Top steelmaker pushes to diversify

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Top steelmaker pushes to diversify

Korea’s largest steelmaker, Posco, unveiled plans on Thursday to invest 2.5 trillion won ($2.2 billion) to diversify the company’s portfolio, with the goal of achieving 5 trillion won in operating profit by 2019.

“We will sustain growth by digitalizing our business platforms and services for the next 50 years,” Posco CEO Kwon Oh-joon said at a forum in Yeouido, western Seoul, on Thursday. “We will establish smart factories, buildings and cities in hand with our affiliates in response to quickly changing industry paradigms.”

As the steel industry faces headwinds due to protectionist policies worldwide and heated competition, Posco said it aims to find new “growth engines” by combining its manufacturing expertise with internet communications technology. It wants to operate smart factories based on Internet of Things and big-data technology. The company expects long-term cost reduction and quality improvement by shifting to smarter facilities.

For building and cities, this means design errors are likely to be minimized in the construction process through the help of new technologies in big data and artificial intelligence. The steelmaker’s affiliates, Posco Engineering & Construction, Posco Energy and Posco ICT, will be taking part in establishing smart factories, buildings and cities.

Apart from making overall businesses smarter, Posco said it wants to diversify its products in both steel and non-steel sectors. One high-potential business includes extracting lithium from saltwater and battery waste to meet growing demand for lithium in electric-car batteries. Another is developing magnesium sheets that are expected to go in high-end cars in the future. To increase lithium production, Posco in February established a production facility capable of making 2,500 tons of lithium a year.

Posco set 11.2 trillion won as the revenue target for these new businesses by 2025 and said it would invest 2.5 trillion won over the next three years. Boosted by these businesses, the steelmaker is forecasting total operating profit in 2019 to jump to 5 trillion won from 2.8 trillion won last year.

On Thursday, the company also released its tentative first-quarter business performance report. Posco posted 6.99 trillion won in revenue, a 21 percent increase from last year, and 740 billion won in profit, a 27 percent jump.

On consolidated earnings, a result combining the performance of all its affiliates, the company recorded 14.6 trillion won in revenue, a 17 percent increase, and 1.2 trillion won in profit, a whopping 82 percent jump.

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