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(LEAD) POSCO swings to net loss in 2015

All News 16:53 January 28, 2016

(ATTN: ADDS chairman's comments in para 9-11)

SEOUL, Jan. 28 (Yonhap) -- POSCO, South Korea's largest steelmaker, said Thursday that it swung to a net loss in 2015 amid weak demand and losses from its equity in affiliates.

POSCO said in a regulatory filing that it posted 96 billion won (US$79.4 million) in net loss last year on a consolidated basis, a turnaround from a net profit of 557 billion won.

This marked the first annual loss the company reported since it started to provide earnings based on international accounting rules in 2011, the company said.

Operating profit also shrank 25 percent on-year to 2.41 trillion won, while sales dropped 10.6 percent to 58.19 trillion won.

For its steel business alone, POSCO remained in the black with a net profit of 1.32 trillion won, up 15.7 percent from a year earlier. Operating profit and sales fell 4.8 percent and 12.4 percent, respectively, to 2.24 trillion won and 25.61 trillion won.

Shares of POSCO ended up 1.16 percent to 174,500 won on the Seoul bourse. The 2015 earnings were unveiled after the stock market closed.

The 2015 net loss was attributed to the overall slump in the steel industry, along with a decline in the value of assets, including overseas mines and losses tied to currency fluctuations.

Despite the tough market situations, POSCO said that it reduced its debt ratio to 78.4 percent, the lowest since 2010. The ratio for its steel business was also trimmed to 19.3 percent, the lowest ever since its steel mill started operations in 1973.

During an IR meeting held after the earnings were announced, POSCO Chairman Kown Oh-joon said that he feels "fully responsible" for the first consolidated-base loss last year but emphasized that the overall financial health improved and vowed to ramp up corporate restructuring efforts this year.

"I think that it will take some time for the steel industry to improve ... and we cannot guarantee getting over the current crisis by using the same methods as those in the past," he said. "We will keep making an all-out effort to accelerate our structural overhaul."

In July, POSCO announced a series of corporate reform measures under which it has sold its stakes in 34 affiliates. It will keep selling its holdings in 35 and 22 companies this year and next year.

POSCO forecasts the market outlooks will improve "to some extent," citing a possible increase in demand in the automobile, ship and housing sectors.

It also expects that prices will bounce back as industrial restructuring is under way in China and more demand will come from emerging markets, including India and Southeast Asian countries.

The steelmaker aims to achieve 58.7 trillion won in sales this year on a consolidated basis. It also plans to invest 2.8 trillion won this year, up around 300 billion won from a year earlier as part of efforts to enhance its core business competitiveness.

kokobj@yna.co.kr
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