On January 29th, POSCO’s CEO Chung Jun Yang presented the company’s 2013 agenda along with our 2012 business performance at Korea Exchange International Forum in Seoul.
Despite the 2012 economic slowdown, POSCO excelled at our performance
Last year’s business performance recorded as following, in regards to the previous year’s standard. The total sale was 7.7% lowered (from the standard), marking 63,604 billion won, and our operating profit decreased by 33.2%, reaching 3,653 billion won.
Due to the unprecedented economic meltdown and oversupply, product prices dropped about 100,000 WON per ton. Looking at POSCO exclusively, our sales and profit each decreased 9% and 35.6%, marking 35,665 billion won, 2,790 billion won, collectively.
To overcome this aggravated globally worsened economy, POSCO put strong efforts to maximize and strengthen its marketing capacity to the fullest at all our locations around the world. By creating and propelling our new demand development, POSCO had crude-steel output of 37,990,000 ton, with 35,050,000 tons of sales volume, breaking all our previous records.
This was a never-seen-before achievement that POSCO is proud and grateful for, and it would’ve been impossible without our responsible employees. POSCO, along with all our subsidiaries and corporates around the world, worked our best to overcome the economic crisis as a unified team. We expanded our sales on high-value products, and reduced the production cost enterprise, and invested continuously for long-term future growth. The result, POSCO marked the highest and the best within the international steel community with business profit of 7.8%.
Reduction in production cost with High-Value Products
Last year, the sales rate of automotive steel and power-structural steel—two of the most popular high-value products of POSCO—recorded an increase of 3.4%, 9.3%, resulting in 7,360,000 ton and 2,700,000 ton, collectively. With this impact, the sales proportion of World First and Best products have boosted from 16.9% to 17.1%. What’s more, POSCO developed all new 128 products, which is a big change and a positive growth, compared to only 46 products created the previous year. POSCO’s automotive steels are now available for all Japanese automobile industries, who demand only the products have the world’s best quality.
Furthermore, POSCO put all our employees to actually be involved in projects for reducing the production cost as participants. As a result, POSCO was able to abridge 1,300 billion won. Also, POSCO was able to strengthen our financial soundness by achieving the 6.6% reduced debt ratio at 33.6% today, with the increased equity ratio at 74.9%.
Following this remarkable sequence, the R&D investment accumulated an additional 2.6% at 580 billion won, enabling the continuous expenditure for developing new technologies and products.
Along with our stable growth in the steel industry, POSCO began to show our potentials and achievements in activities concerning energy and materials business. POSCO reached sales of 2,881 billion won and profit of 267 billion won in the area of developing energy sources, with marking sales of 3,568 billion won and profit of 166 billion won in materials business. Also, with the active contracting enterprise, POSCO recorded 9,726 billion won sales and 339 billion won profit in the E&C sector.
“Qualitative Growth of Consolidation of Profitability Foundation”
POSCO expects that international competition for survival amongst corporations will be at its highest this year. Therefore, in 2013, revolutionary-management is extremely crucial, to secure development and market for one’s exclusive technology. Hence, POSCO plans to transform the international economic crisis into an opportunity to stably obtain profitability and growth development by practicing “value-management.” This year, POSCO’s economic activities will focus on what’s called the “Qualitative Growth of Consolidation of Profitability Foundation.”
To achieve the following, POSCO will strictly continue and push for the “subsidiary-spatial operation reconstruction”, which began last year. The operation aims to maximize our synergy capacity by reorganizing steel, energy, various raw materials as our firm divisional structures. Currently, the steel department is experiencing steady growth in China due to the increase of steel prices after inventory adjustments and demand recovery. Also, POSCO set a new agenda to improve the natural competitiveness of steel itself as a raw material, since there is a high probability of an increased international demand for steel by about 3%.
Furthermore, by successfully completing the Indonesian integrated mill and third Finex steel mill, POSCO decided to further secure our grounds for global production system. POSCO also plans to actively seek research in high-value products that encompass leading-edge technologies. This year again, POSCO propels to reduce 763 billion won in production cost with the previous executive staff who were involved in the process last year. We also expect a profit of more than 300 billion won in the following 20 years’ annual average. Such success is highly possible due to “Myanmar Gas-Field Project,” which is currently operating with the official rate of 92% and the commercial production will start this May.
Moreover, POSCO plans to strengthen our futuristic business portfolio that understands both profitability and growth possibility in the company’s infrastructures and trade relations by increasing our crude-steel capacity to 48,000,000 ton until 2015(40,000,000 ton in 2012), ability for advancing facilities to 4,474MW (3,284MW in 2012), and material sales to 8,200 billion won (5,500 billion won in 2012).
On another note, POSCO set 7,000 to 8,000 billion won as our investment key within the ability range of cash profit in this year, under a strict principle that considers both the enhancement of competitiveness and securement of growth potential.
Through all the above enterprise, POSCO established our sales goal as 66,000 billion won in consolidated earnings and 32,000 billion won as parent earnings, along with 37,000,000 ton of crude-steel production and product sales amount of 34,000,000 ton in 2013.[box]
UPCOMING CEO FORUM AT NEW YORK CITY
Date: Feb 21, 2013
Location : Four Seasons Hotel, New York
Agenda: 2012 Operating Performance & 2013 Business Plan announcement[/box]