Zero Debt
POSCO reported a negative net debt for the third consecutive quarter. The company announced on July 31 that its net debt totaled negative 153 billion won (US$137 million) in the second quarter of this year after negative 31 billion won (US$27.9 million) in the fourth quarter of last year and negative 275.8 billion won (US$248 million) in the first quarter of this year.
POSCO chairman Kwon Oh-joon took office in early 2014 with 8.669 trillion won (US$7.8 billion) in debt and 3.713 trillion won (US$3.3 billion) in cash and cash equivalents from his predecessor. In other words, the company had a debt of 4.9561 trillion won (US$4.4 billion) when the current chairman took office.
Former chairman Chung Joon-yang increased the financial burden of the company by building integrated steel mills abroad, investing in the materials industry, and buying Daewoo International. In 2014, the group’s net debt amounted to over 22 trillion won (US$19.8 billion).
The current chairman has dedicated himself to debt reduction and restructuring. In the field of steel distribution, he merged POSCO AST, TMC and SPFC into POSCO P&S. In addition, he combined multiple business units with one another in the framework of POSCO Daewoo, which had been Daewoo International before the acquisition. At the same time, the current chairman reduced the number of overseas projects to seven in the interest of efficiency and reduced the number of subsidiaries by, for example, integrating POSCO Engineering with POSCO E&C.
These days, POSCO is concentrating on the sale of marketable securities. For instance, it sold its 19.9% shares in SeAH Changwon Integrated Special Steel Corporation late last year and sold 1.1 million Hyundai Heavy Industries shares last month to increase its cash by 190.5 billion won (US$171 million). The company is planning to sell its remaining shares in the Hyundai Heavy Industries Group’s subsidiaries before the end of the first half of next year, too. At present, the total book value of the company’s marketable equity securities amounts to approximately 1.4 trillion won (US$1.26 billion).
Since chairman Kwon Oh-joon took office, the company’s total net debt has been decreased by about 4.6 trillion won (US$4.1 billion). Specifically, the amount was reduced from 8.669 trillion won (US$7.8 billion) to 4.053 trillion won (US$ 3.6 billion) between 2013 and the first quarter of this year. During the same period, its cash and cash equivalents increased from 3.713 trillion won (US$3.3 billion) to 4.308 trillion won (US$ 3.8 billion) and its net debt was reduced from 4.956 trillion won (US$ 4.4 billion) to negative 254.2 billion won (US$228 million).