Posco(SEO:A005490) is the world's third largest Korean steel manufacturing company with 39,648 employees. In Korea, POSCO's market share is slightly different in individual markets (hot-rolled steel, cold-rolled steel, plate) but already take up a matchless market position with over 60% market share. Posco is located in Po-hang in Korea and thanks to Posco's growth, Po-hang is famous for steel related industry. Except Po-hang in Korea, Posco has the affiliates in other countries such as China, Japan, America, Canada, India and Vietnam.
Posco was established in 1968 as public enterprise. Through outside director system in 1997, Posco finally became a privatization company in 2000. Moreover Posco was listed in NYSE in 1994, LSE in 1995 and TSE in 2005.
In 2009, Posco produced 31.1 millions of tonnes in the global steel market. Moreover by volume,Posco is the third largest steel manufacturing company in the global market. Posco recorded sales of $24.5 billion in 2009.
Because raw materials like Iron ore and coking coal, take large part of Posco's product's price, Posco's products are influenced heavily by variation in a resource's price. Increasing demands of steel in emerging economics made rapid growth in steel market and gave chance to bigger the profit to steel companies including Posco.
Sudden unexpected occurring like Japan's massive earthquake can influence heavily to steel demand for Posco This is because, In the case of Japan's massive earthquake.
Posco makes profit from three big products. In FY2010, cold-rolled steel occupied 40% of Posco's sales, followed by 25% of hot-rolled steel and plate took 15% of company's sales. Posco's products are mostly used for ship-making, car-manufacturing and building.
Posco recorded decrease of 12% in sales of 2009's $24.5 billion. This is compare to 2008's $27.8 billion, decrease of 27.5% in net profit from 2008's $4 billion to $2.9 billion of 2009.
Posco posted sales of $7.7 billion for Q4 FY2010 with increase of 7.5% as compare to sales of $7.2 billion for the previous quarter. Fourth quarter net profit decreased 12.8% when compared to last quarter’s profit. net profit of Q2 FY2010 was $1.08 billion but in Q3 FY2010’s net profit was declined to $0.94 billion.
Posco explained this decrease due to the global recession caused drop in steel demand.
|Annual Financial Data, in billions||FY2007||FY2008||FY2009|
Posco breaks its manufacture line into four main segments:
Steel, like all other products, is affected by changes in demand, economic expansion and recession. During the economic recession period, like in 2008, demands for steel products and profit of steel companies decreased. On the contrary, during economic expansion, high demand of steel product brings a lot of profit to steel companies. Recently, growing economies in BRICs countries (especially China and India) brought high demand and this trend is expected to be last longer.
China will import increased amount of Iron ore and also price of coking coal is expected to go up due to BRICs' increased importing amount. Since costs of raw materials are in charge of 66% of steel price, steel company's profit and prices of products are highly influenced by price variations in raw materials.
A lot of steel companies in Japan were in Fukushima, a region that was damaged by the earthquake. During restoration work for earthquake,high demand of steel is expected. Moreover due to the short supply of domestic steel companies, constructing and car manufacturing companies will consume territorially close country's products such as Posco in Korea or Boasteel in China.
Posco's major competitors are other steel manufacturing companies. Especially Nippon steel which produced little more than Posco, and the largest manufacturer Arcelor Mittal (MT).
|Arcelor Mittal||$78.03 billion||77.5 million tons|
|Nippon steel||$36.4 billion||31.3 million tons|
|Baosteel||$21.7 billion||26.5 million tons|