* Kwon says look at "all possibilities" regarding the key
* Aims to cut capex by two thirds in 2016
* Targets signifincant rises in EBITA, operating profit in
(Recasts, adds CEO comments, details, context)
SEOUL, May 19 South Korean steelmaker POSCO
said on Monday it may consider selling a stake in
its profitable trading and resources arm Daewoo International
Corp as part of a restructuring plan aimed at
shoring up its finances.
POSCO, weighed down by heavy debt and three consecutive
years of declining profit, is joining overseas peers like
ArcelorMittal and ThyssenKrupp in trying to
weather a downturn in the industry as global demand for steel
The world's fifth largest steelmaker also said it would cut
its investment budget by about two thirds by 2016 while aiming
to significantly boost its EBITA and profit by that year.
"POSCO's strategy has been so far focused on expansion, but
those days have gone," Chief Executive Kwon Oh-joon told an
"All businesses are subject to restructuring. Daewoo
International is no exception," he added.
Daewoo International is Korea's largest trading company,
with businesses including resource development. Daewoo, which
also operates gas fields in Myanmar, posted a 54 percent jump in
its operating profit in the first quarter of this year.
Global steel producers are weighed down by an oversupply of
steel and reduced customer demand, especially from China, the
world's biggest consumer and producer of steel.
Kwon, who took office in March, has distanced himself from
his predecessor Chung Joon-yang, who spearheaded major
investments and acquisitions in POSCO, including the $3.3
billion purchase of Daewoo International in 2010 despite the
The spending spree has left the steel giant with a debt
burden that has more than doubled over the past four years and
led to a series of rating cuts by Moody's, S&P and Fitch.
Kwon said the steelmaker would scale back its stakes in some
affiliates and exit non-core businesses, while seeking to list
some of its affiliates on the domestic bourse.
The company has more than 40 affiliates, and Kwon declined
to specify restructuring plans, saying they are under review.
"We are looking at various possibilities regarding Daewoo
International. Nothing has been decided yet," he said.
POSCO plans to cut its annual investment to 2.9 trillion won
in 2016, from 8.8 trillion won in 2013.
POSCO also said it aims to boost its EBITA to 8.5 trillion
Korean won in 2016, from 5.7 trillion won in 2013, while
boosting its operating profit to 5 trillion Korean won ($4.88
billion) on a consolidated basis from 3 trillion during the
While focusing on core, steel business, it will nurture
lithium, nickel, fuel cell and clean coal as new growth engines,
"It is very challenging to achieve its EBITA and profit
targets, unless the steel market improves sharply," said Lee
Won-jae, an analyst at SK Securities.
Shares of POSCO, backed by billionaire U.S. investor Warren
Buffett, ended down 0.5 percent on Monday, having fallen 5.4
percent this year, lagging the flat wider market.
($1 = 1024.0500 Korean Won)
(Reporting by Hyunjoo Jin; Additional reporting by Sohee Kim
and Jungmin Jang; Editing by Miral Fahmy)