POSCO Strategizes through Downturn, Looks for $60 Billion in 2013 Sales

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--The accepted wisdom is that when times are tough for companies, innovation and re-invention flourish. The leaders of the pack coming out of the downturn, in a country and/or globally, will be those who have used the shakedown/shakeout period to re-model their strategies and shape their product lines, informed by a view of future markets.

In response to rising uncertainties in the global steel industry, POSCO's (NYSE:PKX) (Seoul, South Korea) top management has unveiled the company's strategy for future growth. The blueprint titled "POSCO Family Vision 2020" will seek core business expansion from steel to energy and materials. Currently, the company is the fourth-ranked global steel producer.

In its development of the renewed growth vision, POSCO acquired independent power provider Kyungin Energy (re-titled POSCO Energy) in 2005 and plant construction company Sung Jing Geotec in 2010, followed by Daewoo International, a trading company specializing in oil and gas exploration and international production activities in 2011, the Korea Herald reports.

Executives at the company said in 2012 said that their focus is be to maintain competitiveness in the steel business and to accelerate results of the other two core businesses in which the company has invested. The company reorganized itself to optimize results from its expanded core business during the latter part of 2012, at the same time divesting its non-core businesses.

In the steel sector, POSCO shifted its gear to high-value-added steel products, like automobile steel plates and steel materials for energy, to boost the company's profitability. Sales of those two high-margin steel products increased 3.4% and 9.3%, respectively, in 2012 from the previous year.

The company is now seeking to expand its global market share for auto steel plates by 10% in 2013 and is aiming to produce 7% of the global steel in the energy industry. It also is aiming to increase the share of premium steel products in its product portfolio 20% this year.

In 2012, the energy and material business began to produce results. The energy division reached $2.6 billion in sales, and the material and chemical division posted $3.2 billion in sales. The engineering and construction division posted sales of just less than $9 billion for the year.

The economic downturn has not inhibited POSCO's global expansion. The company is progressing with a plan for steelwork construction in India, Indonesia and Brazil, and is securing iron ore assets to feed its mills.

POSCO's sales target for 2013 is $60.6 billion consolidated and $29.4 billion independently, with a steel production target of 37 million tons for the year.

For related information see October 10, 2012 -- POSCO Plans Joint Ventures with U.S. Auto Suppliers and Manufacturers.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.