POSCO(PKX)2024-07-26 03:41Financial Data and Key Metrics Changes - In Q2 2024, revenue increased by 2.5% from the previous quarter to KRW 18.51 trillion, while operating profit rose by 29% to KRW 752 billion, driven by higher profits at the steel subsidiary POSCO and improved infrastructure performance [5][76] - EBITDA in Q2 was KRW 1.74 trillion, up by KRW 201 billion, with CapEx invested amounting to KRW 2.6 trillion on a consolidated basis [76][68] - Net borrowings increased by KRW 115 billion from the previous quarter, resulting in a net debt-to-equity ratio of 15.9%, down 0.4 percentage points from Q1 [76] Business Segment Data and Key Metrics Changes - The Infrastructure business saw an increase in operating profit by KRW 89 billion from Q1 to KRW 429 billion, attributed to higher selling prices and recertification of reserves [83] - The Rechargeable Battery Materials segment posted a loss of KRW 28 billion, with initial start-up costs and inventory valuation losses impacting performance [83][89] - POSCO's crude steel output decreased by 650,000 tonnes Q-o-Q, totaling 8 million tonnes, leading to a drop in revenue to KRW 9.27 trillion [87] Market Data and Key Metrics Changes - The overseas steel business faced challenges due to an influx of cheap imports in East and Southeast Asia, resulting in a 6% decrease in sales for major integrated mill subsidiaries [88] - The nickel business is on track for completion by Q2 of next year, with construction progress at 69% by the end of Q2 [115] - The EV market slowdown has led to delayed timelines for major OEMs, impacting the overall demand for steel and battery materials [25][44] Company Strategy and Development Direction - The core strategy remains focused on growth in the EV Battery Materials business, with ongoing adjustments to investment schedules [3][2] - The company is exploring new materials related to mobility and green energy as part of its future business domains [51][52] - The development of hydrogen-based steelmaking technology is a key focus, with the first batch of molten iron produced in April [74][114] Management Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for Q3, anticipating improved profits due to declining raw material costs and the completion of refurbishment projects [118] - The company is actively monitoring the steel market and adjusting strategies in response to changing regulations and market conditions, particularly in China [26][105] - There is a belief that lithium prices have hit rock bottom, with expectations for recovery in the coming years [38][45] Other Important Information - The company is committed to enhancing ESG performance, having achieved an MSCI ESG rating of A [117][86] - The restructuring of non-core assets is ongoing, with a target to restructure 97% of these assets by 2027 [40][65] - The company plans to cancel treasury stocks immediately upon buyback as part of a shareholder-friendly policy [69] Q&A Session Summary Question: Steel market situation and future performance - Management acknowledged the steel market has hit rock bottom but expects gradual recovery as conditions improve [13][19] Question: Supply chain issues in Europe - The company is preparing for the impacts of the CSDD law and is working on strategies to mitigate negative effects on supply chains [16][122] Question: Outlook on nickel prices and IRA compliance - Nickel prices are difficult to predict, with limited IRA-compliant nickel sources available, impacting future supply [22][107] Question: Plans regarding anti-dumping complaints - The company discussed the anti-dumping complaint filed by Hyundai Steel and confirmed ongoing discussions with various stakeholders [31][32] Question: CapEx adjustments and future investments - CapEx has been reduced by about KRW 200 million, with plans to execute around KRW 10 trillion next year, focusing on strategic investments [35][54]