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What were the key takeaways from POSCO's earnings call?

- **Revenue Resilience**: Q1 revenue stable at KRW17.4 trillion amid global trade tensions.
- **Steel Margin Recovery**: POSCO operating margin up to 3.9%, driven by cost control and USMCA compliance.
- **Battery Materials Turnaround**: POSCO Future M profitable with high-nickel cathode sales growth of 64%.
- **Strategic US Expansion**: $8 billion JV with Hyundai for US steel mill to meet North American automotive demand.
- **Risk Management**: Restructuring divested KRW949 billion in non-core assets, but energy materials remain loss-making.


**【Management Overview】**
- Q1 2025 consolidated revenue: KRW17.4 trillion (YoY +1.2%), operating profit: KRW568 billion (YoY -1.7%).
- Key business performance:
  - **Steel Segment**: POSCO's operating margin improved to 3.9% (QoQ +0.4%), driven by cost control and stable domestic demand.
  - **Energy Materials**: POSCO Future M turned profitable with high-nickel cathode sales up 64% QoQ.
  - **Infrastructure**: Myanmar gas field and LNG terminal projects remain stable.
- Strategic initiatives:
  - **US Steel Mill MOU with Hyundai Motor Group**: Joint investment in EAF plant to meet USMCA requirements, targeting North American automotive steel supply.
  - **India Expansion**: JV with JSW Group for 5 million-ton automotive steel plant in Odisha, India.

**【Financial Highlights】**
- EBITDA: KRW1.6 trillion (YoY +2.6%).
- CapEx: KRW8.8 trillion for 2025, with 43% allocated to steel, 34% to energy materials.
- Asset restructuring: Divested 6 assets in Q1, generating KRW286.6 billion cash (cumulative KRW949.1 billion since 2024).

**【Key Risks & Challenges】**
- Global trade barriers: US tariffs on Vietnamese/Thai steel imports limit export growth.
- Energy materials underperformance: KRW100 billion Q1 operating loss due to ramp-up costs and certification delays.
- Lithium price volatility: Argentina plant 1 shipment delayed to Q2 2026, plant 2 certification in Q3.

**【Q&A Highlights】**
- **China Stainless Steel Strategy**: PZSS in China to focus on high-margin automotive steel, restructuring underway.
- **Hyundai JV Impact**: 50-50 equity split with Hyundai for US steel mill, minimal leverage risk for POSCO.
- **Lithium Pricing Outlook**: Projected $20,000/ton by 2028, but US tariffs add uncertainty.
- **Gwangyang EAF Progress**: Completion delayed to Q2 2026, targeting 100% North American-sourced scrap.


POSCO Holdings Inc. (PKX) Q1 2025 Earnings Call Transcript

- **2024 Results**: Revenue/KRW72.7T (-YoY), OP/KRW2.2T (-35% YoY). Energy Materials loss/KRW278B due to new plant costs.
- **Restructuring**: KRW662.5B cash from asset sales, KRW100B buybacks. Focus on overseas growth and carbon neutrality.
- **2025 Outlook**: Slight OP improvement via steel cost cuts and lithium plant ramp-up. HY Clean Metal to break even in 2025.
- **Key Risks**: EV market volatility, U.S. trade barriers, high initial plant costs.
- **Strategic Moves**: Acquire South America/Australia lithium assets, expand electric furnaces, exit low-margin businesses.

**【Management Overview】**
- 2024 consolidated revenue: KRW72.7 trillion (- YoY), operating profit: KRW2.2 trillion (-35% YoY). Steel and energy materials businesses faced headwinds from oversupply, EV market slowdown, and high initial costs of new plants.
- Restructuring efforts generated KRW662.5 billion in cash, with KRW100 billion allocated to share buybacks. Focus on asset efficiency and strategic investments in overseas growth markets and carbon neutrality.

**【Financial Details】**
- Q4 2024 operating profit: KRW95 billion (-29% YoY). Energy Materials segment recorded KRW278 billion loss, driven by inventory valuation impairments at new lithium plants.
- Full-year non-operating losses: KRW1.2 trillion (including KRW1 trillion from steel and battery assets). Asset impairment losses proactive to align with ESG goals.

**【Business Segment Updates】**
- **Steel**: Overseas subsidiaries (India, Indonesia) saw mixed performance. Domestic steel margins stabilized but constrained by rising energy and labor costs.
- **Energy Materials**: POSCO Argentina Phase 1 lithium plant ramping up to 80%+ capacity by Q2 2025. Contracts with SK ON and Future M exceed Plant 1 capacity (25,000 tons/year). HY Clean Metal expected to break even in 2025.
- **Infrastructure**: Myanmar LNG Phase 3 online, Australia Senex expansion underway. Samcheok coal-fired power plant operational but facing ESG challenges.

**【2025 Outlook】**
- Operating profit expected to improve slightly vs. 2024, driven by steel cost innovation and energy materials plant stabilization. CapEx to remain elevated for lithium investments.
- Focus on reducing fixed costs, enhancing high-value steel products, and acquiring quality lithium assets in South America/Australia.
- North America market cautious due to U.S. trade policies, but Mexico exports (100,000 tons/year) minimal impact.

**【Q&A Highlights】**
- **FX Impact**: POSCO (disadvantaged by raw material imports), POSCO International (benefits from energy exports). Overall group net FX impact neutral.
- **One-off Losses**: No additional impairments expected beyond 2024 provisions. Future M targeting 30%+ cathode material sales growth in 2025.
- **ROIC Target (6-9%)**: Achievable via asset efficiency, cost innovation, and high-margin product expansion. Steel and energy materials to drive mid-term revenue growth.

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