November 29, 2024

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Posco International's new CEO Jeong delivers his inaugural address at the company's headquarters in Songdo-, Incheon, Monday. (Posco International)

A merged entity of Posco Group’s trading arm Posco International and power generation unit Posco Energy has been launched with the former Posco President Jeong Tak as its new CEO, Posco International announced Monday.

With the latest merger, the country’s largest trading company has scaled up, with annual sales surpassing 40 trillion won ($31 billion) and its annual operating profit reaching around 1 trillion won.

In terms of sales, Posco International, the second-largest company within the steel giant, will become the 11th largest in South Korea overall.

The company’s debt ratio will also go down to around 160 percent from 200 percent, improving its financial stability.

On Monday, Jeong, a marketing veteran who served as the president of Posco, was appointed as the inaugural CEO of the revamped Posco International. Jeong has also been promoted to vice chairman.

Under Jeong’s leadership, Posco International is expected to strengthen its existing businesses that are dealing with steel and secondary battery materials, while finding new growth engines for the future.

“(Posco International) will utilize its trading capacity to secure synergy in (the group’s) major businesses that are dealing with energy, steel, food and eco-friendly resources,” Jeong said in his inaugural address on Monday. Jeong also hinted at future investment in new businesses, which he expects to bring a competitive edge to the company.

Posco international has secured more financial resources through the recent merger. The company said that its earnings before interest, taxes, depreciation and amortization will increase to 1.7 trillion won after the corporate restructuring from 1.3 trillion won last year.

Through the latest merger with the group's liquefied natural gas plant operator, Posco International now has a full LNG product chain from procurement and production to storage and power generation, and the company plans to increase the resilience of its natural gas supply chains through future investments.

During the shareholders meeting on Nov. 4 last year, Posco International said it would invest a total of 3.8 trillion won from 2023 through 2025.

The company will inject 1.6 trillion won through 2025 to expand its gas terminals and bunkering capacities both here and abroad. An additional 1.3 trillion won will be plowed into gas resource development overseas to increase gas production during the same period.

The company noted it will expand its capacity in eco-friendly businesses utilizing renewable and hydrogen resources as well. Here, some 200 billion won is expected to be spent.

Posco International is also investing 700 billion won for energy generation fueled by a hydrogen-natural gas blend, a shift from carbon-heavy power generation.

In the agriculture and biotechnology market, Posco International will make new investments in value chains for palm oil and soybean oil businesses, the company added.

In terms of its automobile parts manufacturing business, Posco International plans to improve production levels at its overseas manufacturing facilities in China, Mexico and Europe.

Meanwhile, the merger ratio between the two companies was 1 to 1.162692.

Posco International will issue new shares, which will be listed on Jan. 20, accordingly with the ratio. Posco International will also hand over 46.78 million shares to Posco Holdings, a shareholder of Posco Energy.

Once the deal is completed, Posco Holdings will have a 70.7 percent stake in the trading arm.

By Shim Woo-hyun (ws@heraldcorp.com)