Steelmaker posts record sales in 2010

POSCO chief executive Chung Joon-yang said Thursday the nation’s top steelmaker is considering acquiring the country’s largest delivery service provider Korea Express Co.

Kumho Asiana Group plans to sell Korea Express, which it acquired in March 2008, to stabilize the group’s financial structure.

“With regards to the logistics needs arising at overseas steelworks, and Daewoo International’s trade volume, (the company) is interested in logistics companies, and acquiring Korea Express is under consideration,” Chung said at an investor relations event.

During the session, the world’s fourth-largest steelmaker reported that its sales increased 20.9 percent year-on-year to a record 32.58 trillion won in 2010.

It also unveiled plans to invest 7.3 trillion won ($6.6 billion) this year and expand its overseas production network aiming to push up its sales by 11 percent on year to 36 trillion won.

The company also said that it will increase the proportion of its investment budget directed to research and development as part of its efforts to maintain a technological lead over competitors.

The company plans to inject more than 620 billion won, or 1.72 percent of the overall investment budget, to research and development this year. Last year, research and development funds accounted for 1.62 percent of the steelmaker’s overall investment.

In addition, funds directed to projects securing raw materials will also be raised as the company seeks to raise the proportion of materials obtained from in-house sources to 50 percent by 2014.

Concerning its global network, the company said that it will begin works on an integrated steelworks in Indonesia and a cold-rolling mill in India within the year.

Construction of a continuous galvanizing line in China and a stainless steel cold-rolling mill in Turkey will also get underway this year, the company said.

In addition, POSCO is planning to set up six new processing centers in China and India, divided equally between the two nations, expanding its global processing center network to 54 facilities in 14 countries.

Last year, POSCO’s operating profits jumped 60.3 percent to about 5.05 trillion won and its net profits improved 32.5 percent to come in at 4.2 trillion won.

The company attributed the strong performance to its cost-cutting efforts and increasing sales of high-added value products. According to POSCO officials, the company was able to reduce production costs by more than 1.2 trillion won as cheaper raw materials and recycling byproducts offset rising materials costs.

In terms of crude steel output, POSCO saw a 14.2 percent increase to 33.7 million metric tons, while sales rose by 10.6 percent to 31.5 million tons.

By Choi He-suk  (cheesuk@heraldcorp.com)