Steelmaker Posco hurt by rough global trade trends

Posco’s operating profit in 2019 dropped more than 30 percent, Korea’s largest steelmaker announced Friday, blaming the results on a challenging global economy and increased resource costs.

The company’s operating profit last year nosedived 30.2 percent to 3.87 trillion won ($3.24 billion) on-year, even though aggregate sales inched down only 0.9 percent to 64.37 trillion won.

The global economic slowdown, a standstill in the growth of major industries, the growing trend of trade protectionism and rising costs of ores and coal contributed to decreased profitability, Posco said. Despite those adverse conditions, Posco said it sold 400,000 more tons of steel last year, for a total of nearly 36 million tons.

Increased sales of high value-added World Top Premium products and a strong year for its subsidiary Posco International helped the company’s operating profit fall in smaller margin. By the end of 2019, Posco said its debt ratio decreased 1.9 percentage points from a year earlier to 65.4 percent - the lowest level recorded since 2010.

The Korean steelmaker said it maintained higher profitability than many of its global competitors due to consistent facility investments, efficient production and the development of high value-added products.

For 2020, Posco predicted increased sales volume of World Top Premium products, while setting distinct pricing plans catered to each market. The steelmaker is also planning to establish a comprehensive marketing plan to respond to changes in demand.

Posco added it will also expand the use of factory systems based on artificial intelligence to improve production, quality and cost competitiveness. And by using raw materials already secured from a lithium mine in Australia and a saline lake in Argentina, the company will continue with its plan to create a demo plant for the commercial production of lithium, a core component of electric car batteries.

With such moves, Posco aims to reach 63.8 trillion won in sales for this year.

BY KO JUN-TAE [ko.juntae@joongang.co.kr]