Release Date: February 03, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- POSCO Holdings Inc (PKX, Financial) maintained relatively stable profits in the steel business despite regional headwinds, thanks to value-added steel products.
- The company successfully completed various EV battery materials plants, including POSCO Argentina and POSCO Lithium Solution, marking significant progress in the energy materials sector.
- POSCO Holdings Inc (PKX) generated KRW662.5 billion from restructuring efforts, with KRW100 billion allocated for buying back and retiring treasury shares.
- The company is making steady progress in overseas growth market investments and achieving carbon neutrality, focusing on enhancing facility capacity and efficiency.
- POSCO Holdings Inc (PKX) signed supply agreements for lithium with SK On and Future M, surpassing the capacity of their first plant, indicating strong demand for their products.
Negative Points
- POSCO Holdings Inc (PKX) faced a decline in consolidated revenue and operating profit in 2024 due to various internal and external challenges.
- The steel business was negatively impacted by China's oversupply and construction industry recession, leading to suppressed steel prices in Asia.
- High initial operation costs and low plant operation rates during product certification led to larger shortfalls in the energy materials business.
- The company recorded significant asset impairment losses, totaling KRW1.2 trillion for the full year, affecting overall financial performance.
- POSCO Holdings Inc (PKX) experienced a net loss of KRW703 billion in Q4, primarily due to noncash expenses, including asset impairment losses.
Q & A Highlights
Q: How does POSCO Group see the steel market in 2025 given the uncertainties in China and the global trade environment?
A: The steel market is currently slow due to China's economic policies and global uncertainties. However, we anticipate a potential recovery in the second half of the year as China's stimulus measures and market regulations take effect. We are monitoring the situation closely and focusing on innovation and cost competitiveness to navigate these challenges. (Answered by Unidentified Company Representative_1, Head of Marketing at POSCO)
Q: What are POSCO's plans for cost innovation and improving price competitiveness in the steel business?
A: We are focusing on reducing fixed costs, optimizing raw material usage, and enhancing facility efficiency. This includes purchasing less expensive raw materials while maintaining quality and reducing fuel and maintenance costs. We aim to absorb increased raw material costs through sales cost adjustments and focus on value-added products to improve our cost structure. (Answered by Unidentified Company Representative_2, Head of Finance Office at POSCO)
Q: What is the impact of foreign exchange rate hikes on POSCO and its subsidiaries?
A: For POSCO, FX hikes are disadvantageous as we import most raw materials in dollars, but we aim to offset this through value-added products. POSCO International benefits from FX hikes in short-term projects, while POSCO E&C and POSCO DX are less affected due to their domestic focus. POSCO Argentina and POSCO Future M, which are export-oriented, see positive impacts on revenue and sales. (Answered by Unidentified Company Representative_1, Head of Finance and Trade)
Q: Are there any additional one-off losses expected in the future due to restructuring?
A: While there is a possibility of additional one-off losses subject to market conditions and restructuring, we believe that most impairment losses have already been accounted for. We aim to improve operating profit slightly in 2025 compared to 2024, despite the challenging market environment. (Answered by Unidentified Company Representative_1, Head of Finance)
Q: What are POSCO's strategic plans for the secondary battery materials and biomaterials segments in 2025?
A: We plan to continue investing in secondary battery materials, focusing on stabilizing operations and securing new resources. Although we do not expect significant profit increases in the short term, we aim for medium-term growth. CapEx will be slightly reduced from last year, with continued investment in lithium. (Answered by Unidentified Company Representative_1, Head of Finance)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
