• Revenue: KRW18,321 billion for the third quarter.
• Operating Income: KRW743 billion for the third quarter.
• EBITDA: KRW1,705 billion for the third quarter.
• Steel Operating Profit: KRW466 billion, down by KRW331 billion from the previous quarter.
• Infrastructure Segment Operating Profit: KRW449 billion, up KRW20 billion.
• POSCO Crude Steel Production: Increased by 1.3 million tons from the previous quarter to 4 million tons.
• POSCO Maharashtra Market Share: 28% in automotive coated steel, joint number-one market position.
• POSCO Argentina Brine Lithium Phase One Capacity: 25,000 tons of lithium hydroxide.
• POSCO Pilbara Lithium Solution Cumulative Production: 1,965 tons in the third quarter.
• Cash Generated from Restructuring: KRW625.4 billion as of end of September.
• POSCO International Sales and Operating Profit Increase: 1.2% from the previous quarter.

• Warning! GuruFocus has detected 7 Warning Signs with PKX.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• POSCO Holdings Inc (NYSE:PKX) maintained third-quarter revenues and operating profits at levels similar to the second quarter, despite challenges in the market.
• The company has successfully completed construction and initial pilot operations of new lithium production plants, showcasing their readiness for commercial-scale production.
• POSCO Holdings Inc (NYSE:PKX) has formed a strategic alliance with JSW Group in India to build an integrated steel mill and collaborate in rechargeable battery materials and renewable energy sectors.
• The company has a strong presence in the Indian automotive steel market, holding a joint number-one market position with a 28% share.
• POSCO Holdings Inc (NYSE:PKX) is actively restructuring non-essential businesses and non-performing assets, having already secured KRW625.4 billion in cash from these efforts.

Negative Points

• The company faces a challenging business environment due to declining prices of key raw materials in rechargeable battery materials.
• Lithium hydroxide prices have fallen below $10,000 per ton, creating a disadvantage due to the reverse lag between purchase and sale times.
• POSCO Holdings Inc (NYSE:PKX) is experiencing sluggish performance in the steel and rechargeable battery sectors, impacting overall profitability.
• The company is dealing with initial investment and operation costs from newly commissioned lithium production plants, adding to expenditure burdens.
• There is ongoing pressure from low-cost Chinese steel products, leading to anti-dumping investigations and potential market challenges.

Q & A Highlights

Q: What is the current state of the steel market, particularly in the automotive and shipbuilding sectors, and how does the Chinese stimulus package affect POSCO's outlook? A: Hong Yoon-sik, Head of Marketing Strategy, explained that the steel market is experiencing mixed signals, with some rebound due to China's stimulus package. However, prices have started to fall again. In the automotive and shipbuilding sectors, POSCO has half-year contracts, and negotiations for the next year may see price adjustments. The Chinese stimulus package initially boosted prices, but they have since adjusted, reflecting market realities.

Q: How is POSCO handling non-essential assets and underperforming businesses, and will these costs be consolidated at the end of the year? A: Lee Ju-Tae, Chief of Corporate Strategy, stated that restructuring is on schedule, with some divestments generating profits. While there will be some losses, the overall impact is expected to be positive, with profits outweighing losses.

Q: Can you provide details on POSCO's investment in India, including the type of steelmaking process and the project's expandability? A: Chan Sung Mae, Chief of Steel Business, mentioned that the initial phase will involve a blast furnace and shaft method, with potential for expansion. The site in Odisha is strategically chosen for its proximity to local rolling mills, ensuring a steady supply chain.

Q: What is POSCO's strategy for addressing the potential oversupply in the Indian steel market, and how does it compare to the Chinese market? A: POSCO believes that despite potential oversupply, their focus on high-end products will mitigate risks. The Indian market is growing steadily, unlike the rapid growth seen in China in the past, and POSCO is confident in its product portfolio to meet demand.

Q: How does POSCO plan to achieve carbon neutrality in its Indian operations, and how will this impact its overall carbon emissions strategy? A: POSCO aims to follow local regulations in India, with a focus on realistic approaches to carbon reduction. They plan to implement advanced technologies like hydrogen mix and CCS to align with their carbon neutrality goals by 2050.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.