Posco ((PKX)) has held its Q1 earnings call. Read on for the main highlights of the call.
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POSCO Holdings’ latest earnings call revealed a resilient performance with a notable recovery in revenue and operating profit, despite ongoing challenges in certain segments. The general sentiment was positive, highlighting strategic alliances and improved profit margins, although concerns remain regarding underperforming subsidiaries and continued losses in China.
Revenue and Operating Profit Recovery
POSCO Holdings reported a significant rebound in its financial performance for Q1 2025, with consolidated revenue reaching KRW17.4 trillion and operating profit soaring to KRW570 billion. This marks a substantial recovery from the previous quarter’s operating profit of KRW95 billion, aligning with the figures from the same period last year.
Strategic Alliances and Expansion Plans
The company has been proactive in forming strategic partnerships, notably signing a comprehensive MOU with JSW Group in India. This collaboration aims to enhance efforts in steel, energy materials, and renewable energy. POSCO is also strengthening ties with Hyundai Motor Group, focusing on investments in a US-based steelmaking plant and the development of next-generation battery materials.
Improvement in Operating Profit Margins
POSCO’s operating profit margin improved to 3.9% in Q1 2025, reflecting better performance in its overseas steel business. Notably, the losses at the Zhangjiagang plant in China have been reduced, contributing to the overall margin improvement.
POSCO Future M’s Turnaround
A significant highlight was POSCO Future M’s turnaround to profitability within the energy materials segment. This achievement helped halve the overall operating losses quarter-on-quarter, showcasing effective management and strategic adjustments.
Asset Divestitures and Cash Generation
In a bid to streamline operations and generate cash, POSCO divested six assets in Q1 2025, raising KRW286.6 billion. This effort is part of a broader strategy that has generated KRW949.1 billion in cash since last year, with 51 projects completed.
Challenges in Energy Materials
Despite some improvements, the energy materials segment continues to face challenges, recording an operating deficit of approximately KRW100 billion. This is attributed to the ramp-up of newly built plants and investment losses.
Underperformance in Southeast Asia
POSCO’s subsidiaries in Southeast Asia continue to underperform, negatively impacting the overall performance of the company’s overseas steel operations. This remains a critical area for improvement.
Delay in Argentina Plant
The completion of Argentina Plant 4 has been postponed to the first quarter of 2026. This delay is due to sluggish recovery in lithium prices and ongoing market challenges, affecting the company’s expansion plans.
Continued Losses in China
The PZSS office in China has reported continued deficits, marking 12 consecutive terms of losses. This persistent underperformance raises concerns about the need for performance improvement or potential liquidation.
Forward-Looking Guidance
POSCO Holdings provided forward-looking guidance indicating a positive trajectory despite global economic uncertainties. The company reported an EBITDA of KRW1.6 trillion and a consolidated CapEx of KRW1.5 trillion for the quarter. Strategic initiatives include a partnership with Hyundai Motor Group for a US steelmaking plant and next-gen battery materials development. POSCO plans an annual CapEx of KRW8.8 trillion, focusing on core areas like steel and energy materials. Restructuring efforts have generated significant cash, and the company aims for upstream expansion in key markets.
In conclusion, POSCO Holdings’ earnings call painted a picture of resilience and strategic foresight. While the company faces challenges in certain segments, its recovery in revenue and operating profit, coupled with strategic alliances and expansion plans, positions it well for future growth. Investors and market watchers will be keenly observing how POSCO navigates its ongoing challenges and capitalizes on its strategic initiatives.