[K-Steel, Great Survival Transformation] ① Steel Now Accounts for Only Half of POSCO's Sales, with Resources, Energy, and Food Emerging as New Growth Pillars

POSCO Group is accelerating its organizational overhaul to become a comprehensive materials and energy company, moving beyond its 50-year identity as a "steel company." Amid growing uncertainty in the steel industry due to the spread of global protectionism and oversupply from China, the company’s diversification efforts-focused on energy, food, and secondary battery materials-are now producing visible results in its financial performance.

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According to the steel industry on May 6, the share of steel in POSCO Group’s consolidated sales has dropped from the previous 70-80% range to just above 50% in the first quarter of this year. Steel division sales have declined from about 60 trillion won in 2023 to around 50 trillion won projected for 2025. This marks a significant inflection point in the business portfolio reorganization that has been underway since the company transitioned to a holding company structure in 2022.

A POSCO official said, "The proportion of steel in the group’s sales has already dropped to about 50%. The core challenge is to cultivate new growth pillars that go beyond steel."

At the center of this transformation is POSCO International. Based on its resource development, energy, and food businesses, the company posted operating profit in the mid-300 billion won range in the first quarter. It is rapidly catching up to POSCO, which handles the steel business (operating profit in the high 400 billion won range).

In the energy sector, POSCO International has already established a structure that covers everything from production to storage and trading. Its Myanmar gas field, which began operation in 2000, generates approximately 392.4 billion won in annual operating profit. In addition, Senex Energy in Australia, acquired in 2022, brings in an additional annual profit of around 50 billion won. In the first quarter of this year, operating profit reached about 31 billion won, a 230% surge compared to the same period last year.

The food business is also expanding from distribution to production. POSCO International has built a value chain encompassing production, refining, and sales, centered around a palm oil plantation of about 400 million pyeong (approximately 1,322 square kilometers) in Indonesia. Last year, this business recorded sales of about 357 billion won and operating profit of 101 billion won, demonstrating a high-profit structure.

POSCO’s transformation goes beyond simple diversification; it is fundamentally changing its profit structure. In the past, fluctuations in the steel market had a significant impact on results, but as resource, energy, and food businesses have expanded, a stable earnings base is being established. The company is transitioning to a structure that reduces reliance on market conditions and secures multiple revenue streams.

In particular, the combination of energy, food, and materials businesses is strengthening the vertically integrated structure-from securing raw materials to processing and sales. This strategy not only boosts resilience to market fluctuations but also secures a foundation for mid- to long-term growth. The transition from a steel-centric company to a resource, energy, and materials provider is becoming a reality.

An industry insider commented, "In the past, increasing steel production and sales was key, but now securing raw materials and energy and maintaining stable cash flow have become more important competitive factors. As it becomes harder to maintain stable profits with only the steel business, large steelmakers are clearly expanding into resource and energy sectors."

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