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Due to the financial turmoil «POSCO" does not want to acquire objects

8 July 2014

Financial problems at the moment with pressing «POSCO», the largest South Korean steel producer, have led to the fact that corporate management internally delayed the acquisition of production units «Dongbu Group» company in the amount of two pieces. This decision was taken even though the onslaught of government who wants to leave these objects for South Korea. Despite the fact that the «POSCO» is in sixth place among the world's leading steel manufacturers, the corporation is now fighting with considerable debt, resulting from three years of falling profits. It is this reason Kwon Chung, who is CEO of the company, explains the reluctance to purchase any facilities because they do not believe that the additional financial costs will give «POSCO» any benefit. Now for the main purpose of the corporation is to focus on their own business and thus reducing all unnecessary expenses.

Korea Development Bank is the main creditor of the company «Dongbu Group», was issued a proposal for the acquisition of power «Dangjin» and production for steel making and the provision of «Inchon» services, the cost of which is about 900 billion KRW. Which, however, was rejected by Kwon June, because, according to him, the purchase of «Inchon» will not give profit growth, especially considering the fact that «Dongbu Group» has a debt of about 2.3 trillion won. «Dangjin» Power more appealing object, so that the Development Bank planned to implement it to create a separate bidding process. As for the «POSCO», the company itself is not against selling certain objects ssobstvennogo building division — «POSCO Specialty Steel» and «POSCO Energy».

In the first quarter of this year, the company has reduced steel production compared to the same period last year by 2.5%, as evidenced by the data provided by the corporation. As a result, the amount of production was 9.32 million tons, sales decreased by 0.3%, amounting to 8.4 million. Tons. However, in the current year is estimated corporation steel production compared with the previous year to grow by 4%, while the volume of production amounted to 37.7 million. Tons. Last year steel production decreased by 4% compared to 2012, reaching 36.4 million. Tons.

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