POSCO Holdings Inc. (NYSE:PKX) Q3 2023 Earnings Call Transcript October 24, 2023 2:00 AM ET

Company Participants

Jeong Ki-Seop - President, Co-CEO, CSO

Han Young-Ah - Head of Investor Relations

Lee Kyung-seop - Chief of LiB Materials Business

Conference Call Participants

Kim Sang-hoon - HI Investment & Securities

Operator

We will now begin the 2023 Third Quarter Earnings Release Conference Call of POSCO Holdings. As for today's conference call, after the presentation of POSCO Holdings, we will have a Q&A session with the participants. [Operator Instructions] Now we will start the call.

Jeong Ki-Seop

Good afternoon, ladies and gentlemen. I am Jeong Ki-Seop, CSO of POSCO Holdings. First and foremost, I would like to extend my gratitude to all the investors and shareholders for your keen interest in POSCO Holdings.

In Q3, we saw increasing global geopolitical tensions as well as persisting worldwide economic slowdown due to the high interest rate policy initiated by the U.S., which resulted in further uncertainties to the business environment. Amidst the ongoing economic slowdown and rising costs due to inflation, there were many challenges in business operations. However, through proactive pricing adjustments and cost-cutting efforts, we achieved a consolidated revenue of KRW18.9 trillion and operating profit of KRW1.1962 trillion.

In particular, our steel business generated robust profits through improved product mix, lower raw material costs and cost-cutting efforts, despite a drop in selling prices due to deteriorating market conditions, a decrease in product output resulting from major equipment repairs. Such performance underscores that our group's global competitiveness and efficiency in the steel sector continue to be a significant foundation for sustaining profits and cash generation, even in challenging economic conditions.

The secondary battery materials business is now in its initial phase, as production facilities are being completed. At this stage, what is crucial is consistent and ongoing investment based on a long-term strategy. With regards to the market changes such as IRA, emergency, LFP battery and changes in the price of materials, we will be closely monitoring and partially supplementing the strategy if necessary and when there is a need. However, for the most part, investment has been made based on the quantities ordered in the mid to long term until 2030 and thus, the target to build a global market position in the growing market and to solidly secure a market position through rapid investment will not change.

For several years, POSCO Group has continuously improved the financial structure and despite investment being made in the gross business, the 3Q debt-to-equity ratio only amounted to 13.7%. Such sound financials and solid profitability in the steel part will become a foundation that allows the growth strategy to be pursued without faltering. In the fourth quarter as well, it seems difficult to predict the short-term economic recovery. In line with such a difficult business environment, our company will first make continuous efforts to secure short to mid-term profitability and secondly, keenly allocate investment resources so that we can strive for unwavering growth strategy that raises the long-term corporate value of POSCO Holdings.