EPS of $5,694.00 decreased by 7.1% from previous year
Gross margin of 8.2%
Net income of 452.65B
""...we need to address this shift through localization in key markets and aim to get to the growth market early to build our presence through upstream business." - Jeong Kiseop, CSO" - Jeong Kiseop
POSCO Holdings Inc reported third-quarter revenues of KRW 18.32 trillion, reflecting a 1.02% decrease from the previous quarter. Despite maintaining similar levels of operating income (KRW 743 billion), the company faced challenges from declining steel prices and pressures in the rechargeable battery materials sector. Management highlighted strategic partnerships, particularly the joint venture with JSW Group, as a key growth area in the increasingly competitive and protectionist global steel market, as well as efforts to mitigate cost recovery issues within their lithium operations. Moving forward, POSCO remains committed to restructuring non-performing assets while emphasizing capital efficiency and strategic investments in high-demand segments.
Key Performance Indicators
Revenue
18,321.37B
QoQ: -1.02% | YoY:-3.37%
Gross Profit
1,506.51B
8.22% margin
QoQ: 5.91% | YoY:-20.21%
Operating Income
740.00B
QoQ: -0.99% | YoY:-38.13%
Net Income
452.65B
QoQ: -14.59% | YoY:-7.28%
EPS
5.98K
QoQ: -14.38% | YoY:-7.06%
Revenue Trend
Margin Analysis
Key Insights
**Revenue**: KRW 18.32 trillion, QoQ down 1.02%, YoY down 3.37%.
**Gross Profit**: KRW 1.51 trillion, QoQ up 5.91%, YoY down 20.21%.
**Operating Income**: KRW 743 billion, QoQ down 0.99%, YoY down 38.13%.
**Net Income**: KRW 453 billion, QoQ down 14.59%, YoY down 7.28%.
- Revenue: KRW 18.32 trillion, QoQ down 1.02%, YoY down 3.37%.
- Gross Profit: KRW 1.51 trillion, QoQ up 5.91%, YoY down 20.21%.
- Operating Income: KRW 743 billion, QoQ down 0.99%, YoY down 38.13%.
- Net Income: KRW 453 billion, QoQ down 14.59%, YoY down 7.28%.
- EBITDA: KRW 740 billion, reflecting a consistent operational performance amidst market volatility.
- Operating Margin: 4.04%, indicating sustained operational control despite a competitive environment.
Notably, the company's strategic focus on high-end steel products, which account for 32% of revenues, and the declining prices for lithium hydroxide highlight the dual challenges of market pricing dynamics and production costs.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
18,321.37B
-3.37%
-1.02%
Gross Profit
1,506.51B
-20.21%
5.91%
Operating Income
740.00B
-38.13%
-0.99%
Net Income
452.65B
-7.28%
-14.59%
EPS
5.98K
-7.06%
-14.38%
Key Financial Ratios
currentRatio
1.95
grossProfitMargin
8.22%
operatingProfitMargin
4.04%
netProfitMargin
2.47%
returnOnAssets
0.44%
returnOnEquity
0.82%
debtEquityRatio
0.47
operatingCashFlowPerShare
$16196
freeCashFlowPerShare
$-7768.53
dividendPayoutRatio
42.5%
priceToBookRatio
0.58
priceEarningsRatio
17.57
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Market Strategy and Growth: Jeong Kiseop, CSO of POSCO, emphasized, "The joint venture with JSW Group not only strengthens our position in the steel market but also extends into vital sectors such as renewable energy and battery materials, crucial for future growth."
Challenges in Pricing: The management acknowledged the hurdles posed by declining steel prices and the competitive dynamic in battery materials: "...prices of lithium hydroxide have fallen below KRW 10,000 per ton. This decline will necessitate operational adjustments to maintain profitability across segments."
"...we need to address this shift through localization in key markets and aim to get to the growth market early to build our presence through upstream business." - Jeong Kiseop, CSO
â Jeong Kiseop
"Current market conditions require us to tighten our profit management while simultaneously pursuing growth in key sectors despite the challenges we face." - Young-Ah Han, Head of IR.
â Young-Ah Han
Forward Guidance
POSCO's management offered cautious optimism about the upcoming quarters, stating that raw material prices are expected to decline further, which may enhance profit margins going forward. However, the outlook remains tempered by the continuing economic slowdown in China and sluggish demand in global markets. Investors should monitor the performance of the joint venture in India, particularly regarding its capacity expansion and production timeline, as well as the ongoing restructuring efforts to enhance operational efficiency.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
005490.KS Focus
8.22%
4.04%
0.82%
17.57%
017670.KS
22.70%
11.80%
2.47%
11.16%
055550.KS
1.00%
18.30%
2.21%
5.84%
005380.KS
19.80%
8.34%
2.87%
5.44%
015760.KS
16.00%
13.00%
4.84%
1.78%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Overall, while POSCO's Q3 2024 results indicate resilience through strategic initiatives and operational stability, the dual challenges of fluctuating steel prices and evolving market demands require vigilant management. The partnership with JSW Group and advancements in lithium production present significant growth avenues that, if executed effectively, could enhance shareholder value. Investors should evaluate the company's capacity to navigate these market dynamics and its commitment to maintaining financial health amid evolving industry challenges.
Key Investment Factors
Growth Potential
POSCO is strategically entering the upstream segment in India with the JSW Group, targeting the high-demand steel sector, which may position them favorably given India's robust steel consumption growth projections.
Profitability Risk
Ongoing economic uncertainties, particularly in China, alongside fluctuating commodity prices and geopolitical risks can impact margins. The company also faces execution risks related to their lithium and battery material operations.
Financial Position
With a total debt of KRW 26.13 trillion against total assets of KRW 102.30 trillion, POSCO maintains a manageable debt level; however, the increasing debt burden from investment activities requires monitoring.
SWOT Analysis
Strengths
Strong brand position in the steel industry with significant market share in premium automotive steel products.
Strategic partnerships facilitating entry into key growth markets like India.
Diverse portfolio across steel production, construction, and battery materials.
Weaknesses
Dependence on cyclical steel prices susceptible to fluctuations and international competition.
Recent losses in profitability within the lithium segment due to price declines and increased operational costs.
Opportunities
Growing demand for steel in India and the potential for operational synergies from the JSW partnership.
Expansion in battery materials, particularly lithium production, where POSCO is advancing to achieve commercial scale.
Threats
Geopolitical uncertainties and protectionist policies affecting trade and pricing.
Continuous pressure from low-cost steel imports, particularly from Chinese manufacturers, impacting market share.