POSCO Holdings Inc. Q4 FY2023 earnings call

• Steel-making: Expanded low-carbon bridge technologies for BF-BOF route and positioned for HyREX transition; planned hydrogen reduction process pilot plant. - Rechargeable battery materials: Completed lithium hydroxide and recycling plants in Gwangyang, progressed with Argentine lithium brine and nickel JV projects; POSCO Pilbara Lithium Solution completed hard-rock lithium plant. - Business portfolio: Merger of POSCO International and POSCO Energy generated synergy. - ESG: Enhanced governance with major ESG rating upgrades; established preventive workplace safety system. - Eco-friendly infrastructure: Merged POSCO International and POSCO Energy to complete LNG value chain and expand capacity in Australia and Mexico. - Eco-friendly future materials: Advanced lithium production systems and secured green hydrogen rights in Oman.

In 2023, POSCO Holdings' consolidated revenues stood at KRW 77.1 trillion with an operating profit of KRW 3.5 trillion, a decline from the previous year. For the steel business, revenue dropped 9% year-on-year to KRW 38.972 trillion. The eco-friendly future materials business incurred a KRW 169 billion deficit in Q4 2023 due to the fall in metal prices and inventory valuation losses. In the rechargeable battery materials segment, construction was completed on lithium hydroxide and recycling plants in Gwangyang, and progress was made on the Argentine lithium brine and nickel JV projects. The steel-making business expanded low-carbon bridge technologies and planned a hydrogen reduction process pilot plant. POSCO International's consolidated operating profit was similar to the previous year, while POSCO E&C saw revenue increase but operating profit decline because of raw material price hikes.

• Uncertainties persist regarding steel demand and critical battery metals prices, but executives believe the most difficult period is being passed. - Will strengthen bottom line by lowering costs and improving P&L management. - New long-term growth project investments will be closely scrutinized to enhance capital efficiency. - Targeted 33 million tonnes of crude steel production in 2024.

• Uncertainties in steel demand and critical battery metals prices. - Geopolitical risks from conflicts like Ukraine war and Gaza conflict. - Raw material price fluctuations, such as iron ore and coal cost increases. - Delays in China's economic recovery impacting steel demand and prices.

Q: About steel market prospects in 2024, industry slowdown and price recovery?

A: Ban Don-ho stated the steel market will continue to face a recession, but anticipated some pickup in China with interest rate cuts, and there may be a possibility of price rebounds in Korea due to low inventory. Will collaborate with other steelmakers to raise prices and renegotiate contracts with OEMs and in shipbuilding.

Q: On lithium production profitability, PPLS plant progress and lithium price outlook?

A: Lee Kyung-Sub mentioned PPLS plant 1 was completed and is ramping up, with first products soon to come; lithium price hit rock bottom, production cost is competitive, and anticipates 5%-10% oversupply in the next 2-3 years but remains competitive in the long term.

Q: Impact of leadership change on rechargeable battery materials business?

A: Jeong Ki-Seop said leadership change won't dramatically shift the strategy, mid-term plans are in place, close to producing lithium from Argentina acquisitions, and expects profits by 2025, with decisions based on investors and shareholders.