UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15D-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

For the month of December, 2022

Commission File Number: 1-13368

 

 

POSCO HOLDINGS INC.

(Translation of registrant’s name into English)

 

 

POSCO Center, 440 Teheran-ro, Gangnam-gu, Seoul, Korea, 06194

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒                         Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

 

 

 

POSCO HOLDINGS INC. is furnishing under cover of Form 6-K:

Exhibit 99.1: An English-translated documents of POSCO HODLINGS INC.’s 3Q Interim Report for the year 2022.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

				POSCO HOLDINGS INC.
				(Registrant)
Date: December 7, 2022		By		/s/ Han, Young-Ah
				(Signature)
				Name:  Han, Young-Ah
				Title:    Senior Vice President

Exhibit 99.1

 

 

INTERIM REPORT

(From January 1, 2022 to September 30, 2022)

THIS IS AN ENGLISH TRANSLATION OF THE INTERIM REPORT ORIGINALLY PREPARED IN THE KOREAN LANGUAGE (IN SUCH FORM AS REQUIRED BY THE KOREAN FINANCIAL SERVICES COMMISSION). THIS ENGLISH TRANSLATION IS NOT OFFICIAL AND IS PROVIDED FOR INFORMATION PURPOSES ONLY.

UNLESS EXPRESSLY STATED OTHERWISE, ALL INFORMATION CONTAINED HEREIN IS PRESENTED ON BOTH CONSOLIDATED AND NON-CONSOLIDATED BASIS IN ACCORDANCE WITH THE KOREAN-INTERNATIONAL FINANCIAL REPORTING STANDARDS (K-IFRS) WHICH DIFFER IN CERTAIN RESPECTS FROM GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CERTAIN OTHER COUNTRIES, INCLUDING THE UNITED STATES. WE HAVE MADE NO ATTEMPT TO IDENTIFY OR QUANTIFY THE IMPACT OF THESE DIFFERENCES.

INTERIM REPORT

(From January 1, 2022 to September 30, 2022)

 

To:	Korean Financial Services Commission and Korea Exchange

 

/s/ Chon, Jung-Son

Chon, Jung-Son

President and Representative Director

POSCO HOLDINGS INC.

POSCO Center, 440, Teheran-ro, Gangnam-gu, Seoul, 06194 Korea

Telephone: +82-2-3457-0114

 

/s/ Han, Young-Ah

Han, Young-Ah

Senior Vice President

POSCO HOLDINGS INC.

POSCO Center, 440, Teheran-ro, Gangnam-gu, Seoul, 06194 Korea

Telephone: +82-2-3457-0114

 

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TABLE OF CONTENTS

 

I.		Overview
II.		Business
III.		Financial Statements
IV.		Corporate Governance

 

Attachment: Independent auditors’ review reports on consolidated and separate financial statements

 

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I. OVERVIEW

1. Scope of Business

A. POSCO HOLDINGS INC. (the “Company”, Former POSCO)¹⁾

1) Change of the company name : POSCO (the “Company”) approved the vertical Spin-off plan at the Extraordinary General Meeting of Shareholders as proposed on January 28, 2022 and therefore, the name of the company has changed from ‘POSCO’ to ‘POSCO HODLINGS INC.’ as of March 2, 2022.

The Company’s business scope is as follows:

 

Before the vertical Spin-off (Beginning of 2022)		After the vertical Spin-off (As of the date of submission)
(1) To manufacture, market, promote, sell and distribute iron, steel and rolled products;		(1) To engage in holding business of controlling the business of, and guiding, organizing and improving the management of, subsidiaries by acquiring and owning the shares or ownership interests in subsidiaries (including sub-subsidiaries and companies controlled by such sub-subsidiaries; collectively “subsidiaries”);
(2) To engage in harbor loading and unloading, transportation and warehousing businesses;
(3) To engage in the management of professional athletic organizations;
(4) To engage in the supply of gas and power generation as well as in the distribution business thereof and in the resources development business;		(2) To engage in the management and licensing of intellectual property rights including brands and trademarks;
(5) To engage in leasing of real estate and distribution businesses;		(3) To engage in the investment related to start-up assistance and new technology;
(6) To engage in the supply of district heating business;		(4) To engage in market research, management advisory and consulting services;
(7) To engage in marine transportation, processing and sales of minerals within or outside of Korea;		(5) To engage in technology research and commissioned services;
(8) To engage in educational service and other services related to business;		(6) To engage in matters entrusted by subsidiaries to assist the subsidiaries’ businesses;
(9) To engage in manufacture, process and sale of non-ferrous metal;		(7) To engage in the supply of gas such as hydrogen and resources development business;
(10) To engage in technology license sales and engineering business; and		(8) To engage in leasing of real estate and distribution businesses; and
(11) To engage in all other conducts, activities or businesses which are related, directly or indirectly, to the attainment and continuation of the foregoing purposes		(9) To engage in all other conducts, activities or businesses which are related, directly or indirectly, to the attainment and continuation of the foregoing purposes.

 

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2. Business Organization

A. Highlights of the Company’s Business Organization

(1) Location of the Headquarters

 

		Before the vertical Spin-off (Beginning of 2022)		After the vertical Spin-off (As of the date of submission)
Name		POSCO		POSCO HOLDINGS INC.
Location of the Headquarters		6261 Donghaean-ro (Goedong-dong), Nam-gu, Pohang-si, Gyeongsangbuk-do, Korea		POSCO Center, 440 Teheran-ro, Gangnam-gu, Seoul, Korea, 06194

(2) Steel Works and Offices

 

		Before the vertical Spin-off (Beginning of 2022)		After the vertical Spin-off (As of the date of submission)
Date		POSCO		POSCO HOLDINGS INC.
March 2, 2022		(a) Pohang Steel Works: 6262 Donghaean-ro (Dongchon-dong), Nam-gu, Pohang-si, Gyeongsangbuk-do, Korea   (b) Gwangyang Steel Works: 20-26 Pokposarang-gil (Geumho-dong), Gwangyang-si, Jeollanam-do, Korea   (c) Seoul Office: POSCO Center, 440 Teheran-ro (Daechi-dong), Gangnam-gu, Seoul, Korea   (d) Overseas Offices: In order to support international businesses, the Company operates five overseas offices as follows: United Arab Emirates(Dubai), Brazil(Rio de Janeiro), Argentina(Jujuy), European Union(Germany), and Australia(Perth).		POSCO Center, 440 Teheran-ro, Gangnam-gu, Seoul, Korea, 06194

 

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(3) Major Changes in the Board of Directors

 

Date of Change		Type of General Meeting of Shareholders		Appointment				Expiration of Term
				New		Re-appointment
March 9, 2018		Ordinary		—		Representative Director Oh, In-Hwan		—
				—		Representative Director Chang, In-Hwa		—
				—		Inside Director Yu, Seong		—
				Inside Director Chon, Jung-Son		—		—
				—		—		Representative Director Choi, Jeong-Woo
				Outside Director Kim, Sung-Jin		—		—
				—		Outside Director Bahk, Byong-Won		—
				—		Outside Director Kim, Joo-Hyun		—
				—		—		Outside Director Shin, Chae-Chol
July 27, 2018		Extraordinary		Representative Director Choi, Jeong-Woo		—		—
				—		—		Representative Director Kwon, Oh-Joon
March 15, 2019		Ordinary		—		Representative Director Chang, In-Hwa		—
				—		Inside Director Chon, Jung-Son		—
				Inside Director Kim, Hag-Dong		—		—
				Inside Director Jeong, Tak		—		—
				—		—		Representative Director Oh, In-Hwan
				—		—		Inside Director Yu, Seong
				Outside Director Pahk, Heui-Jae		—		—
				—		Outside Director Kim, Shin-Bae		—
				—		Outside Director Chung, Moon-Ki		—
				—		—		Outside Director Lee, Myoung-Woo

 

6

Date of Change		Type of General Meeting of Shareholders		Appointment				Expiration of Term
				New		Re-appointment
March 27, 2020		Ordinary		—		Representative Director Chang, In-Hwa		—
				—		Inside Director Chon, Jung-Son		—
				—		Inside Director Kim, Hag-Dong		—
				—		Inside Director Jeong, Tak		—
				—		Outside Director Chang, Seung-Wha		—
March 12, 2021		Ordinary		—		Representative Director Choi, Jeong- Woo		—
				—		Representative Director Kim, Hag-Dong		—
				—		Representative Director Chon, Jung-Son		—
				—		Inside Director Jeong, Tak		—
				Inside Director Chung, Chang-Hwa		—		—
				—		—		Inside Director Chang, In-Hwa
				—		Outside Director Kim, Sung-Jin*		—
				Outside Director Yoo, Young-Sook		—		—
				Outside Director Kwon, Tae-Kyun		—		—
				—		—		Outside Director Kim, Joo-Hyun
				—		—		Outside Director Bahk, Byong-Won
March 18, 2022		Ordinary		—		Representative Director Chon, Jung-Son		—
				—		Inside Director Chung, Chang-Hwa		—
				Inside Director Yoo, Byeong-Og		—		—
				—		—		Representative Director Kim, Hag-Dong
				—		—		Inside Director Jeong, Tak
				Non-standing Director Kim, Hag-Dong		—		—
				—		Outside Director Pahk, Heui-Jae
				Outside Director Yoo, Jin-Nyong**		—
				Outside Director Sohn, Sung-Kyu**		—
						—		Outside Director Kim, Shin-Bae
						—		Outside Director Chung, Moon-Ki

 

7

*	The re-appointed Outside Director Kim, Sung-Jin was elected as an Outside Director to become an Audit Committee Member

**	The Outside Director Yoo, Jin-Nyong and Sohn, Sung-Kyu were appointed as Audit Committee Member at the General Meeting of Shareholders held on March 18, 2022.

(4) Changes of the Major Shareholders of POSCO HOLDINGS INC.

Since January 30, 2007, National Pension Service holds the largest number of common shares of POSCO HOLDINGS INC.

(a) From SK Telecom to National Pension Service

(b) Date of Change: January 30, 2007

For further reference, please refer to the public disclosures of changes in common shares of the largest shareholder on Financial Supervisory Service website (http://dart.fss.or.kr)

B. POSCO HOLDINGS’ Merger, Acquisition and Handover of Businesses

(1) January 2019 : Small scale merger of POSCO Processing & Service Co., Ltd into POSCO

(2) September 2019 : Handover of business right of LNG terminal to POSCO ENERGY

(3) September 2019 : Small scale merger of By-Product Gas Generation Business from POSCO ENERGY into POSCO after spin-off

(4) January 2022 : Handover of logistic related business to POSCO Terninal

(5) March 2022 : Completion of Vertical Spin-off

 

Classification		Company Name		Business Unit
Surviving Company		POSCO HOLDINGS INC.		Development of future business portfolios and management of group’s businesses
New Company		POSCO		Production and sale of steel

 

8

3. Changes in Share Capital

There has been no changes in share capital in the last 5 years.

 

		(Unit : Share, KRW/Share, In millions of KRW)
Type		Details		As of September 30, 2022				As of December 31, 2021				As of December 31, 2020
Common Stock		Total number of issued shares			84,571,230				87,186,835				87,186,835
		Par value			5,000				5,000				5,000
		Share capital			482,403				482,403				482,403
Preferred Stock		Total number of issued shares			—				—				—
		Par value			—				—				—
		Share capital			—				—				—
Others		Total number of issued shares			—				—				—
		Par value			—				—				—
		Share capital			—				—				—
Sum		Share capital			482,403				482,403				482,403

 

Due to the decision to cancel treasury shares by the resolution of the board of directors on August 12, 2022, the total number of shares issued by the company will decrease from 87,186,835 to 84,571,230, and there will be no change in capital. For more information, please refer to the ‘Retirement of Stocks’ disclosure on August 12, 2022.

4. Other Information Regarding Shares

A. Total Number of Shares

 

		(As of September 30, 2022)
Authorized Shares		Issued Shares
200,000,000		84,571,230

 

Currency of the Republic of Korea is Korean Won (“KRW”).

Par Value: KRW 5,000 per share

Due to the decision to cancel treasury shares by the resolution of the board of directors on August 12, 2022, the total number of shares issued by the company will decrease from 87,186,835 to 84,571,230

 

9

B. Treasury Stock Acquisition and Disposal

(As of September 30, 2022)

 

Method of Purchase		Type		Beginning Balance				Increased				Decreased				Cancelled				Ending Balance				remark
Direct		Common Stock			7,071,194				—				223,605				1,441,410-				5,406,179				1), 2)
Trust Contract					4,490,069				—				—				1,174,195				3,315,874				2)
Total					11,561,263				—				223,605				2,615,605				8,722,053				3)

 

1)	The company has disposed of 223,605 treasury stocks(0.26% of total number of issued shares) to the employee stock ownership association on February 25, 2022.

2)	In order to improve shareholder value, the company has cancelled 2,615,605 shares which accounts for 3.00% of the total number of issued shares on August 22, 2022.

3)

Aforementioned number of treasury stocks includes 3,128,714 treasury stocks which are subject to the exchange of exchangeable bonds issued by the company on September 1, 2021. The treasury stock subject to this exchange is finalized at the time the exchange right is exercised and is currently deposited with the Korea Securities Depository.

5. Voting Rights

 

		(As of September 30, 2022)
Classification		Number of Common Shares				Remarks
(1) Number of Issued Shares			84,571,230				—
(2) Shares without Voting Rights			8,722,053				Treasury stock
(3) Shares with Voting Rights			75,849,177				—

 

*	The above “(3) Shares with Voting Rights” is the number of shares based on holding voting rights as of September 30, 2022.

6. Earnings and Dividends

 

		(In millions of KRW)
		2022.3Q				2021				2020
(Consolidated) Profit*			3,809,956				6,617,239				1,602,148
(Separate) Profit			-1,193,472				5,181,227				965,863
Earnings per Share (Consolidated, KRW)			50,247				87,330				20,165
Cash Dividend Paid			758,492				1,285,635				620,287
Pay-out Ratio (Consolidated, %)			19.9				19.4				38.7
Dividend per Share (KRW)			10,000				17,000				8,000
Dividend Yield (%)			4.3				6.0				3.0

 

*	(Consolidated) Profit : Profit attributable to owners of the controlling company

*	Cash Dividends includes quarterly dividends

-

1Q, 2022 : Cash Dividend Paid : KRW 303,397 million Dividend per Share : KRW 4,000

-

2Q, 2022 : Cash Dividend Paid : KRW 303,397 million Dividend per Share : KRW 4,000

-

3Q, 2022 : Cash Dividend Paid : KRW 151,698 million Dividend per Share : KRW 2,000

 

Changes after the record date (September 30, 2022) of the disclosure

On November 4, 2022 at the Board of Directors meeting, POSCO HOLDINGS INC. resolved to pay cash dividend of the 3rd quarter for the fiscal year 2022 as KRW 2,000 per share (total cash dividend paid : KRW 151.7 billion)

 

10

7. Stock Prices and Trading Volumes

The stock prices and trading volumes of POSCO HOLDINGS INC. for the last 6 months are as follows.

A. The Korean Stock Market

(KRW/share, In thousands of shares)

 

				April 2022		May 2022		June 2022		July 2022		August 2022		September 2022
Common share		Highest Price		299,000		294,000		290,000		242,000		259,500		253,000
		Lowest Price		278,000		273,000		230,500		223,000		233,000		211,000
		Average Price		286,881		286,690		260,075		231,571		248,045		236,825
Trading volume		Daily highest		444		695		627		343		469		539
		Daily lowest		129		155		152		104		181		197
		Monthly		5,225		4,952		6,362		5,123		6,692		7,406

B. New York Stock Exchange

(USD/ADS*, In thousands of ADS*)

 

				April 2022		May 2022		June 2022		July 2022		August 2022		September 2022
American Depositary Share (ADS)		Highest Price		60.5		59.1		58.3		46.9		50.2		46.1
		Lowest Price		55.0		52.4		44.5		42.1		44.8		36.6
		Average Price		57.9		56.3		51.1		44.4		47.0		42.3
Trading volume		Daily highest		324.0		295.0		438.7		250.8		601.7		483.1
		Daily lowest		115.9		99.3		83.1		119.9		76.2		192.0
		Monthly		3,868		3,767		4,267		3,535		4,873		6,892

 

*	ADS : One American Depositary Share representing one-fourth of one of Common Share

 

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II. BUSINESS

1. Overview

A. Classification of Business

We classify our business into four segments:

Steel, Green Infrastructure, Green Materials and Energy, and Others.

Green Infrastructure is subdivided into Construction, Trading, and Energy and others.

B. Summary of Financial Status of Segment

 

																		(In millions of KRW)
Business Segment		2022.3Q								2021								2020
		Sales				Operating Income (Loss)				Sales				Operating Income (Loss)				Sales				Operating Income (Loss)
Steel			34,995,320				4,078,039				41,093,405				8,123,117				28,892,877				1,372,852
Green Infrastructure (Construction)			5,570,260				274,115				6,398,366				424,085				6,576,170				385,048
Green Infrastructure (Trading)			20,187,524				639,312				25,065,608				488,884				19,345,222				394,954
Green Infrastructure (Energy and others)			2,780,636				261,422				2,061,277				96,968				1,739,469				198,192
Green Materials and Energy			1,871,790				118,713				1,241,957				69,510				771,575				22,818
Others			97,128				-96,180				471,732				35,525				467,484				29,171
Total			65,502,659				5,275,421				76,332,345				9,238,089				57,792,796				2,403,035

2. Business Status of Segments

A. Steel

There are 76 consolidated companies in the steel segment, including POSCO and POSCO Steeleon, and overseas companies including PT.Krakatau POSCO in Indonesia, POSCO (Zhangjiagang) Stainless Steel Co., Ltd. in China and overseas processing centers.

 

12

∎ POSCO

(1) Summary of Business

POSCO produces steel materials such as hot rolled, cold rolled and stainless steel at Pohang Works and Gwangyang Works.

The steel industry is a key industry that has taken pivotal roles in the national economic development since the 1970s. Steel is used as a basic material in various manufacturing fields such as automobiles, shipbuilding, home appliances, and construction, and has a close connection with the front industry due to its characteristics.

Global crude steel production until September 2022 fell 4.3% year-on-year to 1,405 million tons as China decreased production for carbon neutrality.

The steel industry is affected by the business cycle and the ups and downs of the demand industry.

Therefore, steel demand is not only related to trend of market economy, but also to situation of demand industries like shipbuilding, automobiles, home appliances, constructions and etc.

The steel industry is a capital and technology-intensive industry that requires enormous initial investments. Steel companies are focusing on reducing production costs and securing price competitiveness. In the meantime, protectionism is intensifying, with the U.S. and Europe building trade barriers to protect their steel industries. In Asia, there is little difference in logistic costs, and the trading is relatively active among countries. Therefore, POSCO is focusing on defending imported products and expanding domestic market share.

All iron ore and coking coal that are the main raw materials for steel manufacturing, are imported. In order to secure stable raw materials sourcing and consider company’s new growth strategy and ESG policy, POSCO maintains an appropriate ratio of investment in raw material development by acquiring or selling shares of overseas raw material companies.

In the third quarter of 2022, energy price soared due to the prolonged Russia-Ukraine war and economic instability and slow steel demand continued affected by concerns over stagflation and economic recession. POSCO responded flexibly to market fluctuations by adjusting sales prices and sales mix of the steel products in consideration of global market situation as well as regional market conditions. In addition, sales volume is expected to decrease until Pohang Steelwork is fully recovered from the flood damage. However, Gwangyang Steelwork is increasing its production volume by adjusting repairing schedule and increasing its productivity. Not only that, POSCO is minimizing sales impact from the flood damage by reducing inventory level which had maintained at a high level due to downtrend in steel market.

In the steel industry, automobiles, shipbuilding, and construction are the main demand industries, and steel products are used as raw materials for these demand industries. In terms of sales, the proportion of domestic sale is 60% of total sales and export sales are around 40%, and by export region, the proportion of Southeast Asia, China, and Japan is high. POSCO maintains order based production and sales system, and to secure stable sales, the proportion of direct sales to customers in domestic sales is maintained at about 60%.

POSCO is the No. 1 global steel company that can maintain its competitiveness in the midst of rapidly changing business environments such as the transition to a low-carbon eco-friendly era, accelerating technological innovation, and strengthening ESG management. The company’s competitive advantages include followings:

First, POSCO has the ability to change current steelmaking process to a low-carbon, eco-friendly process.

 

13

Second, not only being the world’s largest integrated mill, POSCO is building ‘intelligent Smart mill’

Third, POSCO has a portfolio for ‘premium product competitiveness’. POSCO is proactively responding to the increasing customer demand of eco-friendly products by expanding the development of high-end products and Green transition solutions. Fourth, POSCO has been strengthening ESG oriented management. POSCO is strengthening ESG management by establishing a framework for ESG management practice in nine key areas, including carbon neutrality, eco-friendly material development, safety, corporate citizenship management, and diversity.

(2) Market Share

 

		(Millions of Tons, %)
Category		2022.3Q
		Production				Market share
Crude Steel Production			50.5				100	%
POSCO			26.2				51.8	%
Others			24.3				48.2	%

 

Source: World Steel Association (www.worldsteel.org)

∎ POSCO STEELEON

POSCO Steeleon provides differentiated value through technology development and new market development with design/solution provision in both domestic and overseas surface treatment steel market. In addition, POSCO Steeleon is strengthening sales system of WTP (World Top Premium) products through joint marketing with POSCO. In line with POSCO Group’s strategy that strengthens the sales base for high-end steel materials for construction use, POSCO Steeleon is striving to strengthen its competitiveness in the high-end construction/exterior materials through research and development based on customers.

∎ POSCO M-TECH

(1) Summary of Business

POSCO M-TECH is a specialized supplier of steel products packaging and steel supplementary materials such as aluminum deoxidizers which is needed to remove oversaturated oxygen in steelmaking process. In the case of steel products packaging, POSCO M-TECH continuously develops packaging automated molding machines and applies environment-friendly packaging materials. POSCO M-TECH has expanded the sales of aluminum deoxidizers in overseas markets. POSCO M-TECH’s business performance is closely related to the steel industry, and the business situation of the steel industry could have both direct or indirect impact on POSCO M-TECH’s business performance. In the case of the packaging business, the operating performance may vary depending on the change in the production of steel coils and the sales of steel raw materials may also affected by the production of crude steel.

 

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(2) Market Share

 

																						(Tons)
Category		2022.3Q								2021								2020
		Sales Volume				Market share				Sales Volume				Market share				Sales Volume				Market share
POSCO M-TECH			18,142				50.4	%			34,846				49.0	%			31,044				53.0	%
PJ Metal			17,878				49.6	%			36,257				51.0	%			27,576				47.0	%
Total			36,020				100.0	%			71,102				100.0	%			58,620				100.0	%

 

It is difficult to calculate exact market share of Aluminum deoxidizers as total production and sales volume of the domestic market are not counted. The market share stated above is calculated based on supply to POSCO.

B. Green Infrastructure Business

There are 76 subsidiaries on consolidated basis including trading sector (36 subsidiaries including POSCO International), construction sector (26 subsidiaries including POSCO E&C) and energy sector (14 subsidiaries including POSCO Energy).

∎ POSCO INTERNATIONAL

(1) Market Share

 

		(Millions of US Dollars)
Category		2022.3Q				2021.3Q				Growth Rate
All Trading Companies in Korea			524,903				467,675				12.24	%
POSCO International Corp.			7,755				6,386				21.44	%

 

Source: Korea International Trade Association

(2) Summary of Businesses

While focusing on trading which is its main business, POSCO International is engaged in resource development, production processing, and infrastructure development and operation.

POSCO International and its consolidated subsidiaries engage in three major businesses: trading, energy and investment(food resources, motor core for EV, mineral resource development and etc). In addition, POSCO International maintains a global network of over 80 subsidiaries and branches in major overseas regions. In the case of the trading business, POSCO International has not only been securing stable supply line in steel business but also been actively developing and expanding new businesses such as secondary battery business, agro-commodities, LNG trading, and industrial materials based on the know-how accumulated over a long period of time in the traditional trading business and through its vast overseas networks. In the energy business, POSCO International conducts businesses such as natural gas and crude oil development, LNG infrastructure, natural resources and power generation infrastructure. In regard to investment business, POSCO International mainly focus on food resource business in which developing palm farm in Indonesia, and other food value chain in North America. Together with POSCO Mobility Solution, POSCO International started engaging into motor core business for EV. It is expected to expand motor core production to 7 million by 2030. In addition, the company invests in mineral resource development in Australia and power generation infrastructure overseas. To be specific, POSCO International has been participating in the Ambatobi Nickel Mine Project, the world’s third-largest nickel mine in the mineral resource development project with a 6.1% stake since 2006. In addition, POSCO International is searching for new business opportunities in secondary battery materials which is considered to be POSCO Group’s core business in the future.

 

15

∎ POSCO E&C

POSCO E&C engages in primarily 3 businesses: plant, civil engineering(infrastructure) and construction.

Plant business is the construction of integrated steel mills, EPC projects and industrial plants. Plant business used to focus on small investment of existing facilities but there will be more new investments in Electric furnace and hydrogen reduction process followed by global green trend. As nuclear power generation is getting attention again, the development of small nuclear power plants is expected to become active.

The civil engineering business is about constructing expressways, railroads and bridges. With the government’s Green New Deal policy, the infrastructure industry is expected to increase investment in eco-friendly facilities such as water treatment and waste treatment, and investment in roads and railways is expected to increase as well. It is expected that more favorable overseas construction market would be created for the domestic construction companies as demand of infrastructure development is increasing in Asia, Middle East, Americas as well as in Europe. Housing demand is shrinking after a sharp rate hike, and number of unsold households are increasing around areas where supply has been concentrated. Recently, concerns have been growing that new orders will shrink as funding has been suspended due to the financial market crunch. In addition, disputes between contractors/union and construction companies are increasing due to worsening profitability due to rising construction costs. This trend is expected to continue for a considerable period of time, and only profitable businesses would be carried forward in the future. In terms of overseas market, domestic construction companies have entered Southeast Asia, where urbanization is actively underway, but economic uncertainties of each country are also soaring as the exchange rate of emerging economies has plunged due to the recent strong dollar. From now on, construction companies’ risk management is expected to be the top priority in overseas.

∎ POSCO ENERGY

(1) Market Share

 

-

Power generation business : POSCO ENERGY’s power generation facility capacity is about 2.4% of the total power generation facilities in Korea

* Source: Power Exchange as of the end of September, 2022

 

-

Gas business : POSCO ENERGY’s LNG terminal capacity accounts for about 5.2% of domestic terminals.

* Source: POSCO ENERGY’s Estimate Data as of the end of September, 2022

 

-

Fuel cell business : POSCO ENERGY’s supply of fuel cell power generation facilities accounts for about 21.4% of all fuel cell facilities in Korea.

 

16

* Source: POSCO ENERGY’s Estimate Data as of the end of September, 2022

* Statistics on the supply of renewable energy by the Korea Energy Management Corporation as of the end of 2020

(2) Summary of Businesses

POSCO ENERGY started its commercial operation in February, 1972 as the only privately-owned power plant in Korea. Since the early 1990’s, POSCO ENERGY continuously remodeled and built additional power plants meeting the increased demand for electricity in Korea. POSCO ENERGY acquired the LNG terminal business from POSCO in 2019, providing an opportunity to expand the LNG value chain. The LNG terminal business operates stable business structure through businesses such as tank rental, small scale LNG business, and ship trial run. POSCO ENERGY plans to secure stable profit base through the expansion of the LNG terminal in the future and grow into a general energy company focused on gas and power. Furthermore, POSCO ENERGY has been running businesses such as fuel cell facility installation, long-term O&M service provision, and fuel cell power plant operation after it has established fuel cell business division in 2007. POSCO Energy is strengthening its expertise and enhancing its management efficiency through Korea Fuel Cell Co., Ltd., which was established in November 2019.

∎ POSCO ICT

POSCO ICT has both IT and OT technologies and has secured competitiveness in its manufacturing-based business on the convergence of IT and OT technologies. Based on the research conducted by KRG which is IT professional research organization, ICT has 2.9% of domestic ICT market share (ICT market for local corporates only). The experiences operating POSCO’s Smart Factory based on PosFrame system, an AI-based platform, led the company to have a strength in the area of continuous process. The company took this advantage to expand this technology to assembly process and F&B manufacturing. With its experiences in POSCO’s smart factory construction, POSCO ICT is planning to support the mass production system of eco-friendly materials such as lithium and nickel. In addition, POSCO ICT will apply POSCO’s production quality management system that is controlled by edge computing-based smart factory solution to steel production and processing centers overseas.

 

17

C. Green Materials and Energy

∎ POSCO CHEMICAL

POSCO CHEMICAL operates mainly 3 businesses: refractory, quicklime & chemical and energy material.

Refractories maintain their chemical properties and strength even at high temperatures making them indispensable materials for industrial facilities including the furnaces in steelworks and petrochemical plants. In the refractory business, POSCO CHEMICAL produces and maintains refractories. In order to keep price competitiveness in the domestic market, the company has expanded its business to China. In the quicklime & chemical business, POSCO CHEMICAL is currently doing consignment operation of cokes plants where purify coke oven gas (COG) in Pohang and Gwangyang. With the chemical products generated in during the purification process, POSCO CHEMICAL operates cokes business. In addition, it produces quicklime and chemical products such as coal tar and light oil. In the energy material business, POSCO CHEMICAL provides cathode and anode materials which are the main components for secondary battery: cathode, anode, electrolyte and separation membrane. It is planned to expand its production of natural graphite anode materials from 61 thousand ton/year in 2021 to 106 thousand ton/year in 2025. Considering expanding artificial graphite production to 62 thousands ton/year by 2025, it is expected to have a production capacity of 168 thousands ton/year in total by 2025. Furthermore, cathode material production is expected to increase from 40 thousands ton/year in 2021 to 345 thousands ton/year in 2025.

Due to environment-friendly policy with less carbon emission worldwide, demands for Energy Storage System and Electric Vehicle are expected to grow continuously. In particular, the secondary battery market for electric vehicles is expected to grow 29% annually from about 2 million in 2018 to about 15 million in 2025 due to China’s strong electric vehicle industry development policy, European CO₂ emission regulations, and global OEMs’ proportion of electric vehicle. In 2021, POSCO CHEMICAL has focused on investing in large-scale expansion of energy materials for future growth under a difficult business environment. In the meantime, the company conducted various activities to improve profitability and sustainable management and therefore, achieved its highest sales volume of KRW 1,989.5 billion and operating profit of KRW 121.7 billion (consolidated basis) since its foundation.

Global EV Market Outlook

(Ten thousand vehicles)

 

(SNE Research)

 

18

D. Others

In Others segment, there are 13 subsidiaries in total, including POSCO HOLDINGS. POSCO HOLDING is focusing on investment in new growth businesses and opportunities

3. Key Products

A. Sales of Key Products (2022.3Q)

(In hundred millions of KRW, %)

 

Business Segment		Item / Business Sector		Specific Use		Total Sales				Ratio
Steel		Hot-rolled Product (HR)		Steel pipe, Shipbuilding, etc.			103,995			18.70%
		Cold-rolled Product (CR)		Automobile , Home appliances, etc.			170,707			30.70%
		Stainless Steel Products		Tableware, pipes, etc.			109,731			19.80%
		Others		Plates, Wire rods, etc.			170,945			30.80%
		Gross Sum					555,378			100.00%
		Deduction of Internal Trade					-205,425
		Sub Total					349,953
Green Infrastructure		Trading		Steel, Metal			294,918			57.80%
				Chemical, Strategic Item, Energy			40,034			7.80%
				Others			58,770			11.50%
		Construction		Architecture (Domestic)			26,257			5.10%
				Plant (Domestic)			11,031			2.20%
				Civil Engineering (Domestic)			6,714			1.30%
				Others (Domestic)			1,302			0.30%
				Overseas Construction			10,649			2.10%
				Owned Construction			5,545			1.10%
				Others			2,666			0.50%
		Energy and etc.		Electricity Sales, etc.			52,272			10.20%
		Gross Sum					510,158			100.00%
		Deduction of Internal Trade					-224,774
		Sub Total					285,384
Green Materials and Energy		Gross Sum					25,807			100.00%
		Deduction of Internal Trade					-7,089
		Sub Total					18,718
Others		Gross Sum					5,431			100.00%
		Deduction of Internal Trade					-4,459
		Sub Total					972
Total Sum							655,027

 

*	The steel segment above includes POSCO’s performance before the spin-off (January to February).

 

19

B. Price Movement Trends of Key Products

(In thousands of KRW/ Tons, KRW/kWh)

 

Business Segment		Products		2022.3Q				2021				2020
Steel		Hot-rolled Product (HR)			1,175				970				622
		Cold-rolled Product (CR)			1,321				1,035				759
Green Infrastructure		Electric Power			201				98				72
Green Materials and Energy		Refractory			994				913				965
		Lime			119				104				106

 

Trade and Engineering & Construction sector in Green Infrastructure segment are not reflected on the table above due to difficulties in measuring the price movement trend.

[Steel]

(1) Criteria for Calculation

 

(a)

Subjects for Calculation: Unit sales prices of the standard hot-rolled product and cold-rolled product

 

(b)

Calculation Method and Unit: The average price of each product based on its total sales including the freight costs during the given period.

(2) Factors of Price Changes

In consideration of the global steel market, the price of 3Q was partially adjusted, mainly those of distribution market. However, due to the nature of the sales structure, which has a high proportion of long-term contracts, the decline in sales prices is relatively small.

[Green Infrastructure]

(1) Criteria for Calculation

 

(a)

Subjects for Calculation: Price of electric power

 

(b)

Calculation Method and Unit: Unit price per electric power ÷ Net power volume generated

(2) Factors of Price Changes

Power : Korea Gas Corporation cost, etc.

 

•

The cost consists of introduction cost, supply cost, etc., and is affected by crude oil and exchange rates

[Green materials and Energy]

(1) Criteria for Calculation

 

(a)

Subjects for Calculation: Unit price of refractory and quicklime

 

(b)

Calculation Method and Unit: The average price of each product based on its total sales including the freight costs during the given period.

(2) Factors of Price Changes

Price of refractories is affected by business condition of front industry and raw material cost. Quicklime price is mainly influenced by utility unit price and raw materials cost. The price fluctuation of quicklime is small.

 

20

4. Major Raw Materials

A. Current Status of Major Raw Materials

 

														(In hundred millions of KRW)
Business Segment				Type of Purchase		Item		Specific Use		Purchase Amount (Portion, %)				Portion (%)				Remarks
				Raw Materials		Materials for Iron-making		Iron Ore for Blast Furnaces			166,528				60.62	%		Iron Ore, Coal
Steel						Sub-materials		Sub-materials for Iron-making, Steelmaking			51,638				18.80	%		Iron Material, Alloy Iron, Non-ferrous Metal, Limestone, etc.
						Stainless Steel Materials		Key Materials for STS Production			56,545				20.58	%		Nickel, Ferrochrome, STS Scrap Iron, etc.
Green Infrastructure		Construction		Raw Materials		Ready-mixed Concrete		Construction of Structure			1,715				17.52	%		—
						Steel Reinforcement		Strengthening Concrete			2,218				22.66	%		—
						Cable		Electricity Transfer			35				0.36	%		—
						Steel Pile		Foundation of Structure			247				2.52	%		—
						Others		Construction of Pipe and Structure etc.			5,576				56.95	%		—
		Trading		Raw Materials		Others		For other use			1,170				100.00	%		—
		Energy		Raw Materials		LNG		Material for Power Generation			14,968				79.11	%		—
						Others		For other use			3,952				20.89	%		—

 

21

Green Materials and Energy				Raw Materials		NCM and etc.		Production of cathode materials			13,990				85.20	%		—
						Graphite and etc.		Production of anode materials			940				5.70	%		—
						Limestone and etc.		Production of Lime			749				4.60	%		—
						Others		Production of refractory			744				4.50	%		—

 

*	The steel segment above includes POSCO’s performance before the spin-off (January to February).

 

22

B. Price Movement Trends of Major Raw Materials

(In thousands of KRW)

Business Segment				Category		2022.3Q		2021		2020
				Iron Ore (per ton)		149		169		120
				Coal (per ton)		500		257		147
Steel				Scrap Iron (per ton)		628		563		348
				Nickel (per ton)		32,696		21,130		16,254
Green Infrastructure		Construction		Ready-mixed Concrete (per m3)		77		68		65
				Steel Pile (per m)		243		272		102
				Steel Reinforcement (per kg)		0.9		1.0		0.7
				Cable (per m)		1.0		1.2		1.0
		Energy and etc.		LNG (per ton)		1,421		702		484
Green Materials and Energy				Refractory (per ton)		418		320		294
				Limestone (per ton)		22		19		19

 

Trading and Others parts of Green Infrastructure are omitted due to its difficulties of measuring raw materials fluctuations. In the case of the secondary battery material business, detailed descriptions are not included due to risk of information leakage

 

23

[Steel]

 

Price Movement Trend of Major Raw Materials

(1) Iron Ore

 

																																		(In US Dollars/ Tons)
		’22.3Q				’22.2Q				’22.1Q				’21.4Q				’21.3Q				’21.2Q				’21.1Q				’20.4Q				’20.3Q				’20.2Q				’20.1Q				’19.4Q
Trend of International Benchmark Price (Free On Board, “FOB”)			94				126				132				96				148				188				158				126				110				88				83				80

(2) Coal

 

																																		(In US Dollars/ Tons)
		’22.3Q				’22.2Q				’22.1Q				’21.4Q				’21.3Q				’21.2Q				’21.1Q				’20.4Q				’20.3Q				’20.2Q				’20.1Q				’19.4Q
Trend of International Benchmark Price (FOB)			250				446				488				369				264				137				127				109				115				118				155				140

(3) Scrap Iron

 

																																		(In US Dollars/ Tons)
		’22.3Q				’22.2Q				’22.1Q				’21.4Q				’21.3Q				’21.2Q				’21.1Q				’20.4Q				’20.3Q				’20.2Q				’20.1Q				’19.4Q
Trend of Purchase Price (Cost and Freight, “CFR”)			394				531				562				527				500				497				443				361				289				254				274				270

(4) Nickel

 

																																		(In US Dollars/lb, US Dollars/Tons)
		’22.3Q				’22.2Q				’22.1Q				’21.4Q				’21.3Q				’21.2Q				’21.1Q				’20.4Q				’20.3Q				’20.2Q				’20.1Q				’19.4Q
Trend of London Metal			10.01				13.13				11.98				8.99				8.68				7.87				7.97				7.23				6.45				5.54				5.77				7.01
Exchange ( “LME”) Cash Price			22,063				28,940				26,395				19,821				19,125				17,359				17,570				15,930				14,210				12,215				12,723				15,450

 

LME : London Metal Exchange

 

24

[Green Infrastructure]

(1) Criteria for Calculation

 

Business Sector		Products		Criteria for Calculation		Factors of Price Changes
Construction		Ready-mixed Concrete		Standard 25-210-15		Raise of priced agreed in Seoul metropolitan area
		Steel Pile		SPIRAL,609.6,12T,STP275, KS F 4602,STEEL PILE		Changes in unit price due to decrease in raw material (coil) price
		Steel Reinforcement		SD400 10mm		Decrease the price of raw materials (scrap)
		Cable		TFR-3, 0.6/1KV, 2.5SQ, 2C		Decrease the price of raw materials (electrolytic copper)
Energy and etc.		LNG		Average purchase price and LNG direct purchase price of Korea Gas Corporation		Cost of Korea Gas Corporation (cost consists of introduction cost, supply cost, etc. and is affected by crude oil, exchange rate, etc.)

[Green Materials and Energy]

(1) Criteria for Calculation

- Based on the receiving amount

(2) Factors of Price Changes

- Limestone : Raw material price fluctuation is not extreme and it varies slightly depending on the freight cost

- Other (refractory raw materials) : Price fluctuations and compositional costs of raw materials in China

 

25

5. Production and Facilities

A. Production Capacity

[Steel]

∎ POSCO

 

				(Thousands of Tons)
Business Area		Products		2022.3Q				2021				2020
Steel		Crude Steel			30,315				40,680				40,680

 

*	The steel production above includes POSCO’s performance before the spin-off (January to February).

∎ POSCO STEELEON

 

						(Thousands of Tons)
Business Area		Products		Plant		2022.3Q				2021				2020
Steel		Galvanized / Color- coated Steel		Pohang			718				960				960
				Myanmar			52				70				70
Total							770				1,030				1,030

∎ POSCO M-TECH

 

														(Tons)
Business Area		Products				2022.3Q				2021				2020
Raw materials for steel production			Ingot and etc.				30,916				38,080				38,232

[Green Infrastructure]

∎ POSCO ENERGY

 

						(MW)
Business Area		Products				2022.3Q				2021				2020
Power Generation			Electric Power				3,412				3,412				3,412

[Green Materials and Energy]

∎ POSCO CHEMICAL

 

Business Area		Products		Place of Business		2022.3Q				2021				2020
Refractory		Brick and etc.		Pohang			85,640				113,000				115,000
LIME		Quicklime		Pohang Gwangyang			819,000				1,095,000				1,098,000
							819,000				1,095,000				1,098,000
Total							1,723,640				2,303,000				2,311,000

In the case of the secondary battery material business, detailed descriptions are not included due to risk of information leakage

 

26

B. Production Result and Capacity Utilization Rate

[Steel]

(1) Production

 

				(Thousands of Tons)
Products				2022.1H				2021				2020
Crude Steel					29,524				42,964				40,579
Products		Hot-Rolled Steel			6,243				9,243				9,128
		Plate			4,913				6,832				7,009
		Wire Rod			1,716				2,688				2,666
		Pickled-Oiled Steel			2,065				2,880				2,432
		Cold- Rolled Products			5,865				7,898				6,795
		Coated Steel			5,026				7,446				6,316
		Electrical Steel			722				1,032				826
		Stainless Steel			2,772				4,099				3,900
		Others			2,128				3,106				4,691
		Total			31,451				45,224				43,763

 

The amount of products is the aggregate amount of POSCO’s production and production of POSCOsubsidiaries, which may include interested parties’ transactions.

POSCO’s production result includes production of POSCO HOLDINGS before the spin-off date (March 1, 2022), and production of POSCO after the spin-off date.

(2) Capacity Utilization Rate

 

								(Thousands of Tons, %)

		Company		Capacity				Production				Utilization Rate
Crude Steel Production		POSCO			30,315				26,175				86.30	%
		PT.KRAKATAU POSCO			2,319				2,323				100.20	%
		POSCO (Zhangjiagang) Stainless Steel Co., Ltd.			825				728				88.20	%
		POSCO YAMATO VINA STEEL JOINT STOCK COMPANY			413				299				72.40	%
		Total			33,871				29,524				87.20	%

 

POSCO YAMATO VINA STEEL JOINT STOCK COMPANY had production capacity of crude steel 1,100 thousand tons/year: section steel 550 thousand tons/year and reinforcing bar 550 thousand tons/year. However, after the exit of the reinforcing bar business in November 2019, the current crude steel production capacity is 550 thousand tons/year.

POSCO’s production result includes production of POSCO HOLDINGS before the spin-off date (March 1, 2022), and production of POSCO after the spin-off date.

 

27

[Green Infrastructure]

∎ POSCO ENERGY

(1) Production Result

 

(Gwh)

Business Area

Products

2022.3Q

2021

2020

Power Generation

Electric Power

8,076

13,493

13,998

(2) Capacity Utilization Rate

(Hour, %)

Business Area

Products

2022.3Q Capacity

2022.3Q Production

Utilization Rate

Power Generation

Incheon Power Plant

6,552

3,437

52.5

%

[Green Materials and Energy]

∎ POSCO CHEMICAL

(1) Production Result 

 

														(Tons)
Business Area		Products		Place of Business		2022.3Q				2021				2020
Refractory		Brick and etc.		Pohang			60,906				83,884				80,587
LIME		Quicklime		Pohang			818,193				1,151,419				1,101,589
				Gwangyang			876,337				1,295,720				1,243,402
Total							1,755,436				2,531,023				2,425,578

 

In the case of the secondary battery material business, detailed descriptions are not included due to risk of information leakage

 

28

(2) Capacity Utilization Rate (Current Business Year)

 

										(Tons)
Business Area		Capacity				Production				Utilization Rate
Refractory Factory			85,640				60,906				71	%
Quicklime Factory (Pohang)			819,000				818,193				100	%
Quicklime Factory (Gwangyang)			819,000				876,337				107	%
Total			1,723,640				1,755,436				—

C. Production Facilities

(1) The current status of production facilities

 

[Land]																(In millions of KRW)
Business Segment				Beginning Book  Balance				Increased				Decreased				Depreciation				Ending Book Balance
Steel					1,856,469				11,807				-45,147				—				1,823,129
Green Infrastructure		Construction			122,399				261,106				-1,013				—				382,492
		Trading			176,007				9,776				—				—				185,783
		Energy and etc.			372,989				201				-50				—				373,140
Green Materials and Energy					174,851				5,942				—				—				180,793
Others					—				120,987				—				—				120,987
[Buildings]
																(In millions of KRW)
Business Segment				Beginning Book Balance				Increased				Decreased				Depreciation				Ending Book Balance
Steel					3,245,693				86,218				-10,231				-174,485				3,147,195
Green Infrastructure		Construction			85,033				34,433				-4,291				-1,265				113,910
		Trading			460,474				79,354				-1,452				-10,233				528,143
		Energy and etc.			197,846				5,782				-646				-9,897				193,085
Green Materials and Energy					208,793				22,286				-184				-6,137				224,758
Others					6,611				335,013				-196,543				-35,616				109,465

 

29

[Structures]
																(In millions of KRW)
Business Segment				Beginning Book Balance				Increased				Decreased				Depreciation				Ending Book Balance
Steel					2,510,527				193,985				-9,294				-133,365				2,561,853
Green Infrastructure		Construction			24,430				5,391				-441				-1,406				27,974
		Trading			25,313				43,438				—				-3,081				65,670
		Energy and etc.			554,835				5,242				—				-19,417				540,660
Green Materials and Energy					16,690				1,544				-70				-939				17,225
Others					—				43,639				-5,750				-31,626				6,263
[Machinery and Equipment]
																(In millions of KRW)
Business Segment				Beginning Book Balance				Increased				Decreased				Depreciation				Ending Book Balance
Steel					14,286,899				1,524,012				-285,396				-1,414,786				14,110,729
Green Infrastructure		Construction			8,640				1,022				-315				-1,514				7,833
		Trading			373,354				41,900				-4,721				-23,233				387,300
		Energy and etc.			1,224,934				23,349				—				-60,034				1,188,249
Green Materials and Energy					526,329				142,354				-9,428				-34,837				624,418
Others					—				422,245				-107,192				-302,700				12,353
[Vehicles]
																(In millions of KRW)
Business Segment				Beginning Book Balance				Increased				Decreased				Depreciation				Ending Book Balance
Steel					32,036				17,553				-10,412				-7,733				31,444
Green Infrastructure		Construction			2,297				4,908				-2,618				-618				3,969
		Trading			5,894				4,861				-1,394				-1,524				7,837
		Energy and etc.			1,014				805				-532				-267				1,020
Green Materials and Energy					4,786				1,425				-362				-1,651				4,198
Others					3				1,578				—				-1,546				35

 

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