohjoon Kwon worked to enhance the corporate structure and profitability by focusing on strengthening POSCO’s core competitiveness as a steel company, its financial soundness, and group restructurings for his first three years in the role.

Kwon, who worked as CTO (Chief Technology Officer) before becoming the CEO, is a steel technology expert who has previously served as the director of the Technology Research Center and director of the Research Institute of Industrial Science and Technology. Under his leadership, POSCO secured exclusive technology competitiveness and also moved forward with its Solution Marketing offerings that combine hardware, steel products, software integration and application technology, commercial support, and human solutions.

POSCO significantly drove up its operating profits by 19% to KRW 2.6 trillion at the end of last year from KRW 2.2 trillion in 2013, Kwon’s first year as CEO. During the same period, its operating profit ratio also increased from 7.3% to 10.8%, POSCO’s first double-digit operating profit ratio in five years. Since Kwon’s inauguration as CEO, a total of 126 restructurings have been implemented to achieve a cumulative financial improvement of KRW 5.8 trillion by the end of last year. Its debt ratio stood at 17.4 percent, the lowest level since the foundation of POSCO.

As CEO Kwon succeeded in improving POSCO’s structure while enhancing its financial soundness and profitability. The company’s credit ratings by international credit rating agencies also improved. In October 2016 Moody’s upgraded POSCO’s long-term credit rating outlooks from Baa2 (negative) to Baa2 (stable), and in February 2017, Standard & Poor’s upgraded their rating from BBB+ (negative) to BBB+ (stable).

On March 10, POSCO held its 49th general shareholders’ meeting at the POSCO Center. More than 200 domestic and overseas shareholders, including representatives of overseas shareholders and institutional investors, attended the general shareholders’ meeting.

“With a low growth rate, higher raw material costs, and the spread of protectionism throughout the overall domestic industry, we are facing a tough business environment,” CEO Kwon said at the general shareholders’ meeting. “But we will lay the foundation for future growth and strengthen the profitability of steel.”

To this end, Kwon laid out his vision for the future to:

• strengthen the steel business by reinforcing its World Premium Products that are based on proprietary technologies such as high-manganese steel and giga-grade steel,
• solidifying the group’s business structure through structural improvements and efficiencies,
• discovering and promoting new synergy projects among group affiliates, and
• preparing a future growth engine based on smart solutions.

In-hwa Chang, who was newly appointed as an inside director, is responsible for the steel production sites at Pohang Works and Gwangyang Works. He previously served as head of the New Business Management Office, head of the Steel Solution Marketing Office and head of the Technology Investment HQ. As head of the Technology Investment HQ, Vice President Seong Yu is heading up new business endeavors such as in high value-added product technologies as well as the development of POSCO’s lithium production ventures and cathode materials business. Yu previously served as head of the New Business Management Office, head of ESM Business Office and head of the PosLX Business Group.

Outside director Shin-bae Kim is a high-profile IT business entrepreneur who served as president of SK Telecom and vice chairman of SK C&C. Due to his excellent management skills, he was promoted to become a vice chairman of the SK Group.

Outside director Seung-hwa Chang is a professor of law at Seoul National University. Previously he served as a judge of the Seoul District Court and also worked as a lawyer in the United States. As a specialist in international trade law, he worked as an arbitrator for the International Court of Arbitration and was appointed as the first Korean judge of the WTO Appellate Court.

Outside director Moon-gi Jeong is an Associate Professor of Business Administration at Sungkyunkwan University. Jeong worked at Samil PwC as a member of the Financial Supervisory Service’s Accounting Review Committee for many years and has served as the Vice Chairman of the Korean Accounting Society.

The meeting was attended by about 200 domestic and overseas shareholders including representatives of overseas shareholders and institutional investors.

At a Board of Directors meeting held after the general meeting of shareholders, POSCO elected outside director Byoung-won Park as chairman of the Board of Directors. In-hwan Oh and Jeong-woo Choi were appointed as new presidents.

In-hwan Oh, promoted to president in February, is serving as Chief Operating Officer (COO) of the Steel Division and COO of the Steel Business Division. Before, Oh served as the head of marketing and the head of the Steel Business Strategy Office. President Jeong-woo Choi is currently the head of the Corporate Strategy & Finance Center after serving as the chief financial officer, head of the Corporate Audit Department, and vice president of POSCO Daewoo.

Byoung-won Park, chairman of the Board of Directors, is now chairman of the Korea Employers’ Federation and has been working as an outside director of POSCO since 2015. Park also served as chairman of the Woori Financial Group, chairman of the Korea Federation of Banks, and chairman of the National Happiness Fund.

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S&P forecast that POSCO would maintain its EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) at 20%, which is higher than that of its global competitors. This is, in large part, a result of improved performance in sales (due to the increased sales of high valued-added products), its excellent operating efficiency, and a decrease in the oversupply of steel in the region.

S&P added that POSCO is expected to maintain its adjusted debt-to-EBITDA ratio at 2.5 – 3.0 over the next two years by creating a stable free cash flow and continuously reducing borrowings. As a result, S&P changed POSCO’s financial risk profile from “significant” to “intermediate.” In fact, over the past few years, POSCO improved its adjusted debt-to-EBITDA ratio from 3.8 in 2014 to 2.9 in 2016 by implementing various restructuring measures, including the sale of non-core assets.

S&P also predicted that its affiliate, POSCO E&C, would see its sales performance improve from last year by reinforcing its efforts to reduce costs.

In the midst of challenges such as a global economic recession and industry oversupply, POSCO has devoted a significant amount of effort to reinforce the competitiveness of its main business while improving its financial health and profitability. As a result, its consolidated operating profit increased by 19% YoY with consolidated sales coming to KRW 53.0835 trillion and its operating profit coming to KRW 2.8443 trillion.

Increased sales of POSCO’s World Premium Products, its high value-added products such as PosMAC and PosCoZy, along with corporate-wide efforts to improve profitability and reduce costs, led POSCO’s separate operating profit to increase by 17.7% YoY. As a result, its operating margin reached 10.8%, the first double-digit operating margin since 2011. POSCO’s stock price also rose by 55% compared to the first half of 2016. Moody’s, an international credit rating agency, also upgraded its outlook for POSCO’s “Baa2” credit rating from negative to stable last October.

POSCO continues to take steps towards maintaining its position as one of the world’s most competitive steelmakers. Since being nominated to serve a second term as CEO, Ohjoon Kwon has committed to strengthening POSCO’s financial outlook and secondary business growth. As part of its non-steel business ventures, POSCO recently completed the construction of the lithium factory at Gwangyang Steel Works and also announced its plan to invest KRW 300 billion in the cathode material business for secondary batteries.

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However, due to the successful management of POSCO’s overseas subsidiaries, the combined performance of the group improved significantly. By focusing on sales of high value-added products based on solution marketing, engaging in extensive cost-saving efforts, and generating revenues via the “Innovation POSCO Project”, POSCO was able to deliver a two-digit profit margin and a more than 50-percent jump in stock value.

By continuing this work in 2017, POSCO is determined to maintain its position as a leader in the global steel industry.

POSCO’s Vision for 2017

In 2017, further improvements in the global steel market are likely as the global economy continues its recovery. Also, improvements are expected in the supply-demand imbalance as China is expected to slightly reduce steel production.

In 2017, POSCO plans to further the success seen in 2016 and continue to lead the steel industry through innovation and continuous improvements of its World Premium Products.

However, the spread of trade protectionism across developed and developing countries alike, is expected to create potential barriers for POSCO’s export environment. Moreover, competing mills have been accelerating consolidation and expansion to maintain their dominance in their respective local markets while also focusing on the development of high-end products. All of these factors point to ever intensifying competition both in terms of quantity and quality.

To remain competitive with other leading global players in 2017, POSCO plans to solidify its profitability by completing its restructuring process as part of Innovation POSCO 2.0 and strengthening its foundation for future growth.

In CEO Ohjoon Kwon’s 2017 New Year’s message, he marked the steps that must be taken in 2017 to accomplish these goals. First, POSCO must continue upgrading its steel business with proprietary technologies. Second, the business structure of POSCO Group should be continuously restructured to improve efficiencies in low-profit businesses. Third, future growth must be ensured by strengthening competencies based on “Smart Solutions.” And lastly, POSCO must continue its work to establish a flexible and creative corporate culture that excels in the 21^st century.

Despite all of the aforementioned challenges facing the steel industry, POSCO has continued to be a leader. Through innovation and a strong focus on improving the quality of its World Premium Products, POSCO is again well-positioned to lead the industry in 2017 – and in the years to come.

With the theme of “Great Thanks to You! True Pride in You!” the event included 120 guests from over 100 corporate customers. Major industries were represented, including those related to steel building materials, hot-rolled steel plates, energy, shipbuilding, automobile manufacturing, electric and electronics products, wire rods, and stainless steel production.

POSCO held its 2016 Customer Appreciation Night at the POSCO Center on December 16. The event was attended by approximately 120 executives from over 100 corporate customers.

“We beat expectations in 2016 in terms of performance, thanks to the constant support and trust from our customers, despite difficult domestic and overseas economic conditions,” said POSCO CEO Ohjoon Kwon in the main event. “Customers like you are the engines that will lead the future growth of the Korean economy and the global steel industry. In order to lay the foundation for sustainable growth with our customers in 2017, POSCO will do everything it can to develop innovative solutions that provide customers with advanced solution marketing.”

POSCO CEO Ohjoon Kwon welcomes executives from POSCO’s corporate customers and promises to continue focusing on providing advanced solution marketing.

In addition, attendees enjoyed the screening of a special video titled, “Dearest customers, we love you! We thank you!” The video humorously filmed customer responses as they received phone calls from POSCO saying, “I love you!”

Dinner began with toasts from POSCO CEO Ohjoon Kwon and Sang-woon Lee, Vice Chairman of Hyosung, and was followed by a performance from world-famous vocalist Paul Potts. In 2007, Potts catapulted to fame after winning the British audition program “Britain’s Got Talent”. Potts’ beautiful renditions of ‘Brindisi,’ ‘Parla Piu Piano’ (the theme of the film ‘The Godfather’), and ‘Missing Geumgang Mountain’ were warmly received by those in attendance, and Potts continued with an impressive duet with Korean musical singer Bada.

World-renowned vocalist Paul Potts gave a searing performance of classics such as Brindisi and Missing Geumgang Mountain.

As POSCO turns its attention to 2017, it plans to further solidify its leadership in the domestic and overseas steel markets by expanding sales of customer-oriented world-premium products. In addition, while further cementing its strategic partnerships with core customers, POSCO will be strengthening its differentiated competitive advantage through advanced solution marketing that helps unlock customer value.

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The MOU-signing ceremony was held on October 17 in the POSCO magnesium plate factory in the Haeryong Industrial Complex in Suncheon. Approximately 20 people were present, including National Assembly member Jeonghyeon Lee, the governor of Jeolla-namdo Nakyeon Lee, the mayor of Suncheon Choonghoon Cho and POSCO CEO Ohjoon Kwon.

POSCO and Suncheon, Jeolla-namdo entered into an MOU on October 17 to expand the number of magnesium production facilities. Third from the left, National Assembly member Jeonghyeon Lee, governor of Jeolla-namdo Nakyeon Lee, POSCO CEO Ohjoon Kwon and the mayor of Suncheon Choonghoon Cho.

According to this MOU, POSCO and Suncheon will join forces in the purchase of a lot and the expansion of the facilities for producing automotive wide magnesium plates. They will also work side by side in transforming the Haeryong Industrial Complex into a light materials industry cluster by fostering and actively supporting magnesium-related SMEs.

Magnesium is in the spotlight as an ultra-light material that is lighter than aluminum and steel. As environment-friendly issues have emerged in the automotive industry, POSCO has focused on developments with magnesium, as it can be more effective than aluminum in terms of weight reduction. POSCO completed the magnesium plate factory in Suncheon in July 2007, and has since been producing and supplying alloy plates to domestic and overseas automakers and electronics companies.

POSCO’s magnesium was applied to Renault’s concept car ‘EOLAB,’ which was unveiled at the Paris Motor Show in October 2014. The roof of a standard car weights about 10kg, but the roof of ‘EOLAB’, which is made from POSCO’s magnesium plates, weighs about 4.5kg, and has accordingly attracted public attention.

POSCO is planning to capitalize on this expansion to preempt the anticipated increasing demand for magnesium for foreign automobiles, and become the first to make a move in the global market.

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Some 200 guests attended the completion ceremony held on the same day to celebrate the occasion, where blast furnace No. 5 was lighted by POSCO chairman Ohjoon Kwon.

Once a blast furnace has been lighted, it does not cease operation. Instead, the firebricks of its inner wall gradually wear out.

When its lifespan eventually comes to an end, the fire inside a BF is extinguished. After that, either the main body is removed or the firebricks are replaced, while some parts of the facility are renewed. This is what we call “BF refurbishment.”

Through refurbishment, Gwangyang’s blast furnace No. 5 has increased its volume from 3,950 cubic meters to 5,500 cubic meters with an annual production capacity of 5 million tons of molten iron. As such, it has been reborn as the ninth largest in the world.

Additionally, its lifespan has been extended to more than 15 years, while conversely saving energy due to the installation of a facility that completely shuts off steam generated from the BF.

Further enhancements have also been made to the overall performance of the generator that produces electricity itself by using gas from the BF.

POSCO, through the safe and stable operation of the furnace, is committed to bringing it up to the standards of the world’s best in terms of quality and efficiency.

With the completed refurbishment of blast furnace No. 5, Gwangyang steelworks is now operating a total of three mega BFs, including the world’s largest—BF No. 1 with a volume of 6,000 cubic meters and BF No. 4 at 5,500 cubic meters—with a total annual production capacity of 21 million tons of molten iron.

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Dear beloved POSCO family,
The year 2016 has dawned upon us. I wish you a happy and healthy 2016. May the new year be one full of joy, where all your wishes and dreams come true.
Happy New Year!

Dear POSCO family members!
Unfortunately, the local business environment is predicted to decline in 2016.
We anticipate additional challenges to our overseas operations, especially in emerging countries where economic recession is highly likely to persist. Moreover, it has become extremely difficult for us to survive without revamping our current business strategy as we face Japan’s cost competitiveness stemming from its reduced currency value and China’s faster-than-expected technological advancements.
Therefore, I would like to sincerely request that we focus all our efforts towards accelerating “Structural Innovation” in 2016, and break the static mold of old business conventions on operation, cost, profit and consciousness.

First of all, we need to innovatively restructure our Group’s businesses from a perspective of profitability.
Until now, our restructuring initiative has focused on improving financial structure. This year, however, we must carry out thorough restructuring in terms of profitability by eliminating any latent financial issues that may emerge.

Second, we need to improve our current high-cost and inefficient operating structure.
Under the current period of low-margins, it is necessary to improvise our operations to perform under an extremely low cost structure. This transition to low-cost and highly efficient structure should apply to all the functions of the Group including procurement, production, R&D and management. Low-profit and inefficient facilities must all be closely scrutinized to find the most optimal solution, including idling of such facilities. IP projects must be augmented and systemized to accelerate elimination of inefficiencies.

Third, we should also spur our innovations in our revenue structure.
The marketing division needs to implement advanced Solutions Marketing to enhance customer satisfaction. Meanwhile, the R&D and production divisions should seamlessly interconnect with the sales teams to support the expansion of World Premium (WP) product sales.
As for our overseas affiliates that urgently require improvements in profitability, it is important for them to undergo innovative restructuring, strengthen Solutions Marketing and coherently execute cost-savings initiatives.
The significance of breaking away from the conventional captive revenue structure and reinforcing differentiated competitiveness cannot be emphasized enough.
Finally, we must firmly establish an ethical management and a performance-based corporate culture.
Let me re-emphasize that good ethics are POSCO’s most important management principle. No matter what the cost may be, the code of ethics must be adhered to and zero tolerance will be applied to any unethical behavior, regardless of offender’s rank or severity of the case.
Based on this code of ethics, we will create a virtuous corporate culture that generates higher performance results through reinforcing evaluation methods and compensation.

Dear POSCO family members!
As things get more difficult, solutions must be found on-site. As long as we continue to challenge ourselves and make improvements in our production, marketing and construction sites, I have no doubt that we will overcome today’s adversities in no time.

I sincerely hope that 2016 will be a year in which the whole POSCO Group and its members make great strides together.
Thank you very much!

New Year’s morning.
Ohjoon Kwon, CEO

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