POSCO Holdings Q3 Operating Profit 920 Billion Won... Down 71% Due to Typhoon Damage (Comprehensive)

Steel Market Downturn and Naengcheon Flood Impact
Full Efforts to Normalize Pohang Steelworks

[Asia Economy Reporter Choi Seoyoon] POSCO Holdings announced on the 24th that its consolidated operating profit for the third quarter of this year reached 920 billion KRW, down 71% from the same period last year. Net profit also decreased by 77.2% to 592 billion KRW, while sales increased by 2.9% to 21.155 trillion KRW.

POSCO Holdings explained that operating profit declined compared to the previous quarter due to decreased profits in the steel sector caused by the global economic downturn and the flooding of Naengcheon. However, the eco-friendly future materials sector continued its steady growth, driven by strong performance in the anode and cathode materials business for secondary batteries.

POSCO Holdings incurred an operating loss of 435.5 billion KRW on a consolidated basis, including 222.1 billion KRW due to reduced production and sales at POSCO Pohang Steelworks caused by the Naengcheon flooding, 186 billion KRW in one-time costs such as inventory losses, and 27.4 billion KRW from partial equipment damage at other business units in the Pohang area.

Regarding the Pohang Steelworks recovery plan, POSCO Holdings has completed the restart of six plants: 1 Hot Rolling, 1 Wire Rod, 1 Cold Rolling, 2 Electric Steel, 3 Electric Steel, and 3 Plate. In November, they plan to operate 2 Plate, 3 Wire Rod, 4 Wire Rod, and Electro-Galvanizing, and in December, 2 Hot Rolling, 2 Cold Rolling, 2 Wire Rod, and Stainless Steel 2 Cold Rolling. They aim to resume full product production within the year and minimize the impact on domestic steel supply by timely responding to customer requests through maximum production increase at Gwangyang Steelworks.

Besides the impact of the Naengcheon flooding, POSCO experienced declines in both sales and operating profit due to falling steel prices and rising raw material costs amid weak steel market conditions. Overseas steel sales and operating profit also decreased compared to the previous quarter due to worsening market conditions and reduced sales volume.

The eco-friendly infrastructure sector saw a decrease in profits due to sluggish steel raw material sales by POSCO International, suspension of grain sales in Ukraine, and rising material costs at POSCO Engineering & Construction.

However, POSCO Energy recorded increases in both sales and operating profit compared to the previous quarter, driven by increased power demand, higher operating rates, and improved profitability of the LNG terminal.

In the eco-friendly future materials sector, POSCO Chemical saw sales prices rise for both anode and cathode materials, with cathode material sales volume increasing by 25% compared to the previous quarter, leading to a significant improvement in operating profit. POSCO Chemical achieved consolidated third-quarter sales of 1.0533 trillion KRW and operating profit of 81.8 billion KRW, representing increases of 108.6% and 159.9%, respectively, compared to the same period last year.

POSCO Chemical is responding to global moves toward domestic supply chain establishment, including the U.S. Inflation Reduction Act (IRA), by promoting cooperation with the POSCO Group in raw materials and proactive investments. The company plans to build a stable raw material supply chain and further expand production capacity domestically and internationally to strengthen business competitiveness.

On the same day, POSCO Holdings also disclosed the progress of its lithium and nickel businesses in secondary battery materials. POSCO Holdings plans to secure lithium production bases in regions eligible under the U.S. Inflation Reduction Act (IRA). Through the second phase of the Argentina brine lithium project, approved for investment on the 7th, they plan to produce lithium hydroxide domestically starting in 2025. The lithium hydroxide production plants for the third and fourth phases are being considered for establishment in North America.

The lithium ore plant of POSCO Pilbara Lithium Solutions, which began construction in Gwangyang in May last year, is progressing smoothly and is scheduled for completion in October next year. POSCO Pilbara Lithium Solutions is expected to benefit from the IRA as it will receive lithium concentrate raw materials from Pilbara in Australia, a country with which the U.S. has an FTA agreement.

Regarding the nickel business, SNNC started the iron removal process from nickel in June, and on the 14th, POSCO began construction of a high-purity nickel refining plant, which serves as a raw material for cathode materials in secondary batteries. Additionally, in May last year, POSCO Holdings acquired a 30% stake in Australian nickel mining and refining specialist company Ravensthorpe, and plans to decide on refining process investments within this year.

This content was produced with the assistance of AI translation services.