POSCO(US:PKX)2025-04-25 13:47Financial Data and Key Metrics Changes - In Q1 2025, consolidated revenue reached KRW 17.4 trillion, and operating profit was KRW 570 billion, showing improvement from the previous quarter despite economic uncertainties [4][10] - Operating profit rebounded from KRW 95 billion to KRW 568 billion across all business segments, reaching the same level as the previous year [10][11] - EBITDA for the quarter was KRW 1.6 trillion, with consolidated CapEx amounting to KRW 1.5 trillion [10] Business Segment Data and Key Metrics Changes - The industrial segment's operating profit improved from 2.3% to 3% quarter-on-quarter, with an operating margin recovery to 3.9% [11] - The overseas steel business showed improvement due to strong performance in engine operations and reduced losses at the Zhangjiagang plant in China [11] - POSCO Future M's turnaround to profit led to a reduction of overall operating losses in energy materials by half quarter-on-quarter [11][24] Market Data and Key Metrics Changes - The domestic steel market is showing moderate signs of stability, with iron ore and coking coal prices stabilizing [4][5] - POSCO's crude steel output declined by 5.5% quarter-on-quarter due to maintenance works, but selling prices slightly increased, and raw material costs remained stable [21] - The Indian subsidiary has expanded sales of high-margin products, while losses in China's Zhangjiagang plant have reduced due to rising regional stainless steel prices [23] Company Strategy and Development Direction - The company signed an MOU with Hyundai Motor Group to enhance collaboration in the future mobility materials business and to jointly invest in a steelmaking plant in the US [6][7] - POSCO is focusing on upstream expansion in India, the US, and Indonesia, with plans to establish a specialized automotive steel sheet company in India [14][15] - The company aims to comply with the USMCA "melted and poured" origin rule to ensure reliable supply of steel products to its auto panel manufacturing plant in Mexico [8][15] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the future, indicating that while Q1 results are not conclusive for recovery, there are positive signals [5][6] - The management acknowledged the challenges posed by the global tariff war and economic uncertainties but emphasized ongoing restructuring efforts to improve performance [3][39] - Future profitability in energy materials is expected to stabilize by 2027 as plants reach stable operations [42] Other Important Information - The company divested six underperforming assets in Q1, raising KRW 286.6 billion, contributing to a cumulative cash generation of KRW 949.1 billion since last year [17] - The CapEx plan for 2025 is set at KRW 8.8 trillion, with allocations of 43% to steel, 34% to energy materials, and 17% to infrastructure [19][20] - The company is actively pursuing ESG-related initiatives, including establishing a Human Rights Management framework aligned with global standards [29] Q&A Session Summary Question: Plans for improving performance of low-performing businesses like PZSS in China - Management acknowledged the overcapacity in the stainless steel market in China and indicated ongoing restructuring efforts, with a need to assess the situation further [38][39] Question: Projections for energy materials revenue and operating profits - Management stated that while initial stages of operation are causing losses, they expect to see profitability starting in the latter part of next year as customer certifications are achieved [41][42] Question: Update on capital raising for POSCO Future M - Management confirmed that they are exploring various financing options, including potential additional capital raising, due to higher-than-anticipated CapEx needs [44] Question: Impact of trade barriers on sales volume - Management explained that the impact varies by region, with some overseas operations potentially benefiting from tariff changes, while others may face challenges [64][66] Question: Progress on integrated mill investment in India - Management confirmed that the total investment is approximately KRW 11 trillion, with plans to implement it over five years, and they are currently finalizing the site selection [55][117] Question: Updates on lithium price projections - Management indicated that while there is a projected gradual price increase due to rising demand, uncertainties from tariff policies complicate predictions [71][72] Question: Financial evaluation of AD filings for heavy plates - Management noted that retail prices are rising post-AD filings, and negotiations with clients are ongoing, aligning with current market trends [122] Question: Acquisition of additional lithium assets - Management confirmed they are leveraging current market conditions to acquire prime lithium assets, but specific details cannot be disclosed at this time [124]