Korean steel conglomerate Posco plans to increase its revenue by 2.8pc to KRW59.4tr ($53.5bn) in 2021 on an annual basis by focusing on increasing demand for steel in mobility, construction, and the energy sectors.
The company indicated in its earnings report that it will also strengthen its manufacturing competitiveness, lower costs, improve product quality and increase production efficiency in 2021. To achieve these goals, Posco has forecasted capital expenditures and other investments worth KRW6.1tr in 2021.
In 2020, Posco’s steel sales declined by 4.8pc to 34.3mn mt against 36mn mt in 2019. Sales volume bounced in H2 2020 on increasing high-value-added product sales, though H1 was affected by sluggish steel demand due to the COVID-19 pandemic.
The company’s crude steel production dropped by 5.5pc to 36mn mt in 2020 from 38mn mt in 2019, while its overall steel output fell by 4.1pc to 34.4mn mt from 38.9mn mt during this timeframe. Production volumes decreased due to planned idled plant capacities and also a revamp of Gwangyang No 3 blast furnace. Posco’s utilization rate was 88.3pc in 2020, down 1.4 basis points against 89.7pc a year ago.
The steelmaker’s consolidated revenue dropped by 12.7pc to KRW26.5tr in 2020 from KRW30.4tr in the prior year. Its operating profit fell by 56pc to KRW1.1tr in 2020 from KRW2.6tr in 2019, driven by weak steel demand due to the pandemic, lower prices in H1, and higher raw material prices in Q4. Scrap prices rose worldwide, and iron ore prices surged in 2020 exceeding $154/mt for the first time in December, the company noted.
In 2020, the world’s fifth-largest steelmaker reported consolidated revenue of KRW57.8tr, down 10.2pc from KRW 64.4tr in 2019, and a 16.2pc decline in operating profits to KRW2.4tr from KRW3.9tr during the same period.
Recently, Posco announced it is instituting an expanded system in January that allows clients to share the company’s logistics resources. Buyers can share the company’s vessel for exporting goods. SME clients are expected to benefit through this initiative that can reduce their logistics costs and access, especially, as some deal in lower quantities than other vessels may prefer.
($1=KRW1,111.31)