Posco, Hyundai Steel prove mettle in 2014

Posco reported an operating profit of more than 3 trillion won ($274 million) in 2014 despite a series of difficulties in the global market thanks to the falling price of raw materials.

The company on Thursday posted an operating profit of 3.21 trillion won on a consolidated basis, a 7.3 percent increase from 2013. Revenues were up 5.2 percent to 65.9 trillion won, but net profit dropped by 58.9 percent to 556.7 billion won due to the strong won.

“The decline in net profit is partly due to the government’s probe, which made us pay additional taxes,” said a company spokesman.

Korea’s largest steelmaker was subject to a regular tax investigation last year. However, it did not disclose the amount of its additional tax payments.

The results are preliminary and Posco said it plans to release its final earnings on Feb. 5.

The company said 2014 was a tough year, but it was able to improve the company’s overall profitability by focusing on high-value products. The strategy was part of a plan by Chairman Kwon Oh-joon, who took the helm in March.

The nation’s second-largest steelmaker, Hyundai Steel, also reported its 2014 performance Thursday.

The company said it had 16.3 trillion won in revenues, a 25.1 percent rise from 12.8 trillion won in 2013. Operating profit doubled to 1.44 trillion won from 716.6 billion won the previous year.

Net profit also rose by 10.1 percent year-on-year to 751.1 billion won.

The company attributed the improved numbers to a strong performance from Hyundai Hysco’s cold-rolled plate business.

It added that total output increased by 20.1 percent to 19.1 million tons and sales of high-value products rose by 29.7 percent from 2013 to a total of 8.22 million tons.

The company was also able to trim its debt-to-equity ratio from 120.1 in 2013 to 108.8 percent last year.

But industry insiders said the steelmakers should keep trying hard to improve global competitiveness because this year’s forecast in the industry isn’t positive. Chinese companies are expected to continue to flood the market with cheaper products and another tough year is forecast for steel-using businesses such as construction and shipbuilding companies.

sakwon80@joongang.co.kr [BY KWON SANG-SOO ]