Posco fills pockets for DSME bid

POSCO, South Korea’s largest steel mill, said Monday its second-quarter operating profit soared by 51.2% to Won1.89trn ($1.89bn), adding to its war chest for its bid for a stake in Daewoo Shipbuilding and Marine Engineering.

Net profit rose by 34% to Won1.49trn, compared to the Won1.11trn earned in the second quarter of 2007. The leading supplier of steel plate to South Korea’s shipbuilders posted record sales of Won7.46trn, up 28.3%.

Longer term, however, analysts are concerned the world’s fourth-largest steel maker will have difficulties keeping up the recent impetus as expansion plans face frustration.

Projects in Vietnam and India that have been delayed for nearly three years show little sign of progress.

The boost in the company’s profits comes at a time when it is preparing to enter the bidding fray for 50.4% of DSME, the world’s third largest shipbuilder. DSME is expected to be put up for sale by its creditors later this year.

Posco is also set to rake in more cash for the bid for the shipbuilder after the Korea Exchange approved its listing request for subsidiary Posco Engineering and Construction. The impending IPO has been valued at Won1.17trn.