Posco's holding-company structure approve by shareholders
Posco shareholders agreed Friday to the formation of Posco Holdings, which will own the steel business, other existing business and any new businesses later formed.
The Pohang, North Gyeongsang-based company said 89.2 percent of the shareholders who participated in an extraordinary shareholders meeting Friday agreed the maneuver. The National Pension Service — with 9.75 percent of the stock, the largest shareholder — voted 'yes' in favor of the transformation.
The formation of a holding company will allow for the expansion of non-steel businesses and the pursuit of future materials, Posco has argued.
Posco Holdings will be formed on March 3 and headquartered in Gangnam, Seoul. The steelmaker will be called Posco.
The holding company will be tasked with developing businesses, research and development and investment. Posco the steelmaking subsidiary will stay unlisted and be owned by the holding company.
Posco's existing stakes in KRX-listed Posco Chemical and Posco International and Posco Energy will be transferred to the holding company.
The company is Korea's largest steelmaker and the sixth-largest in the world by steel production. More than half of its sales come from steelmaking.
Posco's decision came as its stock price has been in the doldrums despite strong results.
"Although Posco has achieved much over the past four years, the market capitalization is less than half its peak, which was in 2007," Posco Chairman Choi Jeong-woo said during the shareholder meeting. "Transition to a holding company is essential in order to increase the value of the group and for the further growth in this fast-changing business environment."
Posco reported 7.2 trillion won ($5.9 billion) in consolidated net profit in 2021, up 302.4 percent jump, the company said in its regulatory filing Friday, in line with the market consensus compiled by FnGuide.
Annual revenue grew 32.1 percent to 76.3 trillion won, beating the market expectation of 7.5 trillion won. Its operating profit surged 284.4 percent to 9.2 trillion won, hitting a record high.
The consolidated earnings include those of its subsidiaries, a list that includes Posco International, Posco E&C, Posco Energy and Posco Chemical.
Earnings were strong due to the favorable steel market globally, the company said.
Pohang residents numbering about 250 from civic groups, the Pohang City Council and the provincial council of North Gyeongsang staged a protest Friday morning in front of the Posco Center building in Gangnam District, southern Seoul, where the shareholder meeting took place, opposing the company's plan of becoming a holding company.
On Thursday, a group of Pohang politicians including Pohang Mayor Lee Kang-deok and North Gyeongsang Province governor Lee Cheol-woo issued a statement saying that the company's plan runs "against the balanced development of country" and urging that the "headquarters of holding company be located in province," not in Seoul.
"Posco Group's growth was only possible as North Gyeongsang residents went through hard times such as environmental issues together with the company for the past 50 years," the statement read. "Posco should come up with specific details and measures how the transition will lead to mutual growth for the company and the residents."
"Posco Holdings and its Future Technology Research Center must be located in the province, not in the greater Seoul area."
In response to that, Posco Chairman Choi said "Since Posco headquarters is located in Pohang, it is paying all taxes to the city," so the location of the holding company "will not be a big problem."
BY SARAH CHEA [email@example.com]