South Korea’s largest steel maker Posco aims to nearly double operating profit to 5 trillion won ($4.46 billion) within the next three years by enhancing non-steel businesses while further improving profitability from the core steel sector with premium products.

“By the end of 2019, … the company’s consolidated operating profit will reach 5 trillion won, up from 2.8 trillion won last year,” Posco CEO Kwon Oh-joon said during a conference call held on Thursday. “Revenue from future businesses should also jump to more than 11.2 trillion won by 2025.”

Kwon, who successfully retained his three-year CEO position earlier this month, said he will further grow non-steel businesses, yielding more balanced revenue growth between steel, trade, construction and energy.

To this end, the company has picked four priority areas: Sophistication of steel business with a focus on World Premier (WP) Plus products that generate an operating margin of 25 percent compared to 18 percent of WP products, profitable growth of non-steel business, pursuit of differentiated future growth engines, and group-wise so-called “smartization.” In steel business, the company aims to up sales of premium steel products from last year’s 16 million tons (47 percent of total steel sales) to 20 million tons (60 percent) by 2019 by expanding sales of WP Plus products, an unnamed official from the company said.

For non-steel businesses of trade, construction and energy, Kwon said he will improve their profitability dramatically with focused realignment around lucrative core competency, jacking up the combined operating profit from some 600 billion won to up to 1.5 trillion won by 2019.

Meanwhile, Posco’s first-quarter earnings beat market estimates by a large margin. On a consolidated basis, its operating profit in the January-March period of this year surged 82 percent to 1.2 trillion won from a year ago on 14.6 trillion won of sales, up 17 percent. Posco’s operating income and sales on a non-consolidated basis jumped 27 percent and 21 percent, respectively, in the same period.

By Moon Ji-woong

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