POSCO Inter, First Half Investment Subsidiaries' Performance Soars... "Accelerating Transition to Comprehensive Business Company"

[Asia Economy Reporter Ki-min Lee] Posco International, which is transforming from a general trading company to a comprehensive business company, is bearing fruit in investment business areas such as food and eco-friendly car parts.

Posco International announced on the 5th that its investment subsidiaries' operating profit in the first half of the year reached 83.2 billion KRW, an increase of about 289% compared to 21.4 billion KRW in the first half of last year, according to its recent Q2 earnings report. The sales of investment subsidiaries increased from 420 billion KRW in 2019 to 1.059 trillion KRW last year, and recorded 754.2 billion KRW in the first half of this year. Operating profit also rose from 28.1 billion KRW in 2019 to 44.3 billion KRW last year, achieving 83.2 billion KRW in just the first half of this year. Accordingly, the proportion of total operating profit accounted for by investment subsidiaries rose from 4.6% in 2019 to 28% in the first half of this year.

Posco SPS, which produces driving motor cores, a key component of electric vehicles, recorded an operating profit of 17.2 billion KRW in the first half of this year.

Photo by Posco International

The most outstanding performers among the investment businesses include Posco SPS, which produces driving motor cores, a key component of electric vehicles; Indonesia PT.BIA, which cultivates palm fruit and processes palm oil; and a cotton subsidiary in Uzbekistan. Posco SPS recorded an operating profit of 17.2 billion KRW in the first half, including surpassing 10 billion KRW in quarterly operating profit in Q2. In particular, about 500,000 driving motor cores were sold in the first half of this year, achieving approximately 72% of last year's sales volume of 690,000 units.

Indonesia PT.BIA has also begun to reap substantial results since its acquisition and operation started in 2011. Palm oil production in the first half of this year reached 95,000 tons, about a 23% increase compared to 77,000 tons in the first half of the previous year, achieving an operating profit of approximately 43.4 billion KRW in just the first half. The cotton subsidiary in Uzbekistan, which operates spinning and weaving factories, recorded operating profits of 8.9 billion KRW in Q1 and 11.4 billion KRW in Q2, totaling 20.4 billion KRW in the first half, about four times the previous year's full-year operating profit of 5.2 billion KRW.

Posco International plans to enhance the productivity of its investment subsidiaries to increase profitability. Recently, it announced an investment in Poscoa, a motor core manufacturing subsidiary in China, aiming to establish a sales system of 4 million units by 2025 and position the electric vehicle parts business as a growth pillar. Indonesia PT.BIA plans to expand its palm crude oil (CPO) production with a third plant within this year. The Uzbekistan cotton subsidiary also intends to expand its business through replacement of aging facilities and investment in a cotton cultivation business cluster. A Posco International official said, "Based on the performance of investment businesses, we will accelerate investments for future growth in the second half of the year."