POSCO Holdings 2024 Performance: Navigating Market Challenges with Strategic Restructuring
POSCO Holdings, a major player in the steel and materials sector, recently announced its financial results for 2024. The company recorded consolidated sales of KRW 72.688 trillion, with an operating profit of KRW 2.174 trillion and a net profit of KRW 948 billion. Despite these figures, POSCO faced significant challenges, including non-cash losses amounting to KRW 1.3 trillion due to market deterioration and restructuring efforts aimed at improving business efficiency.
Market Conditions and Financial Performance
POSCO's 2024 performance was significantly impacted by various external factors. Domestic and international steel demand remained sluggish, and oversupply issues from China led to a dip in the global steel market. Additionally, the prices of key minerals fell, putting further pressure on POSCO's business in steel and rechargeable battery materials. Non-cash losses, including impairment losses from restructuring low-yield assets and valuation losses due to deteriorating market conditions, also contributed to the decrease in the company’s performance.
The results showed a decline of 5.8% in consolidated sales, 38.4% in operating profits, and 48.6% in net profits compared to 2023. Specifically, the steel sector faced a reduction in sales and operating profits due to decreased demand and production levels. Meanwhile, POSCO Future M, a subsidiary involved in rechargeable battery materials, experienced a drop in performance due to falling metal prices and a reduction in sales volume, particularly after the postponement of a key graphite project in the U.S.
Strengthening Resilience: Business Efficiency and Restructuring
Despite these setbacks, POSCO has taken significant steps toward improving its business efficiency. One of the key strategies involved the early stabilization of new plants for rechargeable battery materials. These plants will play a crucial role in stabilizing POSCO's revenue base, and the company has already started seeing the benefits of their operations. Additionally, POSCO has been actively restructuring its low-yield businesses and non-core assets. As part of this process, the company has already completed 45 of its 125 planned restructuring projects, generating KRW 662.5 billion in cash. By the end of 2024, POSCO expects to complete an additional 61 projects, bringing its total cash generation to KRW 2.1 trillion.
Strategic Partnerships and Global Expansion
POSCO has also focused on expanding its global presence and forming strategic alliances to enhance its competitiveness. In 2024, the company made notable progress in its goal of carbon neutrality by developing hydrogen reduction steelmaking technology and investing in electric arc furnace production. POSCO also signed a memorandum of understanding (MOU) with India's JSW for collaboration in steel, rechargeable battery materials, and energy. This partnership is part of POSCO’s broader efforts to strengthen its global business foundation.
In the steel sector, POSCO is working to expand its footprint in high-growth, high-profit markets such as India and North America. The company plans to invest heavily in these regions to secure long-term growth opportunities and reinforce its market position. In addition, POSCO has continued its expansion in the lithium market by completing domestic and overseas production plants for rechargeable battery materials, including brine lithium projects in Argentina and ore lithium plants in Korea.
Focus on Sustainable Growth and Future Plans
Looking ahead, POSCO Holdings remains committed to strengthening its competitiveness in the steel, rechargeable battery materials, and infrastructure sectors. The company plans to focus on ensuring financial soundness while pursuing sustainable growth. Its strategic objectives for the future include further expanding its presence in the lithium market and securing high-quality resources through initiatives in Chile and Australia.
In addition to this, POSCO is continuing its restructuring efforts, with the goal of improving asset efficiency and generating financial resources for future investments. This ongoing restructuring process, which involves optimizing the company’s business portfolio and focusing on high-value-added sectors, is expected to provide POSCO with the necessary flexibility to weather market challenges.
Financial Discipline and Shareholder Value
POSCO Holdings has also prioritized enhancing shareholder value. The company used KRW 100 billion from its restructuring cash inflows to repurchase and retire treasury shares. Over the next three years, POSCO intends to retire 6% of its treasury shares, with 2% already retired in 2024. This move is part of POSCO’s broader strategy to improve asset efficiency while providing returns to its shareholders.
