POSCO(US:PKX)2025-10-27 08:02Financial Data and Key Metrics Changes - POSCO Holdings recorded consolidated revenue of KRW 17.3 trillion and operating profit of KRW 640 billion, showing improvement in operating profit for three consecutive quarters despite losses at POSCO E&C [1][3] - The operating profit margin for the quarter was 6.6%, driven by increased sales volume and proactive cost-cutting efforts [1][8] - Operating profit increased from KRW 322 billion in Q4 of the previous year to KRW 585 billion in Q3 of this year, despite a 1.7% drop in revenue due to declining sales prices [7][8] Business Line Data and Key Metrics Changes - In the steel sector, production volume increased by 4.9%, but sales prices dropped by approximately KRW 25,000 per ton, leading to a decline in revenue [8] - In rechargeable battery materials, losses narrowed significantly quarter-over-quarter due to increased cathode sales volume and a rebound in lithium prices [2][10] - POSCO E&C faced a one-time cost of KRW 288.1 billion due to the Sinansan incident, with an additional KRW 230 billion expected in Q4 [10][11] Market Data and Key Metrics Changes - The domestic steel market is normalizing, but imports have flooded the market prior to the anti-dumping ruling, affecting sales prices [8][9] - Overseas steel profits are expected to decline moderately due to slow performance in Mexico and other rolling mills, while profits in India shrank due to major repairs [9] - The lithium market is anticipated to see a price increase, with expectations of reaching $10-$15 per ton next year [30][51] Company Strategy and Development Direction - POSCO Group is focused on creating a safe workplace through comprehensive safety management innovations and plans to establish a group-wide safety master plan [3][6] - The company aims to ramp up new plants and improve process efficiency in lithium operations while ensuring disciplined execution to avoid additional costs [2][29] - Future investments will prioritize growth markets in the U.S. and India, with a focus on environmental investments and potential M&A opportunities [28][29] Management Comments on Operating Environment and Future Outlook - Management acknowledged the complexities in the external environment and expressed optimism for a recovery in steel profits in 2026 compared to the current year [9][11] - The company plans to address uncertainties related to the EU's Carbon Border Adjustment Mechanism (CBAM) and is committed to reducing its carbon footprint [20][21] - Management expects to return to normal levels of profitability in POSCO E&C next year after accounting for one-off losses [11] Other Important Information - POSCO Group has completed 63 portfolio management projects, generating KRW 1.4 trillion in cash [7] - The company has launched a safety task force and is implementing new safety technologies and practices to prevent future incidents [5][6] Q&A Session Summary Question: Steel market outlook for Q4 and guidance for next year - Management indicated that the impact of anti-dumping measures would be difficult to assess immediately due to prior imports and expected seasonal demand fluctuations [18][19] Question: Response to carbon-related costs and EU regulations - Management is developing guidelines to counter the CBAM initiative and is focused on reducing carbon emissions while engaging with the EU [20][21] Question: Update on Alaska LNG project and its impact on sales volume - The project is under review, and if realized, it could supply about 300,000 tons of steel from 2026 to 2028 [23] Question: Mid to long-term steel strategies and investment plans - Management confirmed plans to increase overseas capacity and shut down non-competitive domestic facilities while exploring new growth areas [27][28] Question: Update on lithium demand and production - Lithium demand is expected to rise significantly, with projections of 1.3 million tons of production next year, driven by EVs and other applications [45][51]