POSCO saw its quarterly operating profit surpass 1 trillion won for the first time in four years. The Korean steel-making giant released an electronic filing on Oct. 26, announcing consolidated financial statements for the third quarter of this year in which it chalked up 12.7476 trillion won in sales, 1.0343 trillion won in operating profit and 475.5 billion won in net profit. It is the first time in 16 quarters that POSCO exceeded the 1 trillion won barrier in operating profit.
POSCO achieved the milestone despite a decline in steel demand from such industries as automobile and shipbuilding industries due to an increase in sales of added value products. The portion of added value product sales rose to 48.1 percent in the 3rd quarter of the year, up 2.8 percentage points over the previous quarter, as the company sold a record high 403,800 tons of added-value products, up from 199,000 tons.
POSCO’s efforts to restructure business portfolios by disposing of subsidiaries and saving costs have paid off, industry analysts said. POSCO’s earnings surprise was partly attributable to Chinese steelmakers’ restructuring plans, which pushed up prices of steel products produced by POSCO.
POSCO saw combined sales decline 0.9 percent on a quarter-on-quarter basis due to a drop in subsidiaries, caused by its restructuring. But thanks to the better achievements in the steel business, POSCO saw operating profit and net profit jump 52.4 percent and 115.6 percent on a quarter-on-quarter basis, respectively. The company also saw the rate of operating profit to sales in the steel business rise to 14 percent in the 3rd quarter of the year, up 2.1 percentage points over the previous quarter.
Overseas steel corporations posted better business performances, seeing the combined rate of operating profit to sales surge 1,148 percent to 132.3 billion won. Separate financial statements only for POSCO showed that the company posted 6.1065 trillion won in sales and 852.4 trillion won in operating profit and 579 billion won in net profit, a 86.5 percent jump over the previous quarter. An improvement in the business performances of the steel business was partly attributable to the fact that steel outlets have already begun to secure steel products in advance as Chinese-made steel product prices are forecast to rise next year.
Chinese steel makers increased their delivery prices for three months in succession since last October. Chinese steelmakers, accounting for more than half of the world’s total steel production, have been engaging in M&As or are expected to further conduct additional M&As next year. In January, China announced a plan to cut its steel production by 100 million tons to 150 million tons. POSCO also saw its financial soundness improve. The company saw the debt ratio decline to 70.4 percent, a 5.5 percentage point improvement from the previous quarter, the lowest level since the introduction of the consolidated financial statement system.
Honorary chairman Taejoon Park and POSCO enter 'Hall of Fame.'
Honorary chairman Taejoon Park and POSCO were inducted into the “Korean Business Hall of Fame” in the entrepreneur and enterprise categories, respectively. Taejoon Park, honorary chairman, was elected to the hall in recognition of his entrepreneurship in the steel making industry, and POSCO in recognition of its contributions to the industrialization of Korea as a key industry of the country.
The ''Korean Business Hall of Fame” ceremony was a tribute to the distinguished services rendered by enterprises and entrepreneurs that were the driving force behind Korea becoming one of the top 10 economic powers of the world. The event was hosted by the Korean Academic Society of Business Administration and Maeil Business News on Oct. 18 in Shilla Hotel in Seoul.
In the enterprise category, the elected companies included Samsung Electronics, CJ CheilJedang, Amore Pacific, SK Telecom, LG Chem, Hyundai Motor Company as well as POSCO. Inducted into the entrepreneur category were Taejoon Park, honorary chairman of POSCO, Inhoe Koo, Kunhee Lee, Byungchul Lee, Mongkoo Chung, Juyung Chung and Jonghyun Choi. Among the inductees, Taejoon Park is the only hall of famer who is not an owner-manager, which makes it all the more meaningful. At a time when Korea had no experience or technology, armed only with the conviction that “Steel is the rice of industry, and that we must make the country rich by making cheap quality steel,” Taejoon Park erected the integrated steel mill at Yeongil bay of Pohang, which was wasteland at that time.
Living up to his motto “I shall dedicate my short life to the eternal fatherland,” he transformed POSCO into a steel mill, producing 21 million tons a year, in 1992 just 25 years later, and created a stable steel supply system. Thanks to POSCO, steel-consuming industries, like the automobile, shipbuilding and construction industry, secured superior quality and cost competitiveness, thus becoming the leading enterprises of today.
One story often told in Korea involved Deng Xiaoping, who was the Chinese Communist leader. He visited Nippon Steel Corp. in Japan in 1978, and asked the Nippon Steel chairman Yoshihiro Inayama to build a steel plant in China similar to POSCO.
