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POSCO Posts 2.84 Billion Won in Operating Income, Up 18% YoY in 2016
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POSCO Posts 2.84 Billion Won in Operating Income, Up 18% YoY in 2016
  • By Jung Min-hee
  • January 26, 2017, 04:45
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POSCO’s operating profit rose 18% year on year to 2.84 trillion won, which help chairman Kwon Oh-joon continue to serve as chairman of POSCO for another three-year term.
POSCO’s operating profit rose 18% year on year to 2.84 trillion won, which help chairman Kwon Oh-joon continue to serve as chairman of POSCO for another three-year term.

 

POSCO’s operating profit rose 18% year on year to 2.84 trillion won on the strength of improved earnings in overseas steel business. Its operating income swelled 10.8%, recovering to a double digit growth rate in five years since 2011.

On January 25, POSCO announced that it posted sales of 53.83 trillion won and operating profit of 2.84 trillion won in 2016 on a consolidated basis. The net income stood at a loss of 96.2 billion won in 2015. But in 2016 it turned to a surplus to 1.48 trillion won.

In particular, the combined operating profit of POSCO’s overseas steel subsidiaries was a loss of 429.9 billion won in 2015. But it turned to a surplus of 218.2 billion won in 2016 due to increased sales of high value-added products and cost reduction.

POSCO inked sales of 24.3 trillion won and operating profit of 2.64 trillion won on an unconsolidated basis. Although sales fell 5.0% year on year due to a decline in product prices, operating profit increased 17.7% year on year thanks to an increase in sales of high-value-added products such as World Premium (WP) products, improved profitability across the company, and efforts to cut down on costs.

WP product sales expanded by 3,263,000 tons to 15.973,000 tons, the highest ever sales volume. As a result, the sales portion of WP products arrived at 47.3%. Its solution marketing-linked sales volume also grew 61% to 3.9 million tons.

Financial soundness has also improved dramatically. POSCO has lowered debt-to-equity ratio to 74.0% on a consolidated basis by reducing its net debts by 7.1 trillion won over the past three years since Kwon Oh-joon took office as chairman. In particular, the steelmaker’s debt ratio stood at 17.4%, the lowest level since its foundation on an unconsolidated basis. Its borrowings decreased by KRW2,515.2 billion year on year on a consolidated basis.

Affiliates and asset restructuring have been proceeding smoothly. Since 2014, the company has completed 126 of its restructuring targets, achieving a cumulative financial improvement of 5.8 trillion won by securing cash and reducing borrowings.

POSCO plans to put a spur to boosting its steel business competitiveness by increasing the proportion of WP product sales by 52% and solution-linked sales by more than 4.5 million tons this year.

Meanwhile, POSCO has set its annual sales target at 54.8 trillion won on a consolidated basis and 25.6 trillion won on an unconsolidated basis. In order to secure future competitiveness even in a difficult market environment such as a global steel glut and a slump in industries which use steel products, POSCO is planning to invest 3.5 trillion won, on a consolidated basis and 2.6 trillion won on an unconsolidated basis up by 1 trillion won and 600 billion won from the year before, respectively. The company plans to steadily cut back on the amount of net borrowings to 1.7 trillion won on a consolidated basis and 1.3 trillion won on an unconsolidated basis.

In the meantime, POSCO's board of directors received will receive the results of a qualification examination of chairman Kwon from the CEO Candidate Recommendation Committee that Kwon is fit to continue to serve as chairman of POSCO and resolved to recommend Kwon as a candidate for chairman for a three-year term to the upcoming general shareholders meeting. Kwon will be re-elected as chairman on March 10 after the general meeting of shareholders and a resolution of the board of directors.