POSCO Holdings Inc. Q3 FY2023 earnings call

• Steel business showed resilience with improved product mix, lower raw material costs, and cost-cutting despite market challenges. - Secondary battery materials production facilities faced delays (e.g., POSCO Pure Battery Lithium Solutions completion moved to November, commercialization to April 2024; high purity nickel refining plant completion pushed to Q1 2024). - Joint ventures: POSCO and HBIS completed first galvanizing plant in China, POSCO Mobility Solutions expanded EV motor core plant in Mexico with capacity to supply North American auto companies. - POSCO Future M saw revenue growth to KRW1.286 trillion Q-o-Q despite margin pressure from lithium/nickel price drops.

In Q3 2023, POSCO Holdings recorded consolidated revenue of KRW18.961 trillion. The steel sector had an operating profit of KRW852.7 billion in Q3, despite challenges like declining selling prices and equipment repairs. The green infrastructure sector saw revenue and operating profit decrease by 9% and 7% respectively Q-o-Q but grew 19.9% Y-o-Y, with profits over KRW400 billion for two consecutive quarters. The secondary battery materials business is in its initial phase with production facilities being completed, requiring ongoing long-term investment based on mid to long-term orders until 2030.

• The fourth quarter is expected to remain challenging with no immediate short-term economic recovery. - POSCO will focus on securing short to mid-term profitability and allocating investment resources for long-term growth strategy.

• Geopolitical tensions and global economic slowdown due to high interest rates. - Labor disputes (e.g., construction labor union strike affected project timelines). - Market changes like IRA, LFP battery trends, and material price fluctuations impacting secondary battery materials business. - Trade regulations such as EU CBAM and GSSA posing potential barriers to steel exports.

Q: Any changes from earnings discussed during value days?

A: No major changes, but short-term lithium/nickel price adjustments and EV demand short-term adjustment impact are noted.

Q: Transportation costs in Argentina for lithium operations?

A: Working on optimal transportation routes; transportation cost rough estimate over $300, but not overly burdensome compared to lithium price; long-term lithium contracts prioritized with up to 10-year terms if needed