New POSCO CEO says to shun major investments, shed non-core assets
POSCO`s new chief executive said the South Korean steelmaker will sell non-core assets and list some affiliates to shore up its balance sheet, shying away from major new investments in a marked break from his predecessor`s strategy.
Seoul: POSCO`s new chief executive said the South Korean steelmaker will sell non-core assets and list some affiliates to shore up its balance sheet, shying away from major new investments in a marked break from his predecessor`s strategy.
Incoming CEO Kwon Oh-joon, a former POSCO chief technology officer, is taking the helm as the world`s fifth-biggest steelmaker after a wave of investments and acquisitions left it with high debt levels that led to a series of credit rating cuts.
"POSCO`s biggest task is to improve financial structure," Kwon told reporters at a briefing after formally taking up the position of chief executive and chairman at the company. "First of all, we have to improve our core competitiveness in steel and generate profits."
In line with that strategy, the company will restructure its materials and energy businesses, and focus on lithium, nickel, fuel cells and clean coal, Kwon said. He didn`t specify which affiliates might be selected to be listed on stock markets.
POSCO, backed by billionaire investor Warren Buffett, said in January it would reduce investment by 14 percent this year as it sees flat revenue growth. It has posted three consecutive years of profit declines.
"POSCO will not pursue fresh investments aimed at quantitative growth, and instead focus on downstream investments aiming at boosting value," Kwon said in a separate statement, noting the global steel market is suffering from serious over-supply.
Despite the overall investment cutback, Kwon said POSCO will not give up on its plan to build steel mills in India after years of delays. But the company will seek to cut costs for the USD 12 billion project, billed as what would be the biggest foreign investment in India.