"Steel Demand Slump and Excess Supply from China... POSCO's Operating Profit Plunges 38%"

Weakness in Steel and Secondary Battery Materials... Infrastructure Holds Steady
Expanding Investments in India and North America

Due to sluggish steel demand, oversupply in China, and a decline in key mineral prices, POSCO's operating profit last year sharply dropped by nearly 40% compared to the previous year. The company plans to secure global business opportunities by expanding investments in high-growth and high-profit markets such as India and North America.

POSCO Holdings announced on the 3rd through a public disclosure that its consolidated sales for last year reached KRW 72.688 trillion, with an operating profit of KRW 2.174 trillion. This represents a decrease of 5.8% and 38.4%, respectively, compared to the previous year. Net profit plunged by 48.6% to KRW 948 billion during the same period.

Weakness in Steel and Secondary Battery Materials... Infrastructure Holds Steady

The company cited the sluggish domestic and international steel demand, oversupply of steel in China, and falling prices of key minerals as the main reasons for the deteriorated business environment last year. Additionally, the results reflect non-cash losses amounting to KRW 1.3 trillion, including one-time impairment losses from restructuring low-profit assets and business efficiency improvements, as well as valuation losses due to market downturns.

By business segment, in the steel division, POSCO experienced a decline in production and sales due to weak demand and blast furnace repairs, resulting in sales of KRW 62.201 trillion and operating profit of KRW 3.083 trillion, down 2.1% and 35.9% respectively from the previous year.

The secondary battery materials division also saw a decline in POSCO Future M's performance due to falling metal prices and reduced sales following the deferment of the designation of natural graphite by the U.S. Foreign Entities of Concern (FEOC). The materials segment recorded sales of KRW 3.83 trillion and an operating loss of KRW 278 billion. Sales decreased by 20.5% year-on-year, and operating losses continued for the second consecutive year following KRW 161 billion in 2023.

The infrastructure division defended profitability thanks to stable earnings generated through POSCO International's expansion of the energy value chain and POSCO E&C's increased order intake. Sales were KRW 56.872 trillion, and operating profit was KRW 1.324 trillion, decreasing only 0.5% and 13.6% respectively compared to the previous year.

Last year's business achievements included the development of hydrogen reduction steelmaking technology and the groundbreaking of an electric furnace, emphasizing carbon neutrality. The company also stated, "We established a foundation for strengthening global business through a memorandum of understanding (MOU) with India's JSW for cooperation in steel, secondary battery materials, and energy sectors," and introduced that "we further enhanced competitiveness in steel, secondary battery materials, and infrastructure sectors by completing domestic and overseas lithium upstream and downstream production plants, and continuously expanding gas fields in Myanmar and Australia."

Expanding Investments in India and North America... Accelerating Carbon Neutrality Achievements

POSCO Holdings also announced plans to strengthen group business competitiveness to overcome the current crisis and prepare for a sustainable future.

In the steel business, the company aims to secure global business opportunities by expanding investments in high-growth and high-profit markets such as India and North America, achieve concrete results in the carbon neutrality sector, and strengthen fundamental competitiveness through structural innovation in costs by reinforcing and optimizing facilities.

The secondary battery materials business will focus on early achievement of normal operation rates at newly commissioned domestic and overseas plants, including Argentina's brine lithium phase 1, domestic ore lithium plants 1 and 2, recycling, and silicon anode material plants. It will also secure a stable profit base by expanding customer product certifications. Additionally, the company will concentrate on securing high-quality resources through bidding for the Chile Maricunga and Alto Andinos lithium brine projects, and cooperation with Australia's Hancock for additional lithium development, while adjusting the pace of low-profit businesses and rebalancing the portfolio.

Furthermore, POSCO Holdings plans to maintain financial soundness and improve asset efficiency by completing ongoing restructuring. Last year, POSCO Group completed 45 out of 125 restructuring projects for low-profit businesses and non-core assets, generating KRW 662.5 billion in cash. By completing an additional 61 projects by this year, the group plans to secure a cumulative cash amount of KRW 2.1 trillion from a total of 106 projects, enhancing asset efficiency while utilizing the funds for growth investments.

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