Posco passes 5 trillion won in operating profit in 2018

Posco on Wednesday posted 5.5 trillion won ($4.9 billion) in annual operating profits last year, surpassing the five trillion won mark for the first time in seven years.

The global steel market last year struggled due to slowing steel demand and harsh protectionist policies form the United States. The steelmaker, however, said it achieved a performance boost thanks to expanded sales of profitable high-end products and improved performance of affiliates like trading arm Posco Daewoo, construction unit Posco Engineering and Construction as well as battery materials maker Posco Chemtech.

Among overseas businesses, Indonesian steel mill PT. Krakatau Posco and Indian car steel plate production facility Posco Maharashtra posted record operating profits since opening, according to Posco.

Compared to the previous year, the company’s operating profit grew by 19.9 percent while revenue increased by 7.1 percent to 65 trillion won.

Despite good-looking results, the steel company’s net profit plummeted 36.4 percent to 1.9 trillion won. The company said one-off losses were reflected in the fourth quarter last year as it decided to stop its synthetic natural gas business. It also cited increased corporate taxes and loss incurred on the disposition of marketable securities as reasons for net profit declines.

The steelmaker said it will achieve sustainable business in the long term by bolstering its non-steel businesses, especially its battery materials business, which is expected to be the company’s cash cow when more electric cars run around the globe.

While the steel business accounted for 49 percent of Posco’s revenue last year, the company said it will reduce that dependence to 44 percent by 2021 in a statement. To boost the battery materials business, Posco is planning to merge Posco Chemtech and Posco ESM. The affiliates make different materials used for batteries.

The company’s revenue target this year is 66.3 trillion won. By 2021, it hopes to reap 78 trillion won in sales.

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]