POSCO(PKX) - 2023 Q4 - Annual Report

Revenue Performance - The Steel Segment generated revenue of ₩40,393 billion in 2023, accounting for 52.4% of total revenue, a decrease from ₩44,547 billion in 2022[119] - The Green Materials and Energy Segment's revenue increased to ₩3,816 billion in 2023, representing 5.0% of total revenue, up from ₩2,452 billion in 2022[119] - Revenue decreased by 9.3%, or ₩7,947 billion, from ₩85,004 billion in 2022 to ₩77,057 billion in 2023[272] - Total revenue from the Trading Segment of the Green Infrastructure Business decreased by 19.3%, or ₩10,252 billion, from ₩53,196 billion in 2022 to ₩42,944 billion in 2023[277] - External revenue from the Green Materials and Energy Segment surged by 55.6%, amounting to Won 3,816 billion in 2023, primarily due to increased sales of anode and cathode materials for electric batteries[283] - Total revenue from the Green Materials and Energy Segment, including internal transactions, rose by 42.3% to Won 4,822 billion, with internal revenue increasing by 7.4%[284] Production and Capacity - The company produced approximately 39.9 million tons of crude steel and stainless steel in 2023, with a production capacity of 45.3 million tons[130] - POSCO (Zhangjiagang) had an annual production capacity of 1,100 thousand tons of stainless steel products[178] - PT. Krakatau POSCO had an annual production capacity of 3,000 thousand tons of slabs, plates, and hot rolled coils in 2023[178] - POSCO YAMATO VINA had an annual production capacity of 550 thousand tons of shape steel products in 2023[178] - The annual production capacity of the lithium hydroxide plant upon completion of both stages is projected to be 25,000 tons, while the lithium carbonate capacity is expected to be 23,000 tons[209] Market Share and Sales - POSCO had a domestic market share for hot rolled products of approximately 52% in 2023[141] - POSCO's domestic market share for stainless steel products was approximately 46% in 2023[144] - The Steel Segment's export sales constituted 60.4% of total revenue in 2023, with major markets in Asia, China, and Japan[132] - The largest export market in 2023 was Asia (excluding China and Japan), accounting for 24.6% of export revenue from steel products[159] - Exports to China decreased by 20.5% from Won 8,625 billion in 2022 to Won 6,859 billion in 2023 due to decreased demand from the construction industry[160] Financial Performance - Operating profit fell by 36.9%, from ₩4,342 billion in 2022 to ₩2,738 billion in 2023[267] - Net profit decreased by 48.5%, from ₩3,586 billion in 2022 to ₩1,846 billion in 2023[267] - Gross profit decreased by 16.5% to Won 6,417 billion in 2023, with gross margin declining from 9.0% in 2022 to 8.3%[290] - Finance income decreased by 20.8%, from ₩4,834 billion in 2022 to ₩3,831 billion in 2023[267] - Income tax expense increased by 71.0%, from ₩462 billion in 2022 to ₩789 billion in 2023[267] Cost and Pricing - Cost of sales as a percentage of net sales increased from 84.4% in 2021 to 91.7% in 2023, leading to a decline in gross margin from 15.6% to 8.3%[254] - The weighted average unit price for principal steel products increased by 17.2% from 2021 to 2022, but decreased by 11.3% from 2022 to 2023 due to declining global demand[246][248] - The unit sales price of stainless steel products decreased by 13.4% in 2023 compared to 2022, while the unit sales price of plates decreased by 13.7% in the same period[249] - The average unit sales price for cold rolled products decreased from 1,254 thousand Won per ton in 2022 to 1,218 thousand Won per ton in 2023[252] Sustainability and Future Plans - The company aims for a 30% reduction in carbon emissions by 2035, 50% by 2040, and net zero emissions by 2050 as part of its sustainability strategy[123] - The construction of the lithium hydroxide commercialization plant in Argentina is expected to be completed by April 2024, with a total cost of ₩1,301 billion and remaining costs of ₩219 billion as of December 31, 2023[209] - The company is actively exploring diversification opportunities in promising business areas through its Others Segment[120] - The company continues to explore diversification opportunities in promising business areas to secure new growth engines[239] Operational Efficiency - The capacity utilization rate improved from 72.2% in 2022 to 75.5% in 2023, although it was significantly lower than the 104.9% achieved in 2021[236] - The company has implemented cost reduction measures, including enhancing product designs and improving productivity, to address declining profit margins[255] - Other operating expenses decreased by 19.5%, from ￦1,124 billion in 2022 to ￦904 billion in 2023, primarily due to decreases in impairment loss on intangible assets and loss on valuation of firm commitment[301] Challenges and Losses - The loss on disposal of assets held for sale increased significantly by 2,475% from ￦4 billion in 2022 to ￦103 billion in 2023, primarily due to the disposal of CSP — Compania Siderurgica do Pecem[302] - Impairment loss on other receivables rose dramatically by Won 274 billion, from Won 10 billion in 2022 to Won 284 billion in 2023[295] - Share of profit from equity-accounted investees decreased by 60.1%, from ￦676 billion in 2022 to ￦270 billion in 2023[303]