POSCO INTERNATIONAL : transforms into a consolidated company, combining energy to existing set of capabilities and becoming a globally integrated corporation

POSCO INTERNATIONAL transforms into a consolidated company, combining energy to existing set of capabilities and becoming a globally integrated corporation

2023.01.02

POSCO INTERNATIONAL transforms into a consolidated company,

"combining energy to existing set of capabilities and becoming a globally integrated corporation"

- Official merger with POSCO ENERGY on Jan. 1st to become a large-scale joint energy corporation

- Accelerated growth investments as the "Big 2" in the group as well as one of the top 10 companies in Korea in terms of sales

- New Vice-chairman Jeong Tak to "transform the company into a global general business"

POSCO INTERNATIONAL and POSCO ENERGY officially merged as a consolidated company on Jan. 1st. The name of the company will remain as POSCO INTERNATIONAL after the merger, with Vice-chairman Jeong Tak to be appointed as the CEO of the merged corporation at the general shareholders' meeting.

This merger between POSCO INTERNATIONAL is expected to add a new "energy expert" wing to its existing reputation as a "general trading company", which will strengthen its foundation for becoming a globally integrated corporation with top-of-the-industry competitiveness.

The consolidated corporation is expected to have annual sales of 40 trillion KRW and an operating profit of more than 1 trillion KRW. This will put the corporation in 11th place in terms of domestic corporate sales in 2021, allowing it to strengthen its foothold as a key affiliate within the group, along with POSCO.

▲ With the merger, the corporation expects ▶increased management stability through sturdier business structure, ▶strengthened foothold to become a global eco-friendly energy specialist, and ▶accelerated growth for its new businesses.

POSCO INTERNATIONAL has been pushing for a transition from a general trading company to a globally integrated corporation in the areas of energy, food, parts and materials. Serving as a cash cow, a stronger energy sector is expected to have a positive impact on the growth of food and new growth sectors as well as the advancement of the trading sector.

With the merger of the two companies, the earnings before interest, taxes, depreciation, and amortization (EBITDA) will improve from 1.3 trillion KRW in 2022 to 1.7 trillion KRW in 2023, and the debt ratio will be reduced from 200% to 160%, significantly improving financial soundness.

Its reputation as an eco-friendly energy company will also take a step forward. The merger will allow POSCO INTERNATIONAL to connect the entire LNG value chain from exploration to production, storage and power generation. The profits generated here are anticipated to accelerate the eco-friendly energy business as well.

In addition, new growth businesses are expected to gain momentum. Based on its larger size and improved profitability, the corporation can now speed up investment in promising companies and technology development, such as expanding the mobility business, entering into the eco-friendly bio business, and establishing a low-carbon production/power generation system using hydrogen.

POSCO INTERNATIONAL plans to put efforts into maximizing the effect of the merger early, based on the stable growth of existing businesses in 2023.

As for the energy business, it is anticipated that the sector will become the group's third growth engine through quantitative and qualitative growth. To this end, the corporation will continue to develop new gas fields and expand terminals in connection with power generation projects both domestic and overseas. In addition, the corporation plans to expand new and renewable energy businesses, including onshore/offshore wind power and solar power, in order to take initiative in terms of achieving carbon neutrality in line with the global trend towards energy transformation.

With regard to its steel business, the corporation will further strengthen its competitiveness as a trading specialist in order to become an industry leader in the field. It will actively develop new demand for future growth industries, while stabilizing the supply chain for steel and secondary battery materials, which is expected to act as a sourcing window for the group.

This year will be a year of transformation for its food business as well, as the corporation plans to put an increased emphasis on sustainability. The process will include increasing its sourcing capacity and investing in demand assets, while securing profitability by expanding its value chain, including palm refining and soybean milking.

Lastly, the corporation hopes to stabilize its mobility business early on in overseas production bases such as Europe, China, and Mexico, to become a supplier specializing in motor parts. Moreover, a company-wide environment-oriented roadmap will be designed to establish a foundation for its chemical and biotech sectors.

Vice-chairman Jeong Tak, to be appointed as the new leader of the joint corporation, is well known for being a sales and marketing expert within the POSCO Group. He has previously served as the head of the Kuala Lumpur branch of Daewoo International, as well as the head of steel business division, the head of the marketing division, and the CEO of POSCO.

Vice-chairman Jeong is evaluated by many as a well-qualified candidate expected to help POSCO INTERNATIONAL take its second leap by stabilizing the organization post-merger based on extensive expertise and experience he acquired as the CEO of POSCO.

In his inaugural address on Jan. 2nd, Vice-chairman Jeong remarked, "We will combine our trading competitiveness with the strengths of our core businesses, including energy, steel, food, and eco-friendly future businesses, and strengthen our position in each of those industries through bold investments. I expect all executives and employees to work together with a common goal to transform our corporation from a general trading company to a globally integrated corporation"

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