Posco Holdings profit falls 27% as steel, battery materials falter

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Posco Holdings profit falls 27% as steel, battery materials falter

Published: 31 Jan. 2024, 18:17

SARAH CHEA
chea.sarah@joongang.co.kr

A real-time video of a blast furnace at Posco's Pohang steel mill [POSCO]

Posco Holdings reported a weaker-than-expected 3.5 trillion won ($2.6 billion) in consolidated operating profit for 2023, impacted by falling steel and battery materials prices.

The figure reflected an on-year drop of 27.2 percent, falling short of the FnGuide-compiled market consensus of 4 trillion won.

Revenues came in at 77.1 trillion won, down 9 percent, in line with market expectations.

Net profit plunged 48.2 percent to 1.8 trillion won, far afield of the 2.6 trillion won analyst estimate.

Consolidated earnings include those of the firm's subsidiaries, a list that includes Posco, Posco Future M and Posco International.

The disappointing reports followed unstable steel prices and the “falling prices of raw materials like lithium amid slowing growth of EV market,” said Jeong Ki-seop, head of the business strategy team of Posco Holdings, during a conference call Wednesday afternoon.

The company's steel making businesses reported 2.6 trillion won in operating profit, down 21 percent on year, while sales fell 10.1 percent to 63.5 trillion won.

Posco Future M, Posco Holdings' EV battery materials subsidiary, logged 36 billion won in operating profit last year, down 78 percent on year, though its sales increased 44 percent to 4.7 trillion won.

Posco Future M reported 74 billion won in operating loss in the fourth quarter alone, compared to 1.1 trillion won during the same period a year earlier.

The average prices of lithium carbonate, a primary ingredient in batteries, stood at 86.5 yuan ($12.10) per kilogram (2.2 pounds) as of January, an on-year fall of 81 percent.

“Posco Future M will return to profit this year, though the overall EV market will continue its slowdown, maybe to next year,” Jeong added.

Posco International, an energy arm, reported 1.16 trillion won in operating profit last year, an on-year jump of 28.9 percent. Its yearly revenues slid 12.8 percent to 33.1 trillion won last year.

Posco Holdings shares fell 0.6 percent to 426,000 won on Wednesday.

BY SARAH CHEA [chea.sarah@joongang.co.kr]