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Published: 2022-10-24 07:15:06 ET
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EX-99.1 2 d393885dex991.htm EX-99.1 EX-99.1

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Oct 24, 2022 3Q 2022 Earnings Release Exhibit 99.1


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Disclaimer This presentation was prepared and circulated to release the informations regarding the company’s business performance to shareholders and investors prior to the completion of auditing for the period of the third quarter 2022. As figures in this presentation are based on unaudited financial statements, certain contents may be subject to modification in the course of auditing process. This presentation contains certain forward-looking statements relating to the business, financial performance and results of the company and/or the industry in which it operates. The forward-looking statements set forth herein concern future circumstances and results and other statements that not historical facts, and are solely opinions and forecasts which are uncertain and subject to risks. Therefore, the recipients of this presentation shall be aware of that the forward-looking statements set forth herein may not correspond to the actual business performance of the company due to changes and risks in business environments and conditions. The sole purpose of this presentation is to assist persons in deciding whether they wish to proceed with certain investments to the company. The company does not make any representation or warranty, expressly or impliedly, as to the accuracy and completeness of this presentation or of the information contained herein and shall not have any liability for the informations contained in this presentation.


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Contents Consolidated Business Performance Business Performance by Major Areas Appendix


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△1,855 △1,178 △4.8%p QoQ 20,637 23,010 21,155 9,238 3Q21 2Q22 3Q22 15.1% 3,117 2,098 920 4.3% 9.1% 【 Before Inter-company Transaction Adjustment 】 Steel profit weakened due to the flood and the slow demand, while LiB materials business showed resilient growth QoQ +205 7,752 2Q22 3Q22 7,547 3,007 2,657 △350 * Debt increased on USD-denominated debt due to exchange rate effect : 2Q22) 1,292.9 → 3Q22) 1,434.8 (billion KRW) Revenue Operating Profit 3Q21 2Q22 3Q22 3Q21 2Q22 3Q22 QoQ QoQ Steel 18,447 19,331 17,784 △1,547 2,942 1,762 515 △1,247 POSCO 1) 11,315 11,871 10,878 △993 2,296 1,322 397 △925 Overseas Steel 5,813 6,463 6,030 △433 519 315 11 △304 Green Infrastructure 14,482 18,641 15,885 △2,756 320 484 345 △139 POSCO International 9,151 11,070 9,041 △2,029 149 321 197 △124 POSCO E&C 2,029 2,490 2,262 △228 111 126 43 △83 POSCO Energy 590 676 1,049 +373 70 26 86 +60 Green Materials 529 810 1,056 +246 29 48 75 +27 POSCO Chemical 505 803 1,053 +250 31 55 82 +27 * POSCO result is parent basis, other subsidiaries consolidated (billion KRW) OP Margin Revenue Operating Profit Income Financial Structure Net Debt EBITDA (billion KRW) * 3Q21 : POSCO Parent result before the vertical spin-off


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Flood Impact on 3Q Result POSCO 408 billion KRW ○ Loss due to production and sales volume decline : 222 bil KRW - Based on IFRS, increased amount of fixed cost caused by temporary production drop was realized in 3Q COGS ○ One-off loss due to the flood damage : 186 bil KRW - Inventory impairment loss : 94.4 bil KRW - Repair, material cost to recover production facilities : 91.6 bil KRW ○ Impairment loss on tangible assets : POSCO 147 bil KRW, POSCO Chemical 0.75 bil KRW, etc. Recognized Operating Loss of 436 bil KRW, Non-OP Loss of 148 bil KRW Operating Loss Other Subsidiaries (POSCO Steeleon, POSCO Chemical, POSCO Mobility Solution, etc) 27.4 billion KRW ○ POSCO Steeleon : Production loss due to submerged facilities, repair cost on damaged facilities ○ POSCO Chemical : Repair cost for electrical facility in refractories, etc. ○ POSCO Mobility Solution : Production/Sales volume dropped due to operation loss, wash off submerged inventories, etc. Non-OP Loss


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Flood Damage and Repair Schedule Exert all efforts to normalize the production to work to minimize the impact on supply and demand; timely respond towards customers’ urgent requests ○ Target to produce all type of products by the year end, Maximize production in Gwangyang Works - Prioritize based on imminent demand, recovery on track - Softened the impact of product volume decrease by maximizing production of Gwangyang Works · Rescheduled maintenance plan of Gwangyang Works Completed ~Nov 2022 ~Dec 2022 Hot Rolling Line Cold Rolling Line [Repair Schedule of Pohang Works] [Impact on Pohang Works by Region] (Completed●, Under Progress ○) No.1 HR (Oct 7) No.3 Plate (Oct 24) No.2 HR No.3 Wire Rod No. 1 Wire Rod* (Oct 20) No.2 Plate** No.4 IWire Rod No.3 Electrical Steel (Sep 14) No.2 CR Electrical Galvanizing Line No.2 STS CR Zero Impact Extreme Impact River Partial Impact CR STS CR Plate HR Wire Rod STS Electrical Steel * Operation on No.1 Wire Rod earlier than scheduled (Speeded up to finish by Oct. from Nov.) ** No.2 Plate , expected to operate by end of Oct., required a week more of repair ○ River flooded over to the Pohang works’ down- stream line causing electricity blackout (9/6) - Downstream line, located near the river, was submerged, while zero impact on the upstream line - 3 BFs/2 FINEXs normalized operation (9/12), down- stream line gradually under repair No.2 Wire Rod No.2 Electrical Steel (Sep 28) No.1 CR (Oct 6)


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LiB Materials Business Progress Secured production base, enable to fluidly respond to change in business environment, as the IRA* Lithium Start construction of battery-grade nickel refinery in SNNC, lowered dependency to China through MHP procurement from RNO Nickel * IRA : Critical minerals should be extracted/processed from US FTA partners; as for components, tax credit restricted to EV models, made in N.America 2nd Stage Project in Argentina Ore-based Lithium • Produce lithium carbonate in Argentina, and produce lithium hydroxide in Gwangyang, S.Korea (25k tons/yr) • Reviewing to invest 3rd/4th stage project in the N.America (under revision) • 2nd stage CAPEX U$1,093 mil (Including debt) Argentina Domestic Environmental Assessment (Nov 22) Complete construction (Jun 25) Built Pond (Jun 23) Company set-up (Nov 22) Start plant construction (Nov 23) [2nd stage construction schedule ] • 1st stage commercial plant under construction as scheduled (43k tons/yr) • Produce lithium hydroxide in Gwangyang commercial plant by using Aus. Pilbara spodumene procurement (315k tons) - Expect counter benefit from IRA, as Australia being US FTA partner [1st stage progress] - Supply to Domestic line - Provide for Domestic cathode-makers • (SNNC) Upstream: Iron-removal process to produce nickel matte from SNNC (Started construction in Jun 22, Complete by 3Q23) • (POSCO) Downstream : Refine nickel matte to produce battery-grade nickel (Started construction in Oct 22, Complete by 4Q23) Pyro-Metallurgical • (P-Holdings) Procured MHP through stake investment in RNO, Aus.(30%, May 21), Feasibility study underway on refining (Target to win approval by Jan 2023) Hydro-metallurgical Start plant construction (Jun 23) Complete construction (Aug 25) Start construction (May 21) Groundwork for 1st , 2nd plant (Nov 21) Civil construction and building under progress (Oct 22) Complete construction (Oct 23)


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POSCO Overseas Steel POSCO International POSCO Energy POSOC E&C POSCO Chemical Business Performance of Major Areas Steel Green Infrastructure Green Materials


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+315 △441 QoQ +2.2%p 94.6% 84.2% 86.4% 3Q21 2Q22 3Q22 ○ Crude steel production went up as No.4 BF revamping completed in Gwangyang in 2Q, whereas product production dropped as downstream in Pohang flooded - Pohang : 2Q) 3,983 → 3Q) 3,309 △674 - Gwangyang : 2Q) 4,562 → 3Q) 5,551 +989 3Q21 2Q22 3Q22 QoQ Carbon Steel 8,592 7,885 7,554 △331 STS 521 455 345 △110 (k tons) 9,022 8,238 61.2 60.1 7,904 55.1 △334 △5.0%p 32.3 28.2 29.0 +0.8%p ○ Sales volume decreased along with product production volume declined from Pohang Works Sales Volume (QoQ, k tons ): Plate △172, Wire rod △158, etc. WTP sales volume held up to 2Q level as WTP sales increased to automakers (+205k tons) [WTP Sales Volume (k tons)] WTP 3Q21 2Q22 3Q22 QoQ △31 9,703 8,545 9,113 8,340 7,899 2,797 2,231 2,200 * 3Q21 : POSCO Parent result before the vertical spin-off 8,860 3Q21 2Q22 3Q22 【Crude Steel Production (k tons)】 POSCO_Production/Sales Production Crude Steel Product (thousand tons) Utilization Rate* * Utilization rate : Crude Steel Production / Crude Steel Capacity Sales Sales Volume Domestic Sales Ratio (thousand tons, %) WTP Sales Ratio* QoQ *Un-ordered and semi-product figure excluded in total sales volume [Carbon Steel/STS Production Volume] * 3Q21 : POSCO Parent result before the vertical spin-off


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Sales Price (carbon steel, thousand KRW/ton) : 2Q) 1,236 → 3Q) 1,186 (△50) - Domestic distribution price downtrend slightly halted after the flood, domestic demand remains weak Raw Material Input Cost : Iron Ore 2Q) 100→3Q) 107, Coking Coal 100→93.6 (2Q22 price=100) - Despite the fall in input cost, profit declined as inventory with high applied cost from previous quarter raw material cost, was sold Operating income impacted by 222 bil KRW, due to production decline in Pohang - Increased fixed cost on inventories, caused by the production decline, recognized as 3Q COGS, regardless of sales status (production disruption) One-off cost recognized due to the flood damage - Repair cost : 91.6 bil KRW (material cost, maintenance cost, etc) - Inventory impairment loss : 94.4 bil KRW (finished/semi-product, materials, etc) ※ Impairment of tangible assets : 147 bil KRW recognize as Non-op income QoQ △993 △925 △7.5%p 11,315 11,871 10,878 2,296 397 20.3% 11.1% 3.6% 1,322 ○ Revenue, OP plunged as price dropped due to worsened steel demand and one-off losses, as repair cost and OP loss from the flood damage, occurred ○ Turned net cash as working capital decreased due to raw materials and product inventory lowered Working Capital (trl KRW) : 2Q) 11.5 → 3Q) 11.1 (billion KRW) 2Q22 3Q22 QoQ Net Debt 262 △109 △371 EBITDA 1,915 995 △920 3Q21 2Q22 3Q22 (billion KRW) 3Q22 2Q22 ASP decrease, etc Raw material input cost increase 【Operating Profit QoQ】 △463 △54 Repair cost and losses from the flood △222 △186 Production/Sales Volume drop 1,322 397 POSCO_Income/Financial Structure Income (billion KRW) OP Margin Revenue Operating Profit * 3Q21 : POSCO Parent result before the vertical spin-off


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PT. Krakatau POSCO Profitability dampened as demand faltered due to China’s Zero-COVID policy and weak construction market, and low- pricing competition with local competitors - Sales volume (k tons) : 2Q) 280 → 3Q) 270 (△10) - Sales price (QoQ) : △12.1% / Raw materials cost (QoQ) : △11.2% *Sales price rebounded during September 852 883 57 △29 3Q21 2Q22 3Q22 753 △32 3Q21 2Q22 3Q22 709 773 550 206 125 44 Despite the price and sales volume drop due to slowing demand, generated profit by defending profitability by selling highly priced product to Europe - Sales volume (k tons) : 2Q) 752 → 3Q) 607 (△145) * Plate sales to Europe : (sales volume) 73k tons (OP) U$9 mil - Product price(QoQ) : [Slab] △16% [Plate] △11% Profit of overseas steel subsidiaries continue their downtrend due to slow demand and price decline, mostly from rerolling mills Overseas Steel Subsidiaries_Performance Zhangjiagang STS (PZSS) Revenue Operating Profit (USD million) Revenue Operating Profit (USD million)


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Turned to loss as sales volume and price dropped due to weakened construction market and low-priced imports entered the market - Sales volume (k tons) : 2Q) 108 → 3Q) 90 (△18) - Product price (QoQ) : △11.7% 104 10 7 ’21.3Q ‘22.2Q 83 ‘22.3Q 78 △8 ’21.3Q ‘22.2Q ‘22.3Q 395 388 42 20 363 0.1 Profit slashed as market worsened and processing cost increased due to materials cost as natural gas price increased - Sales volume (k tons) : 2Q) 322 → 3Q) 337 (+15) - Product price (QoQ) : △9% / Processing cost(QoQ) : +14.5% *Export tax imposed by the Indian government in May(15%) caused domestic distribution and construction price to drop POSCO Maharashtra PY VINA Overseas Steel Subsidiaries_Performance Revenue Operating Profit (USD million) Revenue Operating Profit (USD million)


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(bil KRW) 3Q21 2Q22 3Q22 QoQ Steel 8,390 10,047 7,968 △2,079 Energy 335 322 349 +27 Investment Co., etc. 426 701 724 +23 3Q21 2Q22 3Q22 △2,029 9,151 11,070 9,041 △124 △0.7%p 149 1.6% 2.9% 321 2.2% 197 ○ Trading Gas sales volume (bil ft3) : 2Q) 45.5 → 3Q) 49.7 Operating profit (bil KRW) : 2Q) 104 → 3Q) 93.8 ○ Flood impact : OP Impact from steel trading, △4.7 bil KRW - Steel : Product and raw materials volume dropped due to weak steel demand Sales volume(QoQ) : Steel product △3%, Raw materials △45% Senex Energy sales volume(bil ft3) : 2Q) 5.3 → 3Q) 6.1 - Agri./Materials : Domestic/overseas demand on feeds declined and sales volume fell as crop sales halted in UKR Sales volume (QoQ) : Corn △23%, Soybean △53% - Revenue went up as Myanmar gas sales increased, OP dropped as cost recovery rate reduced ○ Energy ○ Investment companies - Senex : Revenue went up as gas sales volume and price increased - P-MS : Motor core sales volume dropped as demand from China weakened POSCO International_Performance Major Activities Income QoQ (billion KRW) Revenue Operating Profit OP Margin 【Revenue by Business】 * Earning result under consolidated basis


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(bil KRW) 3Q21 2Q22 3Q22 QoQ Power Generation 495 620 977 +357 Terminal 71 28 47 +19 Fuel Cell, etc. 24 28 25 △3 3Q21 2Q22 3Q22 +373 676 1,049 +60 +4.4%p 11.9% 3.8% 26 8.2% 86 70 590 ○ Power generation : Electricity demand and utilization rate went up, lifting up profit Both revenue and operating profit increased as capacity payment(CP) climbed up as entering to the electricity peak season, along with utilization rate normalized after the revamping of No.3 and 7 generator completed in 2Q ○ Terminal: Profitability improved due to stable tank lease operation, increased margin of terminal-related businesses Secured stable profit base by leasing Tank (to SK, S-OIL) Profit upturned as orders and margin improved on commission businesses Gwangyang No.6 LNG Tank construction underway as scheduled (Target to be completed by May 2024) - Capacity : 200k ㎘ (Current LNG Tank capacity : 730k ㎘) 3Q21 2Q22 3Q22 QoQ Power demand (GW) 80 71 81 +10 SMP (KRW/kWh) 93 156 194 +38 【Market Index】 Major Activities Income POSCO Energy_Performance Revenue Operating Profit (billion KRW) OP Margin QoQ 【Revenue by Business】 * Earning result under consolidated basis


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(bil KRW) 3Q21 2Q22 3Q22 QoQ Plant 475 592 568 △24 Infrastructure 224 397 356 △41 Building 1,033 1,170 990 △180 Consolidated subsidiaries 297 331 348 +17 3Q21 2Q22 3Q22 △228 2,029 2,490 2,262 △83 △3.2%p 111 5.5% 5.1% 126 1.9% 43 ○ Steady order won led by plant projects (3Q 2.6 trl KRW) Plant(1.5 trl) : Dangjin LNG Terminal (0.4), Kumho ethylene rubber plant(0.2), etc. Infra.(0.2 trl) : Groundwork for Dangjin LNG LNG Terminal(0.1), etc. Construction(0.9 trl) : Remodeling order increased from the first planned city, etc. (QoQ +225%) ※Order trend by quarter in 2022(trl KRW) : 1Q) 2.7→ 2Q) 2.7 ○ Profit squeezed as additional cost occurred due to increase in materials cost Plant/Infra.: Profitability weakened due to materials cost hike Construction : Additional cost recognized as materials/outsourcing cost went up and showed lower profit due to levelling effect* from the 2Q - Operating Profit (bil KRW) : 2Q) 93.0 → 3Q) 31.5 * 2Q) Reversal of mater lease agreement of Parc 1 +8.5 bil, Jeju Health Care PJT +7.4 bil Consolidated : New orders won in major subsidiaries (O&M, A&C) Major Activities Income POSCO E&C_Performance Revenue Operating Profit (billion KRW) OP Margin QoQ 【Revenue by Business】 * Earning result under consolidated basis


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○ Cathode : Both revenue and profit improved as sales volume and N65 price went up Sales price climbed due to raw material hike (QoQ +27%) Sales volume in total went up as volume to European EV increased and started to supply to domestic ESS (QoQ +25%) ○ Anode : Profitability improved as price went up and sales portion to EV increased ○ Refractories, Furnace Maintenance/Construction : Profitability slightly lowered due to one-off costs P&O Chemical speeded up its construction completion, as a result, recognizing initial fixed cost (August à June) KPCC revenue went up as product price increased (+12% than initially planned) * KPCC: PT.KRAKATAU POSCO CHEMICAL CALCINATION Revenue and profit increased as product price went up Sales portion to EV expanded (QoQ +16%p) (bil KRW) 3Q21 2Q22 3Q22 QoQ Cathode materials 172 417 648 +231 Anode materials 43 47 68 +21 Refractories 111 139 120 △19 Quicklime/Chemical 179 200 217 +17 3Q21 2Q22 3Q22 +250 505 803 1,053 +27 +0.9%p 31 6.2% 6.9% 55 7.8% 82 ○ Flood impact : Operating cost of 1.5 billion KRW, including repair cost on facilities Non-OP loss of 0.75 bil KRW, including impairment loss on tangible assets Major Activities Income POSCO Chemical_Performance Revenue Operating Profit (billion KRW) OP Margin QoQ 【Revenue by Business】 * Earning result under consolidated basis


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Appendix Summarized Income Statement Summarized Balance Sheet


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3Q21 4Q21 1Q22 2Q22 3Q22 2022 Accumulated Accumulated YoY Revenue 20,637 21,334 21,338 23,010 21,155 65,503 +10,505 Gross Profit 3,779 3,142 2,929 2,733 1,590 7,251 △1,489 (Gross margin) (18.3%) (14.7%) (13.7%) (11.9%) (7.5%) (11.1%) △4.8%p SG&A 662 773 671 635 670 1,976 +106 Operating Profit 3,117 2,369 2,258 2,098 920 5,275 △1,595 (Operating margin) (15.1%) (11.1%) (10.6%) (9.1%) (4.3%) (8.1%) △4.4%p Non-Operating 242 △270 206 240 △293 153 +163 Equity Income and Loss 287 97 248 194 △13 429 △124 Net interest expenses 28 61 △145 50 4 △90 +6 Profit before Income Tax 3,359 2,099 2,464 2,338 627 5,429 △1,888 Net Profit 2,628 1,622 1,907 1,799 592 4,298 △1,277 EBITDA 4,006 3,282 3,146 3,007 1,939 8,092 △1,444 (EBITDA Margin) 19.4% 15.4% 14.7% 13.1% 9.2% 12.4% △5.0%p EPS (KRW) 34,745 21,452 25,187 23,717 7,800 56,692 No. of outstanding shrs 75,625,572 75,625,572 75,710,045 75,849,177 75,849,177 75,803,309 Summarized F/S_Consolidated Income Statement (billion KRW)


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(billion KRW) 3Q21 2Q22 3Q22 QoQ Current Assets 45,706 52,147 53,769 +1,622 Cash & Cash Equivalents 18,567 17,939 20,942 +3,003 Accounts Receivable 10,468 12,394 11,209 △1,185 Inventories 13,810 17,962 17,430 △532 Non-Current Assets 44,429 49,723 51,463 +1,740 Tangible Asset 29,414 30,407 31,289 +882 Intangible Assets 4,305 5,222 5,366 +144 Other LT Financial Assets 2,396 2,300 2,640 +340 Total Assets 90,135 101,870 105,232 +3,362 Liabilities 36,614 43,121 45,040 +1,919 Current Liabilities 19,405 25,757 26,695 +938 Non-Current Liabilities 17,209 17,364 18,345 +981 Interest-bearing Debt 22,841 25,486 28,694 +3,208 Shareholders’ Equity 53,521 58,749 60,192 +1,443 Owners of the Controlling Stake 49,171 53,256 54,710 +1,454 Net debt 4,274 7,547 7,752 +205 Net Debt to Equity (%) 8.0% 12.8% 12.9% +0.1%p Summarized F/S_Consolidated Balance Sheet