'Sharp Drop in Operating Profit and Emergency Management Initiated' POSCO Future M... Can It Find a Breakthrough?

Seeking New Opportunities Through Customer Expansion and R&D
Considering Sale of Gumi Cathode Material Plant
'Tariff Threat' from Trump Also Unavoidable

POSCO Future M's operating profit last year sharply declined due to the electric vehicle chasm (Chasm: temporary demand stagnation), and the company is now facing compounded challenges from persistent low-price competition from China and U.S. President Donald Trump's decision to halt electric vehicle subsidies. The company has announced plans to enter an emergency management system to overcome the crisis, but with the additional threat of tariff risks stemming from President Trump's policies, it is difficult to expect immediate improvement in performance.

According to the business results announced on the 3rd, POSCO Future M recorded consolidated sales of 3.6999 trillion KRW and an operating profit of 700 million KRW last year. These figures represent decreases of 22.3% and 98.0%, respectively, compared to the previous year. The decline is attributed to reduced battery demand caused by the electric vehicle chasm continuing since the end of 2023, and the inability to secure profitability due to price competitiveness of cathode and anode materials being outmatched by China. Although sales volume slightly increased year-on-year, centered on high value-added high-nickel products, sales revenue actually decreased as prices fell due to declines in key raw material costs such as lithium and nickel.

POSCO Future M has expressed its intention to seek new opportunities by expanding its customer base and increasing research and development (R&D) support. The company explained that, similar to last year's business agreement with Japanese automaker Honda, it is securing new customers in North America and other regions together with its partners. Um Ki-cheon, who was newly appointed as CEO this year, reportedly urged all executives at a meeting on the 17th of last month to "thoroughly review key management tasks from the perspective of securing profitability, including boldly adjusting the company's non-core assets."

POSCO Future M is currently deliberating whether to sell its cathode material plant located in Gumi, Gyeongbuk. The Gumi plant, built in the early stages of the cathode material business, does not have production facilities for high value-added high-nickel cathode materials, which POSCO Future M plans to focus on in the future. Additionally, 303.3 billion KRW is expected to be invested in upgrading aging equipment. If the sale of the Gumi plant is decided, the approximately 300 billion KRW impairment loss already reflected in advance will not be incurred.

However, regardless of cost rationalization efforts such as the plant sale review, global market risks continue to threaten performance. POSCO Future M is constructing a battery cathode material joint venture plant in Canada with General Motors (GM), but President Trump recently issued an executive order imposing a 25% tariff on imports from Canada. An industry insider said, "Entering through a joint venture plant generally assumes a certain level of stable sales volume," but added, "The impact of the tariff imposition on POSCO Future M seems inevitable."

President Trump's indication of reducing or eliminating electric vehicle purchase subsidies (tax credits) is also negative news for the domestic battery industry. However, POSCO Future M expects to gain a counter-benefit, analyzing that while electric vehicle mandate policies may be relaxed, U.S. sanctions against China will intensify simultaneously.

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