EPS of $3,998.00 decreased by 32.4% from previous year
Gross margin of 7.7%
Net income of 302.00B
""Despite the headwinds of the global tariff war, we have seen improvement against the previous quarter... We have signals that allow positive assessments little by little."" - Kim Sung-Jin
In Q1 2025, POSCO Holdings Inc reported a consolidated revenue of KRW 17.4 trillion, reflecting a year-over-year decrease of 3.66%, though showing a slight quarter-over-quarter improvement amid challenging market conditions. Despite these headwinds, notably from heightened global tariff conflicts, the company achieved operating income of KRW 568 billion, rebounding substantially from KRW 95 billion in Q4 2024. However, the net income of KRW 302 billion signifies a concerning drop of 44.15% year-over-year, suggesting that while operational profitability has improved, overall bottom-line performance remains under pressure due to external economic factors and ongoing restructuring costs. Management expressed cautious optimism regarding the recovery, citing stabilizing raw material prices and a rebound in domestic market conditions as potential catalysts for growth moving forward. Additionally, strategic partnerships, notably with Hyundai Motor Group focusing on joint investments in the US, underline the company’s forward-looking growth plans.
### Cash Flow and Balance Sheet
- Operating Cash Flow: KRW 668.8 billion
- Free Cash Flow: KRW -851.4 billion (indicating a significant capital outflow primarily due to high CapEx investments)
- Total Debt: KRW 26.69 trillion with a net debt position showing cash reserves of KRW 15.5 trillion, suggesting robust liquidity amidst aggressive capital investment plans.
Management indicated a renewed focus on capturing stable domestic demand and improving operational efficiencies to foster improvement in both margins and overall profitability as the company returns to sustainable growth tracks.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
17,437.00B
-3.66%
-2.07%
Gross Profit
1,336.00B
0.53%
23.41%
Operating Income
568.00B
-5.33%
495.49%
Net Income
302.00B
-44.15%
170.50%
EPS
4.00K
-32.38%
173.91%
Key Financial Ratios
currentRatio
1.89
grossProfitMargin
7.66%
operatingProfitMargin
3.26%
netProfitMargin
1.73%
returnOnAssets
0.3%
returnOnEquity
0.54%
dividendPayoutRatio
67%
priceToBookRatio
0.41
priceEarningsRatio
18.66
Net Income vs. Revenue
Expense Breakdown
Management Commentary
### Management Insights
- Market Conditions: CEO Kim Sung-Jin remarked, "Despite the headwinds of the global tariff war, we have seen improvement against the previous quarter... We have signals that allow positive assessments little by little."
- Partnership Developments: The collaboration with Hyundai Motor Group aims to build a steelmaking plant in the US, emphasizing an agile response to trade fluctuations: "This partnership is a strategic choice to address the rapidly changing environment."
- Financial Prudence: Management noted ongoing restructuring efforts leading to cash generation through divestments, which amounted to KRW 286.6 billion in Q1 2025. Kim stated, "These measures are expected to help eliminate potential sources of loss going forward."
- Guidance: Looking ahead, they emphasized a careful projection where stabilization is anticipated, enhancing visibility in operational performance by the latter half of 2025.
"Despite the headwinds of the global tariff war, we have seen improvement against the previous quarter... We have signals that allow positive assessments little by little."
— Kim Sung-Jin
"This partnership is a strategic choice to address the rapidly changing environment."
— Kim Sung-Jin
Forward Guidance
Management highlighted a strategic CapEx plan of KRW 8.8 trillion for 2025, allocating substantial investments across their core segments, with a focus on energy materials and infrastructure. Given the stabilization in raw material prices and the gradual normalization in domestic steel pricing driven by improved local market conditions, management appears cautiously optimistic. Guidance indicates a sustained recovery trajectory, particularly in the steel market, with anticipated volume increases as the impact of restructuring and improvement measures take effect. Investors are encouraged to monitor developments in strategic partnerships, particularly in North America, and further stabilization in the domestic market as potential growth indicators.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
005490.KS Focus
7.66%
3.26%
0.54%
18.66%
017670.KS
21.60%
11.10%
3.13%
7.86%
055550.KS
0.00%
12.10%
0.00%
3.98%
005380.KS
0.00%
8.18%
0.00%
4.24%
015760.KS
8.75%
5.58%
1.53%
6.32%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Given the comprehensive analysis, investors should note that while POSCO Holdings faces significant challenges in Q1 2025, the strategic initiatives, including investments in core competencies and potential recovery in domestic demand, provide a cautiously optimistic outlook. The current valuation appears reasonable given the underlying potential for recovery and revenue enhancement through strategic partnerships, particularly relating to North American markets, hence making it a noteworthy consideration in the steel and basic materials sector.
Key Investment Factors
Growth Potential
POSCO Holdings is well-positioned to capitalize on recovering domestic demand with its joint ventures and strategic investments in North America, targeting high-margin segments like automotive steel and energy materials.
Profitability Risk
The ongoing global tariff war and fluctuating raw material prices pose risks to revenue stability and profitability. Potential impairments from restructuring also remain a concern if they cannot swiftly return underperforming segments to profitability.
Financial Position
With a robust liquidity position and effective cash management, underscored by significant internal cash-generating capabilities, POSCO Holdings has a solid base to support its future growth initiatives.
SWOT Analysis
Strengths
Strong domestic market position in the steel industry
Diverse investment portfolio including energy materials and infrastructure
Established relationships with major automotive manufacturers
Weaknesses
Weak performance in international markets due to tariff barriers and restructuring costs
Declining net income indicating pressure on profitability
Opportunities
Potential for growth in US automotive and energy sectors through strategic partnerships
Increased demand for EV components and battery materials
Threats
Intensifying global trade conflicts and tariff wars
Volatility in raw material prices and local regulations impacting production