POSCO Group’s consolidated sales have declined year-on-year due to a sluggish domestic market, unfavorable overseas market conditions, and a decrease in the number of subsidiaries due to group restructuring. However, the group’s consolidated operating profit increased by 18% year-on-year thanks to a significant improvement in profits in the overseas steel sector.

In particular, after POSCO’s overseas steel subsidiaries showed a combined operating deficit of KRW 429.9 billion in 2015, they managed to achieve a combined operating profit of KRW 218.2 billion in 2016 due to increased sales of high value-added products and cost reduction. The performance of POSCO’s major overseas steel subsidiaries has also improved significantly, with Zhangjiagang Pohang Stainless Steel Co., Ltd. and POSCO Maharashtra Steel achieving an operating profit of KRW 107.4 billion and KRW 36 billion respectively.

POSCO’s consolidated net profit was also in the black, from a net loss of KRW 96.2 billion in 2015 to a net profit of KRW 1.482 trillion in 2016.

Separately, POSCO recorded sales of KRW 24.3249 trillion and an operating profit of KRW 2.6353 trillion in 2016. POSCO’s sales fell by 5% year-on-year due to a decline in product prices; however, POSCO’s operating profit grew by 17.7% year-on-year, thanks to the company’s cost reduction efforts and expanded sales of its World Premium (WP) products, which are its proprietary high-value-added products

Although last year saw a depressed market in which the price difference between finished steel products and their raw materials reduced by KRW 1.2 trillion, POSCO managed to increase its operating profit by more than KRW 400 billion compared to 2015 by securing KRW 1.4 trillion with its internal revenue-generation activities alone; KRW 1 trillion through increasing sales of WP products, and KRW 400 billion through cost reduction methods. As a result, the company’s operating margin recovered to a double-digit figure for the first time since 2011 (10.8%).

The sales of POSCO’s WP products reached a record high of 15.973 million tons, up 32.63 million tons compared to the previous year. As a result, POSCO’s sales of WP products reached a share of 47.3% among the company’s total sales. In addition, the company’s solution marketing-linked sales also increased 61% to 3.90 million tons.

POSCO’s financial soundness has also improved dramatically. POSCO lowered its consolidated debt-to-equity ratio to 74% by reducing its net debt by KRW 7.1 trillion in three years since POSCO CEO Ohjoon Kwon’s inauguration. In particular, POSCO’s separate debt ratio stands at 17.4%, the lowest figure since its foundation. The company’s consolidated borrowings also decreased by KRW 2.5152 trillion from the previous year.

The restructuring of the company’s affiliates and assets are also moving forward. 126 of the 149 restructuring targets that the company set in 2014 have been completed, which resulted in a cumulative financial improvement of KRW 5.8 trillion thanks to the acquisition of cash and the reduction of borrowings.

POSCO’s aim is to strengthen its steel earning power, which is one of the best in the world, as well as to complete the restructuring planned in POSCO 2.0 in order to set the foundation for future growth. Most notably, the company plans to increase the share of the sales of its WP products to 52% and to increase the volume of solution-linked sales to more than 4.5 million tons this year, thereby further boosting its competitiveness in the steel industry.

For 2017, POSCO is aiming for sales of KRW 54.8 trillion consolidated and KRW 25.6 trillion separate. In order to secure future competitiveness in an increasingly difficult market environment where you see the global steel industry dealing with oversupply and sluggish demand, the company plans to increase its investment cost by KRW 1 trillion consolidated and KRW 600 billion separate, to KRW 3.5 trillion and KRW 2.6 trillion respectively. At the same time, the company plans to continue reducing its net debt to KRW 1.7 trillion consolidated and KRW 1.3 trillion separate.

Don’t miss any of the exciting stories from The Steel Wire – subscribe via email today.

On October 26, POSCO held an IR session and announced a revenue of KRW 12.748 trillion, as well as an operating profit of KRW 1.034 trillion in the third quarter. Its net income amounted to KRW 475.5 billion.

As the number of its subsidiaries was reduced due to group restructuring, revenue on a consolidated basis declined by 0.9% QoQ. However, thanks to the slight improvement in the performance of the energy and ICT divisions due to the vastly improved performance of the steelmaking division, operating profit and net income increased by 52.4% and 115.6% QoQ respectively.

In particular, due to the increased sale of high value-added products and a reduction in costs, the operating profit of overseas steelmaking subsidiaries increased by 1148% QoQ to KRW 132.3 billion. The integrated steel mill in Indonesia also recorded an operating profit of KRW 38.5 billion. In addition, major overseas steelmaking subsidiaries, including the Mexico CGL, the cold rolling mill in Vietnam and the cold rolling mill and CGL in Maharashtra, India, saw their operating profits greatly increase.

The separate revenue and operating profit of POSCO increased by 1.6% and 19.6% QoQ respectively to KRW 6.106 trillion and KRW 852.4 billion. Its net income amounted to KRW 579 billion, up 86.5% QoQ.

The separate operating profit margin went up by 2.1% QoQ to 14% thanks to the increased sales of WP (World Premium) products and solutions, the higher price of steel and cost-saving efforts. It is the highest figure in 20 quarters since the third quarter of 2011.

The sales of WP products increased by 199,000 tons QoQ to 4,038,000 tons, a record high. As a result, WP products now account for 48.1% of the total sales of POSCO.

Its financial strength drastically improved as well. The consolidated debt-to-equity ratio was lowered by 5.5% QoQ to 70.4%, the lowest level since the introduction of the Consolidated Accounting Standards, and the separate debt-to-equity ratio declined by 2.3% QoQ to 16.9%, the lowest level since its founding. The debt on a consolidated basis decreased from the previous quarter to KRW 2.264 trillion, and on a separate basis, as it has more cash than loans, the net debt became negative (△KRW 829.5 billion).

Meanwhile, POSCO decided to merge POSCO TMC and SPFC into POSCO P&S in the third quarter, and slimmed down the structure of its steel distribution business. It also merged its processing centers in China and Japan to innovate the structure of its overseas steel business. All in all, POSCO completed nine cases of affiliate restructuring and eight cases of asset restructuring. POSCO is planning to finalize 24 cases of affiliate and asset restructuring in the fourth quarter of 2016, and 27 cases next year.

POSCO to Post 678.5 billion Won in Operating Profit on a Consolidated Basis During the Second Quarter

POSCO Announces First Quarter Earnings During IR Conference Call

Be sure you never miss any of the exciting steel stories from The Steel Wire by subscribing to our blog.

SMK has been held biennially since 2010 and is an exhibition that highlights steel and nonferrous metals. The event receives great attention globally for its focus on metal materials but also on other technological aspects, including tubing, piping, metallurgy technology, equipment, and the metal business.

By participating in SMK for four consecutive years, POSCO has experienced the accompanied growth of small business participants through close interaction. Through exhibiting the high technical skills it maintains as the leading domestic steel company, POSCO has also contributed to the growth of small businesses.

For this year, POSCO set up a booth at the convention with four different zones, all under the concept of attracting visitors. The booth introduced how WP products can be used in daily life through differentiated exhibitions.

Introducing POSCO’s world-class steel technology

Visitors could experience how WP products could be used in different industries through the divided zones: “Automotive”, which revealed how WP products could be applied to an automobile’s interior and exterior, “Living”, which showed customers how to get acquainted with WP products for daily home use along with “Infra” (infrastructure), which is meant to increase and encourage customer partnerships.

The last and most popular area was the “Hero” zone, which allowed visitors to experience a 360-degree view of the complete steel production process through VR. The footage showed everything from loading and unloading raw materials, to shipping the products.

Since the Automotive zone displayed cars made from POSCO steel sheets, it was possible for consumers to see the technology applied to both the interiors and exteriors of the cars. Models that were displayed included the POSCO Body Concept-Electric Vehicle (PBC-EV), Renault’s Chassis and SM6 BIW (Body in White), as well as examples from MG. All models were manufactured with high-strength body and chassis parts from POSCO.

The company brought car body parts to the exhibition, and incorporated them to show which areas of the automobiles used their special steel sheets. The exhibition also drew the highest attention because of an inclined display, which showed how the inner dynamics of the car would appear as if it were driving on a hill.

The Living zone had a setting modeled after a real home, introducing WP products for daily life usage. Visitors could see the premium home appliances and household products made from POSCO steel in each room of the house, including the living room, utility room, study room and kitchen.

Widely used POSCO WP products were displayed in each room: a washer and an air conditioner in the utility room, a refrigerator, sink, and cooking tools in the kitchen, a computer and a printer in the study room and a TV in the living room.

The Infra zone helped visitors have a better understanding of the principles behind making stronger and safer construction sites, LGN carriers and suspension bridges with POSCO’s structural steel products, such as PosCozy, PosMAC and UL700. Visitors could touch the products, including high manganese, high damping steel and cable bridges that prevent noise between floors. The exhibition also compared POSCO’s steel products to products made from average steel, to help visitors experience the true quality of the company’s premium steel.

Lastly, the Hero zone was highlighted as the most future-oriented space at SMK 2016. The VR component provided a realistic and exciting video tour of the production process at the steelworks – a 360-degree video and immersive sound experience made viewers feel as if they were actually standing in the center of the steelworks.

Besides the featured products in the Hero zone, visitors could also enjoy the kinetic art performance that took place every 30 minutes in the center of the exhibition space. This performance utilized POSCO’s stainless steel in the form of wires, showcasing a fluid steel movement show with a background of beautiful music.

POSCO displayed yet another substantial and high-quality exhibition at SMK 2016, and we are already looking forward to seeing what the company has in store for the next time around.

POSCO to Use VR Content to Promote Its Steel Products and Exceptional Manufacturing Process

Be sure you never miss any of the exciting steel stories from The Steel Wire by subscribing to our blog.

POSCO saw improvement in its performance with 12.8574 trillion won in sales and 678.5 billion won in operating profit on a consolidated basis.

Although the construction and energy sectors showed a slight decrease in sales and operating profit, steel, ICT and other materials exhibited overall improvement, leading to an increase in sales and profit in those sectors by 3.2% and 2.8%, respectively. The operating profit margin amounted to 5.3%, remaining at the same level as the previous quarter.

In particular, the operating profit in the steel sector, which includes the combined profit of overseas steel subsidiaries, increased 33.1% from the previous quarter to make a profit during the second quarter. The overseas steel subsidiaries, which had an overall deficit of 399.1 billion won last year, reduced the deficit to 42.3 billion won in the first quarter and raised 10.6 billion in the second quarter, resulting in an increase of 52.9 billion won from the previous quarter.

Zhangjiagang Pohang Stainless Steel (ZPSS), the manufacturer of STS in China, has realized profit for the second straight quarter thanks to an increase in the prices of raw materials, including nickel. PT. Krakatau POSCO in Indonesia and POSCO SS-VINA in Vietnam have largely reduced their deficit as well.

Recorded profit margin is currently at 11.9%, the highest in four years, thanks to the increased sales ratio of high quality steel (on a parent basis)

In terms of parents, POSCO posted 6.96 trillion won in sales and 712.7 billion won in operating profit, up by 4.2% and 22.4% respectively from the previous quarter. It posted 310.5 billion won in net income during the term, down by 30.4%, due to asset impairment caused by the decrease in the value of their stock holdings and losses on valuation of foreign debt caused by exchange fluctuations.

The operating profit margin for parents amounted to 11.9%, up by 1.8% from the previous quarter, which is the highest since the second quarter of 2012. This was driven by the sales and price increase of World Premium (WP) products. It can also be considered a result of the enhanced competitiveness in basic steelmaking, as the company has actively implemented a marketing solution designed to satisfy the needs of customers from the manufacturing stage to the selling stage.

The sales volume of WP products reached 3.839 million tons, up by 157K tons from the previous quarter. WP products accounted for 45.2% of total product sales, an increase of 0.7% from the previous quarter.

Completed 81 cases of restructuring of assets and subsidiaries since 2014

The company’s overall financial health is steadily improving as well. It recorded 75.9% in debt-to-equity ratio on a consolidated basis, the lowest since 2010, and 19.2% on a parent basis, the lowest since its founding.

Relevant innovation within the business structure, which has been underway since 2014, is being carried out smoothly. The company has completed 45 subsidiary restructuring cases from 2014 up to the first half of this year, which includes the cases completed during the second quarter. An example of such a case is the merger between POSCO AST and POSCO P&S. Eighty-one cases, which include 36 asset restructuring cases, have been completed so far out of a total of 149 cases, with the overall restructuring target to be achieved by 2017. POSCO will restructure 28 domestic and overseas subsidiaries and 13 assets during the second half of this year.

Be sure you never miss any of the exciting steel stories from The Steel Wire by subscribing to our blog.

On April 21, POSCO held an Investor Relations (IR) conference call to announce improved operating performance of its first quarter.

Although POSCO recorded KRW 12.46 trillion in revenue in the first quarter on a consolidated basis, which is a slight decrease from the previous quarter, it recorded KRW 659.8 billion in operating profit, KRW 319.3 billion up from the previous quarter, and KRW 352.5 billion in net income during the term,  KRW 243 billion up from the previous quarter. The company also accounted for 5.3% in operating profit margin, which is 2.9%p up from the previous quarter.

Operating profit increased due to improvement in sales performance in steel and trading 

These positive results can be attributed to increased performance in the steel and trading divisions, being operated by POSCO Daewoo and POSCO-China, even though the construction division showed a decrease in sales and profits. Overseas steel corporations exhibited remarkable improvement in sales performance, as Zhangjiagang Pohang Stainless Steel (ZPSS) and POSCO-Mexico realized profits, and the operating deficits of PT. KRAKATAU POSCO and POSCO SS-VINA are beginning to be reduced.

KRW 582.1 billion in operating profit, 10.1% in operating profit margin (in paraent basis) 

On a parent basis, POSCO recorded KRW 5.767 trillion in revenue, KRW 582.1 billion in operating profit and KRW 445.9 billion in net income during the term. Although revenue has slightly decreased, the company recorded KRW 210.9 billion in operating profit and KRW 184.1 billion in net income during the term, which is an increase from the previous quarter. This is driven by the sales increase of World Premium (WP) products, POSCO’s proprietary high-value products, along with the improvement of market conditions due to the price increase of carbon steel products and restructuring of Chinese steel companies.

POSCO recorded 3.682 million tons in sales volume of WP products, which amounts to an increase of 255,000 tons from the previous quarter. Among total product sales, the sales of WP products accounted for 44.5%, which is an increase of 4.8%p from the previous quarter.

Also POSCO recorded 10.1% in operating profit margin which is an increase of 3.9%p from the previous quarter.

POSCO forecasts to improve the financial structure of KRW 4 trillion within this year by accelerating the restructuring of subsidiary companies

POSCO realized continuous improvement of its financial structure. On a consolidated basis, it recorded 77% in debt-to-equity ratio, which is a decrease of 1.4%p from the previous quarter, while registering 19.2% on a parent basis, which is 0.1%p down from the previous quarter.

In particular, on a parent basis, the company recorded -356.3 billion in net debt in the first quarter from 341.3 billion in the  previous quarter as total cash and cash equivalents have increased more than debt. This is the result of improving the company’s overall financial structure that it has strived for over the last two years.

POSCO completed 6 subsidiary restructuring cases in the first quarter, which have been carried out since the announcement of the management reform plan in July of last year. The company sold Genesis, a subsidiary in the power generation sector, and finalized liquidation of POSCO-RUS, while completing the merger of POSCO Green Gas Technology. It is expected that the improvement effect will reach to approximately KRW 4 trillion through the restructuring of subsidiary companies.

Meanwhile, POSCO announced its sales goal of KRW 58.7 trillion on a consolidated basis, and 37.2 million tons for the production of crude steel and 35.3 million tons for product sales. The company also estimated that its investment costs amounted to KRW 2.8 trillion, which is KRW 300 billion up from last year, and net debt was KRW 14.6 trillion, which is KRW 1.9 trillion down from last year.

Be sure you never miss any of the exciting steel stories from The Steel Wire by subscribing to our blog.

While interest in EVs is particularly great among eco-conscious consumers, they are not the only ones wanting to get behind the wheel of these industry disrupting vehicles. Early adopters are drawn to technological advances that are making EVs increasingly practical, while frugal travelers see them as a buffer against gasoline price hikes.

One advantage of electric cars is the potentially available infrastructure. After all, electrical power grids are nearly ubiquitous. In order to support the adoption of EVs, there is a need for the expansion of charging infrastructure, which can range from household electrical plugs to high power appliances that could eventually replace today’s gasoline pumps.

This electric vehicle charging infrastructure market is still fairly limited, but has great potential for growth in the coming years. In fact, all over the world, the EV market and charging infrastructure are coming to life.

A variety of players, including governments, car companies, blue chips and startups, are now working to build a universal EV charging infrastructure. So much so that the charging station market is expected to grow to more than 4.5 million units by 2021, with sales revenues estimated to reach $10.4 billion in Europe, the Middle East and Africa, according to a report from IMS Research.

Ready, Set, Charge!

In the EV world of the future, on-the-go fast charging solutions will no doubt be necessary, but the most common charging configuration is likely to be the slow-charging device for home and work because of its convenience and cost efficiency.

Today, all mainstream EVs can “slow charge” (over several hours) from a general-purpose 110V/240V household electrical outlet. In fact, for the most basic slow charge (single-phase charging at less than 16A), all that is required is an adaptor cable to connect the car to the outlet. However, charging at locations as essential as home and work must not only be practical, but also effective.

As such, POSCO has recently put efforts into developing an EV slow-charging device that is scheduled to be released in 2016. In doing so, the company will be able to engage the market for the first time, while also expanding it with products that incorporate World Premium (WP) steel materials. In this way, POSCO is differentiating itself from other corporations, securing product and brand competitiveness in the EV charging infrastructure market.

A New Steel Solution

In July of last year, the Design Solution Task Force of the Structure Research Group in POSCO’s Steel Solution Marketing Department discovered the potential demand for steel in the EV charging infrastructure market. They soon collaborated with POSCO ICT to develop EV charging service designs, and set out to upgrade the quality of the existing market products.

The company then developed an EV slow-charging device that is a hybrid of wall-mounted and free-standing devices to enhance the productivity and efficiency of the product. Considering that each EV manufacturer has a different form of charging cable, this new device can simultaneously charge two vehicles at once by applying two channels (5-pin and 7-pin).

 While many other products on the market tend to adopt the powder coating method on general cold-rolled (CR) steel, POSCO applied its PossSD surface processing material to sustain the natural texture of the steel and emphasize the product as a premium one. PossSD, which was named the Innovation of the Year by the World Steel Association in 2015, consists of lean duplex stainless steel with super ductility using a strip-casting process that can directly produce hot-rolled coils in molten steel without a separate process.

In addition to adding an unrivaled aesthetic to the devices, PossSD has also increased cost competitiveness by significantly reducing the content of expensive raw materials such as nickel and molybdenum while sustaining the general stainless steel grade’s moldability and corrosion resistance. As such, POSCO is now more likely to secure marketability and market share by addressing the issue of corrosion caused by the external environment.

Driving Design

Furthermore, POSCO jointly developed a product design with JoongAng Control late last year, and has since completed detail design and prototype production. The corporations also decided to discuss plans for immediate mass production with the goal of initially supplying the product to GM Korea later this year and are currently hoping to diversify the aesthetics of the main body in order to satisfy the diverse needs of clients in the EV charging market.

Starting with this collaboration with POSCO ICT, POSCO plans to expand the scope of design solution applications from EV charging infrastructure to other areas with potential demand such as charger canopies, charging stations and parking towers. Furthermore, the company is endeavoring to respond to the expansion of the future eco-friendly energy market and increase the sales of WP steel materials. As such, POSCO’s future remains bright as ever as the EV market, and subsequently the steel market, continue to grow.

As mainstream original equipment manufacturers begin to mass produce EVs, the role of charging infrastructure will continue to evolve from being an awareness tool to becoming a commercially viable business venture. The roll-out of EV charging infrastructure is essential to the mass adoption of EVs and therefore could prove to be a huge social, political and economic change every bit as important to our society as the introduction of the internal combustion-powered automobile.

Be sure you never miss any of the exciting steel stories from The Steel Wire by subscribing to our blog.

POSCO-CWPC has been selected as an excellent supplier for the third consecutive year by DPCA, the largest finished carmaker in the Central China region. (From left) DPCA’s technical director, Tan Min Qiang and POSCO-CWPC’s President, Young-ki Seo

Dongfeng Peugeot Citroen Automobile (DPCA), the largest finished carmaker in the Central China region, selects the recipient of its Excellent Supplier Award each December after evaluating purchase amount, quality, delivery and technical cooperation. This year, POSCO-CWPC was the only recipient among the company’s steel product suppliers.

This achievement is the result of POSCO-CWPCeliverya region,warded tthe strategic partnership between both parties and to improve its solution marketing by actively utilizing the sales channel of POSCO’s automotive flats.

POSCO-CWPC has completed quality certification on about 70 percent of the galvanized steel products produced at the Guangdong Pohang Automotive Steel Corporation in the two years since its quality certification process began. In doing so, POSCO-CWPC is able to successfully supply high quality materials that meet DPCA0 of POSCO’s au, solidifying its position as a major supplier to automobile manufacturer.

POSCO-CWPC held a technical exhibition in October to expand its technical marketing. It also improved its technical response to DPCA through the operation of its Technical Service Center based in Wuhan, China, and is actively working on EVI activities to apply POSCOponse to DPCA throughthe G25 and G95 DPCA automotive models.

POSCO-CWPC plans to strengthen the cooperation between both parties by constructing a JIT supply system and to expand the sales infrastructure of WP products through the extension of solution marketing with DPCA.

Be sure you never miss any of the exciting steel stories from The Steel Wire by subscribing to our blog.