[Yonhap News Photo]
South Korean steel giant Posco refused Wednesday to apply for a government-led corporate restructuring program, despite a prolonged slump, oversupply and weak demand in the global market that have driven many steel makers to the corner.
Posco CEO Kwon Oh-joon admitted that without painful restructuring, it would be hard for South Korea's steel industry to ride out "a global trade war", citing a new trend of protectionism and trade barriers.
In recent months, Posco has been slapped with a wave of anti-dumping duties in the United States, China and India, clouding prospects for its early business turnaround, but Kwon said his company would step up spontaneous restructuring to improve competitiveness and profitability.
"Our restructuring has been completed almost 60 percent in the past two years, and we will step up efforts to get it done 100 percent," Kwon told reporters at a forum in Seoul.
He also stressed Posco would not apply for the so-called One-Shot Act, which is designed to encourage corporate restructuring by streamlining legal procedures and providing tax and funding benefits. Companies can use a fast-track process to shed assets or loss-making businesses.
Together with shipbuilding, the steel industry has been selected as one of South Korea's five industrial sectors which need to be restructured. The situation, however, changed after China moved first to overhaul its own steel industry and reduce steel output by up to 150 million tons by 2020.
China's crude steel output fell 2.3 percent on-year to 803.8 million tons in 2015, the first drop in more than three decades as the world's second-largest economy lost steam. Posco has responded to China's oversupply by restructuring and diversifying into trading, engineering, and construction.
In 2015, Posco reported 96 billion won (85.6 million US dollars) in net loss, compared to a net profit of 557 billion won a year earlier. But the company bounced back in the first quarter of this year thanks to brisk sales of sales of high-end steel products.
Posco's second-quarter net profit soared 88 percent on-year to 220.5 billion won while its operating profit fell 1.1 percent to 678.5 billion won due to poor earnings at Posco Engineering & Construction Co. Second-quarter sales also declined 15.4 percent to 12.9 trillion won.
Aju News Lim Chang-won = cwlim34@ajunews.com
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