POSCO Holdings (PKX) Q2 2022 Earnings Call Transcript

For the period ending June 30, 2022

July 21, 2022 03:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, we will now begin the POSCO Holdings Earnings Call for the Second Quarter of 2022. For today's conference call, you will first hear the earnings presentation from POSCO Holdings, and then we will move onto a Questions and Answers: with the participant's presence. [Operator Instructions] We will now like to hear the presentation from the company.

Chon Jung-Son

Good afternoon. I am Chon Jung-Son, CFO of POSCO Holdings. I would like to take this opportunity to thank our investors for your support and interest for POSCO Holdings.

During the second quarter, with the war in Ukraine continuing, the concern for inflation has become a reality, accelerating fiscal uncertainties, including sharp increases in interest rates by major nations. The spike in raw material prices, including iron ore and coal did lead to difficulties in production and sales. However, thanks to proactive responses in pricing and efforts to achieve cost cuts, POSCO has recorded a revenue of KRW23 trillion and operating profit of KRW2.1 trillion based on our consolidated business performance.

The Steel business achieved a sound performance with higher revenue and operating profit Q-o-Q, thanks to increase in sales prices and efforts to achieve cost cuts despite the raw material cost and decrease in production volume due to the revamping of key facilities. The Green Infrastructure and Green Materials and Energy businesses saw an increase of over KRW2 trillion in revenues Q-o-Q, thanks to improvements in the revenues and operating profits of key units such as POSCO International, POSCO E&C and POSCO Chemical. The Rechargeable Battery business, one of the seven key businesses completed the construction of PLC Poland for recycling to produce black mass from battery scrap. We have also made an equity investment in ProLogium, a Taiwanese company, that produces hybrid solid-state batteries and acquired Tera Technos, which holds technologies to produce silicon anoids in an effort to preemptively secure securities for next-generation materials for batteries.

Increase in interest rates by key nations is also expected for the third quarter, uncertainties will continue to increase compared to the second quarter with the respreading of COVID-19. The steel industry plans to upgrade the product portfolio centered around markets expected to have higher demand such as automobiles and shipbuilding. The green infrastructure and green material energy businesses will also do our utmost to live up to the market expectations by continuing to closely monitor oil prices and industrial trends such as EVs, enabling us to secure profitability through preemptive measures.