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2003 Review
Our stellar financial performance came at a time of political
and economic turmoil highlighted by the war in Iraq, SARS, and snowballing
consumer debt and bankruptcy in Korea. On the upside, strong growth
in China continued to help mitigate the steel industry¡¯s chronic
overcapacity problem, while trade pressure from the EU persuaded
the United States to drop protective tariffs in early December,
with China following suit at the end of the year.
Increasing capacity for growth
We joined the ranks of the world¡¯s top-five stainless steelmakers
in April with the commissioning of our Pohang No. 3 Stainless Steelmaking
Plant. We also had a banner year in China, completing expansion
projects at mills in Zhangjiagang, Dalian, and Shunde, breaking
ground for a new stainless mill in Qingdao, establishing an automotive
steel processing center in Suzhou and a mill in Benxi, winning approval
to build a stainless steelmaking plant in Zhangjiagang, and setting
up POSCO China Holding Corporation to manage our growing network.
Improving competitiveness
Our focus on four strategic product categories?automotive steel,
linepipe steel, ferritic stainless steel, and high-grade electrical
steel?boosted sales of these value-added products by 1.24 million
tons to 4.31 million tons. In August, we monetized a portion of
our SK Telecom shareholdings in a ¡Í52 billion exchangeable bond
issue, the first by a Korean firm to boast a negative yield. S&P
and Moody¡¯s also upgraded our credit rating to A- and A3, respectively?the
same as Korea¡¯s sovereign rating. In October, we officially opened
our POSMAC iron ore joint venture in Australia, gaining a valuable
hedge against increasingly volatile raw materials markets.
Transforming innovation
Our Process Innovation initiative continued to transform the way
we do business in 2003. We passed our 18-month Six Sigma milestone
in October with 995 projects completed. At year-end, we had 24 Master
Black Belts, 70 Black Belts, and 312 Green Belts, giving us the
capacity to drive Six Sigma on our own. As we pushed ahead with
our web-enabled manufacturing network project, we also completed
or upgraded our balanced scorecard, supplier relationship management,
customer relationship management, treasury, knowledge management,
and human resource management systems.
Setting new standards
We reviewed and updated our own ethical standards in line with current
global norms, introducing a new code of conduct in June. We also
commissioned an outside analysis of our governance, resulting in
significant changes in the makeup and operation of our board.
Increasing shareholder value
We paid out a combined interim and year-end cash dividend equivalent
to 120% of par value as well as buying and retiring 2% of our outstanding
shares. We upgraded our investor services with expanded disclosure
and quarterly conference call webcasts. Our efforts were rewarded
with a 38% rise in our stock price, propelling us into the No. 4
position on the Korea Stock Exchange with a market capitalization
of KRW 14,500 billion.
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