Due to Electric Vehicle Slowdown... POSCO Future M's Operating Profit Drops to One-Quarter Last Year

Sales Up 44% Year-on-Year... Impact of Launching Premium Product Sales

Due to the global electric vehicle demand slump, POSCO Future M's operating profit plummeted to one-quarter of its previous level.

POSCO Future M announced on the 23rd that its consolidated operating profit last year was tentatively estimated at 35.9 billion KRW, a 78.4% decrease from the previous year (165.9 billion KRW). This is an 'earnings shock' far below the market consensus of 165.9 billion KRW (average of more than three securities firms).

Last year's sales amounted to 4.7599 trillion KRW, a 44.2% increase from the previous year. Net profit was 4.4 billion KRW, down 96.4% from 121.9 billion KRW the previous year. Overall, while the top-line growth trend centered on sales continued, profitability deteriorated.

POSCO Future M explained, "Sales increased due to the start of premium product sales following large-scale order contracts. However, profitability declined due to global economic uncertainties, inventory adjustments by customers caused by sluggish demand and growth slowdown in the upstream electric vehicle industry, initial stabilization costs for new product operations, and the decline in raw material prices such as lithium, which were reflected in selling prices and product inventory valuation losses."

Exterior view of the secondary battery material complex [Photo by POSCO Future M]

POSCO Future M produces secondary battery materials such as cathode and anode materials and supplies them to secondary battery cell manufacturers. The prices of battery materials such as lithium, nickel, graphite, and cobalt have plummeted, leading to a negative lagging effect on raw material input costs.

There are also forecasts that profitability will improve from the second half of this year. Jinsoo Park, a researcher at Shin Young Securities, stated in a report on the same day, "The key points for future performance improvement lie in the timing of lithium prices and cathode material price recovery, as well as whether shipments to major customers rebound," adding, "Cathode material prices are expected to stop declining starting from the third quarter of 2024."

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