In the Swing of Things

POSCO comes up with super Q1 record with sales up to 7.75 tln won

"Smooth cycle of the domestic manufacturing industry has reached the limit,"POSCO Chairman Lee Ku-taek warned during a lecture at a meeting of POSCO officials and their counterparts from the steel giant's cooperative firms held recently at the conference room in the POSCO Pohang complex.
The POSCO chairman went on to say that the manufacturing industry may be fallen into the bad cycle if things don't go right, adding that the industry should continue to be the base for the country's economy for the coming 10 to 15 years. "But it has come to the limits for further growth,"the chairman lamented.
He said the smooth cycle for the manufacturing industry means that the industry's rising sales, and productivity due to its strong competitiveness.
The POSCO CEO went on to say that it is in the vital interest of the manufacturing industry to keep its smooth cycle going further because if it falls to the bad cycle due to problems arising from such causes as globalization and environmental factors, it would be very hard to recover.
POSCO officials said what the chairman was trying was to convey a message that the steel industry is in a good state of business, but other manufacturers are facing the bad cycle with the smooth cycle reaching the limit.
Lee called on the industry to rearm, citing the example of the Japanese manufacturing industry's survival from the past decade of stagnation that visited Japan. In general terms, if per capita GDP of the manufacturing industry rises, it loses competitiveness. But Japan was different. The recognition and respect for people who make goods in Japan's social customs, in fact, kept its manufacturing industry competitive.
He said, in this vain, POSCO needs a reform a step higher than usual, adding that POSCO should raise its productivity further since it is still not on the same level with the wage level. POSCO is ahead in some part of technologies, but lags behind in some areas, he warned.
The chairman emphasized that implementation is very important, warning against the tendency to think that 90 percent of work is done with planning and getting reports, although outsiders think that POSCO has a high implementation rate.
He also touched on the trend in the world steel industry that after the merger of Mittal Steel and Arcelor, New Japan Steel, POSCO and Baosan Steel of China have emerged as a rival steel network pitted against the Mittal-Arcelor merger, along with the prediction that the merger of smaller steel makers would continue to occur in the days ahead.
In the meantime, POSCO surprised the world with its record first quarter results with the sales of 5.701 trillion won, up 5.4 percent from the preceding quarter and operating profit of 1.13 trillion won during the period with net profit amounting to 98.2 billion won, up 4.9 percent from the previous quarter, the Oct.-Dec. of 2006. Operating profit was up 1.5 percent from the last quarter of 2006.
POSCO, during its investor relations session at KRX, said it has readjusted upward the sales projection for this year to 22.6 trillion won from 21.3 trillion won and operating profit target to 4.3 trillion won from 4.1 trillion won.
POSCO Vice President and CFO Lee Dong-hee,during an IR session, said the consumption of steel in BRICs has been rising enough to boost POSCO's sales this year to increase 5.9 percent, along with the demand for steel in such domestic industries as shipbuilding and automobile also expected to increase this year, ensuring their steel company's growth.
Korea's steel giant notched production of 7.552 million tons of crude steel in Q1, down 3.1 percent from the preceding quarter, but sales rose 1.7 percent at 7.295 million tons.
The CFO said the sales of lead alloy steel plates and steel plates rose 14.3 percent and 11.4 percent respectively from the Q4 last year, along with stable steel demand increases in shipbuilding and automobile industries and steel product increases in international steel markets helped POSCO to record very good results in Q1.
As for POSCO's steel plant project in India, he said the Orissa State where the steel mill is to be built, has promised that it will clear every thing up in 2 to 3 months to allow POSCO to finish the purchase of land requited for the projected steel plant and the New Delhi government, too, is scheduled to hold a meeting under Premier Mamohan Singh to check up on the progress of the POSCO project. POSCO will be able to launch the construction of harbor and the complete the purchase of land in the first half of the year. nw

POSCO Chairman Lee Ku-taek.