[Courtesy of Posco]
SEOUL -- Posco, a steel giant which used to be credited with spearheading South Korea's miraculous economic growth, has often fallen prey to political favoritism with chief executives pressed to stand down almost every time when there was a regime change.
Posco's current CEO Kwon Oh-joon is no exception. Despite his good reputation among investors at home and abroad, the 67-year-old who built his career at the company's technology team has been under pressure to give up his seat since President Moon Jae-in took office in May last year.
"I know that Posco chairman Kwon Oh-jun has decided to resign," an official at the presidential Blue House said, admitting Moon's office has a negative view of Kwon, who took office in 2014 and secured his three-year second term in March last year.
At Wednesday's board meeting, Kwon bowed out. "I thought that it would be better to hand over the management of our company to a person who is more passionate, capable, young and powerful than me," he told reporters.
Kwon's sudden offer sparked "heated" discussions, but board members agreed to respect his decision, asking him to retain his post for two or three months until his successor will be named.
Under Kwon's stewardship, Posco has aggressively revamped its structure through a period of painful restructuring, cost cuts and a strategic shift to higher-value products. The steelmaker has sold non-core assets and reorganized its workforce and businesses amid a prolonged slowdown caused by oversupply and weak demands that have driven many steel makers to the corner.
In 2014, Posco responded to China's oversupply by diversifying into trading, engineering, and construction under a new strategy of "selection and concentration" led by Kwon to focus on high value-added "World Premium (WP)" products.
Kwon's strategy paid off across the board. Some seven trillion won (6.5 billion US dollars) has been saved over a four-year period, and Posco has reduced the number of domestic affiliates from 71 to 38 and the number of overseas affiliates from 181 to 124.
Despite weak demands in auto, shipbuilding and construction industries, Posco's consolidated net profit last year rose to 2.97 trillion won from 1.048 trillion won a year earlier. Operating profit soared 63 percent on-year to 4.62 trillion won and sales rose 14 percent to 60.65 trillion won.
The company attributed its gains to brisk performances at its non-steel business and steel subsidiaries abroad. This year, Posco promised to invest 4.2 trillion won in new facilities in steel and non-steel businesses and set sales target at 61.9 trillion won.
Posco has also tried hard to cut cost and strengthen customized solution marketing. Sales related to solution marketing jumped from 1.3 million tons in 2014 to 5.14 million tons last year. To cope with uncertain market conditions, Kwon called for a preemptive investment to step up the production of high value-added and premium products.
reporter
Lim Chang-won
cwlim34@ajunews.com
