POSCO, South Korea's leading steelmaker, is accelerating its push to sell unnecessary assets as part of its efforts to focus more on its key business and strengthen its financial soundness, industry sources said Monday.
According to the sources, POSCO sold 28 billion won ($25.4 million) worth of real estate last year, including buildings and land in Pohang, its main base on the southeast coast and Gwangyang on the south coast.
The sale was decided as the assets were regarded as idling or unnecessary to hold onto in carrying out its core business.
With the sale, POSCO will be able to reduce taxes and maintenance costs by about 1.9 billion won annually, they said.
Such efforts will likely accelerate going forward, with POSCO seeking to unload 47 billion won worth of real estate this year.
In a related move, the company is reportedly in talks with retail giant Lotte Shopping to sell a building and a land site in Pohang where Lotte Mart is operating for about 18 billion won.
"We will keep selling real estate that has no direct bearing on our core steelmaking business to improve financial status and enhance the overall efficiency in asset management," a company official said.
POSCO also is pushing to complete the sale process for its subsidiaries, including POSCO Specialty Steel for which the company already signed a deal late last year to sell its shareholdings to SeAH Besteel Corp. for 1.1 trillion won.
In October, the steelmaker tapped Hahn & Co., a private equity group, as the primary negotiation partner for the sale of POSFINE, a company that sells ground blast-furnace slags to cement makers.
The asset sale effort is in line with the business plan unveiled earlier last month during an investor relations meeting, in which POSCO promised to cut back on investment and sell assets deemed to be "non-core."
During the meeting with investors, POSCO CEO Kwon Oh-joon said that the company will strengthen its financial soundness by securing some 1 trillion won this year through planned corporate restructuring, such as an affiliate sale.
The move came after the company reported disappointing earnings results for last year. POSCO saw its net profit plunge 58.9 percent to 557 billion won for 2014, citing a one-off payout of taxes following a regular tax probe. Market experts cited the economic slowdown and fiercer market competition as other reasons for the lackluster performance. (Yonhap)