SEOUL, KOREA - POSCO Engineering will spin off its power generation unit, thereby focusing henceforth more on the chemical engineering business. According to industry sources on May 12, the company's board of directors has decided on the 9th to separate the power generation business by July 31. The new unit specializing in power plant design and renewable energy business will be born as "New PowerTec," a 100-percent subsidiary of POSCO Engineering.
According to a POSCO Engineering official, the spinoff is intended to improve management efficiency. Last year, the company took an operating loss of 36.8 billion won on an 896.6-billion-won sales revenue. The 2012 sales revenue was 10 percent lower than the previous year, largely due to an underperformance of its hydroelectric power plant in Indonesia.
Some observers said this was unexpected given the parent company's insistence on reducing affiliates as part of improving financial soundness. The number of affiliates within POSCO affiliation has shrunk to 52 as of January this year, from 70 in 2011 and 62 in 2012. By the year's end, POSCO plans to consolidate six more companies to 46.
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