Posco ICT Co., South Korean information technology (IT) solution provider that is also a sister company of the country’s largest steelmaker Posco Co., is expected to continue to deliver solid earnings in the second quarter, thanks to its intensive corporate restructuring efforts.

According to a brokerage consensus, Posco ICT is forecast to gain 9.6 billion won ($8.4 million) in operating profit on sales of 222.4 billion won in the second quarter ending June. Such a positive outlook for Posco ICT comes after the company made a turnaround in the first quarter. It posted an operating income of 9.3 billion won on sales of 199.6 billion won in the January-March period, swinging from an operating loss of 110.0 billion won in the previous three months. Its operating profit in the first quarter also more than doubled from a year ago.

Posco ICT’s stellar performance is largely attributed to the restructuring efforts the company has been putting out since July last year. It has been disposing non-core business affiliates and insolvent businesses.

Posco ICT sold off PonuTech Co., a nuclear power plant managing arm, to Soosan ENS Co. for 55 billion won in October last year and streamlined its workforce by about 100 employees through a voluntary retirement program in the end of last year.

In March this year, the company was able to significantly improve its overall financial sheet by selling off its subsidiary Posco LED Co. that has been in the red for all six straight years since its establishment.

After such intensive business and manpower reforms, Posco ICT has turned to focus on core sectors with growth potential, such as smart factory, energy, and airport distribution system businesses. Posco ICT’s smart factory, a solution that allows automatic and efficient control in a production system, is expected to create synergy with its parent firm Posco that globally operates steel mills. Seol Myung-hwan, head of PR at Posco ICT, said exports of the company’s smart factory system to foreign steel makers in China and the Middle East including Hebei Iron and Steel Group Co. have been steadily rising.

Posco ICT that is Korea’s first operator of electric vehicle battery chargers and charging stations is also expected to benefit from the growing electric vehicle industry. It has been expanding EV charging infrastructure with automakers BMW and Hyundai Motor.

Sales in its airport baggage handling system (BHS) business is also set to increase, as the global BHS market has been growing at a compound annual growth rate (CAGR) of 30 percent over the past five years, mainly driven by growing air cargo demand. Chang Jung-hoon, an analyst at Samsung Securities Co. said Posco ICT is most likely to win the remaining contract for the four-phase construction project to expand the country’s main gateway Incheon International Airport based on the know-how it has accumulated by supplying BHS to the airport.

By Yoo Tae-yang

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]