Chmn. Chung promises to lead POSCO past sluggish steel demand caused by global economic slowdown
Chairman Chung Joon-yang of POSCO said his second term as head of the steel giant will be focused on overcoming the current crisis and making POSCO a company loved by the public rather than becoming a top-class corporation.
Meeting reporters after attending the breakfast meeting of the World Management Institute during the weekend of March 24, Chung said as he begins his second term as chairman the crisis is at the center of the problems he is facing as the domestic demand for steel has been slumping.
Chung said the first quarter this year has been one of the toughest periods for POSCO as a reporter asked if the steelmaker’s operating profit in the first quarter might come in below 500 billion won.
He said, “Spring has arrived, but it doesn’t feel like it,” quoting an old saying to describe the general domestic economic conditions in Korea. He was matter-of-fact about steel market conditions because it has been worse than what it was like in 2008 at the height of the financial crisis.
The lack of demand and glut in the supply of steel products have sapped the profit of the steelmaker’s Q1 operations, which POSCO financial officials project to be down to less than 500 billion won. Some outside sources estimate it will come in at just above 400 billion won, far less than the 692.5 billion won that the company posted in Q4 of last year, which was considered to have been the company’s worst quarterly results.
The POSCO Group is considering initial public offerings for its affiliates POSCO Energy and POSCO Special Steel, along with stakes in listed companies including banks in order to build-up its cash reserves.
At the breakfast meeting Chung said in his speech, “The business community has been the target of public criticism, that it only knows how to take advantage of the devaluation of the won and government favors, and it’s not making its due contribution to society.”
He said the public perception would change if large businesses like POSCO and others would step up their efforts to share in the growth and development for mutual survival.