In 2016, excess global supply, rising prices of raw materials, and weak global investment all created significant barriers for steel makers. While managing these industry wide market hurdles, some POSCO domestic affiliates saw sharp declines in profitability.
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.
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 21st 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.