POSCO in company-wide cost-saving campaign

By Kang Seung-woo

POSCO is different from other conglomerates when it comes to belt-tightening.

The conglomerate, which acquired Daewoo International in one of this year’s biggest merger and acquisition deals, is now engaged in two company-wide campaigns to reduce costs where it can.

First, it is asking its employees to reduce the use of photocopies.

“We are asking our employees to report electronically so as to save the use of paper,” a company spokesman said, adding that it may amount to a little in terms of savings but may make them aware that the company wants to save.

Plus, the steel maker is asking employees to switch off their computers and lights when they are not using them.

These campaigns come at a time when the company has been on a rollercoaster ride this year.

The company had an impressive start in the first half of 2010, with second-quarter earnings almost tripling from a year earlier due to price hikes and rising demand at home and abroad.

Its net income reached 1.19 trillion won ($1.03 million) in the April-June period, compared with a profit of 431 billion won a year earlier.

But it posted an 8.6 percent fall in its third-quarter profit on higher costs and weak overseas demand, and offered a downbeat earnings outlook for the next quarter due to higher materials costs.

The unimposing number was actually reflected in its market value.

Amid the growing combined market value of the top 10 local companies, POSCO saw its market value decrease by nearly 20 percent.

Its stock price began the year at 612,000 won, but ended up at 467,500 won last week.

In a bid to stimulate this, the two top chief executives bought back shares worth 100 million won, Friday.

Meanwhile, POSCO said that it had broken ground for a stainless steel plant with an annual capacity of 235,000 tons in Vietnam.