POSCO Holdings, Steel and Infrastructure Rebound... Secondary Battery Materials Weigh Down (Comprehensive)

Q2 Sales 18.51 Trillion KRW, Operating Profit 752 Billion KRW
"Furnace Repair Completed, Q3 Profit Improvement Expected"
Reviewing Mobility, Eco-friendly Energy, and Electric New Materials Businesses

POSCO Holdings announced on the 25th that it recorded consolidated sales of 18.51 trillion KRW and an operating profit of 752 billion KRW in the second quarter. This represents a decrease of 8% and 43.3%, respectively, compared to the same period last year. However, compared to the previous quarter, sales and operating profit increased by 2.5% and 29%, respectively.

Net profit reached 546 billion KRW. Due to improved performance in the steel and infrastructure sectors compared to the previous quarter, despite increased investment costs in the second quarter, the net debt ratio decreased by 0.4 percentage points from the previous quarter to 15.9%.

[Image source=Yonhap News]

Performance improved in the key business sectors of steel and infrastructure.

The steel sector recorded sales of 15.449 trillion KRW and an operating profit of 497 billion KRW, showing gradual improvement since the fourth quarter of last year. Although production and sales decreased due to the overhaul of POSCO’s blast furnaces, resulting in a slight decline in sales compared to the previous quarter, operating profit slightly increased due to rising selling prices and reduced raw material costs.

POSCO Holdings stated, "Although the operating environment in the third quarter is not very favorable, with the completion of blast furnace and downstream process overhauls, product output in the third quarter is expected to recover to at least the level of the first quarter," adding, "We cautiously expect further profit improvement in the third quarter compared to the second quarter."

Hong Yunsik, Head of POSCO Marketing Strategy Office, explained, "Most demand sectors continue to be sluggish, and steel prices remain weak due to soft raw material prices," adding, "We are monitoring signals of demand improvement such as interest rate cuts and China’s steel production reduction policies."

The infrastructure sector saw sales and operating profit rise to 14.768 trillion KRW and 429 billion KRW, respectively, compared to the previous quarter. POSCO International’s sales and operating profit increased due to reduced depreciation expenses following gas field reserve re-certification and higher selling prices, while POSCO E&C also saw slight increases in sales and operating profit due to the acceleration of large-scale project processes.

In the secondary battery materials sector, POSCO Future M experienced declines in sales and operating profit compared to the previous quarter due to falling prices of cathode materials and initial operating costs of the artificial graphite anode material plant. However, the company maintained profitability through increased sales volume and yield improvements of high value-added products such as high-nickel cathode materials (N86, N87, NCA).

[Image source=Yonhap News]

Regarding future investment plans, POSCO Holdings explained, "Reflecting a somewhat more sluggish market outlook than initially forecasted at the beginning of the year, we have revised our existing investment plans downward," adding, "It is less than 10 trillion KRW. Approximately 44%, or 4.6 trillion KRW, was executed by the first half of the year, with about 1.8 trillion KRW in steel, 2.1 trillion KRW in materials, and 500 billion KRW in infrastructure."

They continued, "It is rare for the allocated investment budget to be fully executed at 100%, and it usually falls slightly short," adding, "We originally planned to manage investment costs tightly, so we do not expect to exceed the budget." They also stated, "We expect investment costs next year to exceed 10 trillion KRW as well."

Additionally, POSCO Holdings said, "We are reviewing new materials businesses that can create synergy with existing steel and secondary battery materials sectors and establish themselves as new industries," adding, "We are focusing on future materials related to mobility, eco-friendly energy, and power infrastructure sectors as we consider entering the new materials business."

Meanwhile, regarding the anti-dumping petition on Chinese hot-rolled plates filed by Hyundai Steel, POSCO Holdings stated, "We plan to submit our opinions according to the government’s request for a response, based on our situation and strategy." Hyundai Steel recently filed an anti-dumping petition with the Ministry of Trade, Industry and Energy, citing damage caused by low-priced Chinese hot-rolled plate exports. Hot-rolled plates are thick steel plates over 6mm in thickness, mainly used for shipbuilding and construction steel materials.

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