POSCO HOLDINGS INC. American Depositary Shares (Each representing 1/4th of a share of Common Stock)

Good afternoon. Thank you for joining us for the Postcode Holdings earnings call. Today, we will have a presentation by Postcode Holdings followed by a Q&A session with our participants. If you would like to ask questions, please press star followed by number one on your phone. Now let us begin Postcode Holdings earnings presentation for first quarter of 2020-2025.

Greetings, everyone. I am head of the Finance and Iron Division at Postcode Holdings. My name is Kim Seung-jin. I'd like to extend my appreciation to all investors who are attending this meeting for taking time out of your busy schedule. As we're all aware, including investors, the first quarter witnessed the global tariff war materialize, economic uncertainty. Despite this headwind, Postcode Holdings achieved improvement against the previous quarter. In Q1, consolidated revenue hit $17.4 trillion and operating profit $570 billion. Looking at the general overview by key businesses, despite lingering volatility in export volume and FX rates, the domestic steel market is showing moderate signs of instability. In addition, iron ore and coke and coal prices have also become more stable. Postcode Future M is selling more CAM and M, while Postcode International's gas field business continues to perform well. While these Q1 results are insufficient to jump to the conclusion that we have made a turn toward clear recovery, we do, however, have signals that allow positive assessments little by little. Therefore, barring unexpected exigencies out of left field, we are carefully optimistic that things cannot get any worse from here. Next, I turn to a topic that I'm sure many have read in the media. I'd like to address our MOU signed with Hyundai Motor Group. As was illustrated in the Postcode Holdings corporate value enhancement program released in December 2024, we have defined a strategy to invest in overseas upstream steelmaking process, and we have been taking a close and hard look at the high growth market of India and high profit markets in North America. As an outcome of that plan, in October last year, we signed a comprehensive MOU with JSW Group in India to seek collaboration in steel, energy materials, and renewable energy businesses. This time with Hyundai Motor Group or HMG, with the goal to address the global trade environment and to enhance our competence in the future mobility materials business, we intend to strengthen our collaboration to jointly invest in to build a steelmaking plant in the US and to jointly develop next generation battery materials. This alliance can be regarded as a strategic choice made to actively address the rapidly changing trade environment. In steel, in compliance with the USMCA melted and poured origin rule, we plan to offer reliable supply of steel products melted and poured in the US to our auto panel manufacturing plant in Pasco, Mexico. Additionally, we will expand volume supply to USOEMs to whom our volume was limited due to the export quota. In addition, by focusing the EV battery materials technology that both companies possess, we hope to be able to advance to an elevated level of Korea's next generation battery development once the EV market chasm draws to close. Currently, we're in discussions with HMG regarding the size of equity investment into a US steel mill as well as more specifics on how we will see cooperation. Once we have more detail confirmed, we'll make sure to share those with you. I'd like now to invite the head of our IR department to deliver the first quarter results.

Please refer to page four of the presentation materials. On a consolidated basis, RFQ1 revenue and operating profit came in at 17.4 trillion won and 560 billion won respectively. Due to a market downturn in the previous quarter and to adjustment, operating profit dropped to as low as 95 billion won but has since rebounded across all business segments to 568 billion won, reaching the same level as the previous year. EBITDA reached 1.6 trillion and our consolidated capex for the quarter amounted to 1.5 trillion won now by business segments. In the steel, the operating profit improved from .3% to 3% What's particularly notable is that Postco's OP margin recovered to 3.9%. Overseas steel business also showed improvement thanks to strong performance in our engine operations and reduced losses at our China's Zhangjiagang plant. As for the energy materials, thanks to Postco Futuram's turnaround to profit, overall operating losses were reduced by half, but due to ramp up of newly built plants and investment, losses continued. As for the infrastructure segment, overall performance remained quite solid. Now looking at page five, you will find a summary of the MOU or mutual cooperation with Hyundai Motor Group. Our CFO in his remarks earlier mentioned about the strategic rationale behind what we're seeking to pursue. In essence, it includes cooperation in entering the U.S. upstream electric furnace operations and in the battery sector, we'll work together on investments in key materials, supply chain establishment, and technology development. Let me elaborate further on page six. Postco currently operates not only in Korea, but also in China, Vietnam, and Indonesia, our upstream steel production basis, while running sales subsidiaries, downstream processing lines, and processing centers around the world to sell made in Korea products globally. As global steel markets increasingly continue to regionalize and form blocks, we have selected India, U.S., Indonesia as three priority regions for upstream expansion. In India, together with JSWA, we're working to establish a specialized automotive steel sheet, specialized company, with an estimated capability capacity of about five million tons. And we're proceeding with final site selection, initial planning step by step. The latest announcement regarding upstream cooperation is driven by two needs. First is to expand our presence in the U.S. automotive steel market, our long-term objective, and second is to respond to the USMCA, which will take effect in July 2027, its mid to short-term need. USMCA is the revised multilateral trade agreement that replaced NAFTA among three North American countries. To qualify for tariff-free automobiles, there are three conditions, one of which is the regional content requirement. Here, the molten iron of the steel must be produced within North America for steel to be recognized as North American made. Postco currently uses cold rolled steel sourced molten iron produced at our Kwangyang Works in Korea, with which Postco Mexico produces coated automotive steel sheets. And starting from July 2027, Postco Mexico and its operations, it's essential to use cold rolled steel made from molten ore iron produced within North America. So this new partnership is therefore a critical decision that aligns with our long-term strategic ambition in the automotive steel sheet market, also addressing the urgent midterm need to respond to the USMCA. Now page seven, progress on our rebalancing efforts. Through the restructuring of underperforming projects and non-core assets in Q1 of 2025, we tried to generate cash. So we divested a total of six assets in the first quarter, raising $286.6 billion won. And since last year, the cumulative cash generated reached $949.1 billion won, with 51 projects completed. So in Q1, we sold off loss-making operations like P&O Chemical, as well as the power demand management business of Postco DX. So these rebalancing measures are not only just about securing additional cash, but are also expected to help eliminate potential sources of loss going forward. Moving on to the next page, the KFIX plan for this year. This year, we have established a KFIX plan of $8.8 trillion won, slightly down from the previous year. We plan to continue investing in core businesses while adjusting the pace. We have allocated 43% to steel, 34% to energy materials, and 17% to the infrastructure. As for the steel segment, there is the construction of the new EAC in Gwangyang, overseas growth, and replacement of aging facilities to improve operational efficiency. We have budgeted a KPEC for these initiatives. And as for the energy materials, its KPEC suspending in 2024 was $4.1 trillion won, but major production facilities including Argentina were completed at the end of last year. And this year, despite ongoing construction of second biome plant in Argentina and kept at materials plant, KPEC's burden will be slightly lowered to $3 trillion won. As for the infrastructure, we planned the CEDIS project in Australia, stage four of Myanmar gasfield, and construction of the second energy terminal. Now, performance by key area. Page nine, versus Postco. Postco's crude steel output in Q1, mainly due to the impact of overall maintenance works, declined by .5% QOQ. But while selling slightly increased, and raw materials cost remains stable, and we have been making cost saving efforts enterprise-wide. And all of these efforts led to an improvement in OP margin, which rose to 3.9%.

And

the volumes were reduced not because of demand cut. So in Q2, we believe there's going to be a recovery in terms of sales and so forth. And recently, the domestic retail market, there was a reduction in unfairly traded imported products, which had previously caused significant disruption in the market. But we're seeing a gradual normalization of the market prices in certain categories, such as steel sheet, which are some positive developments. Now let's move to page 10. Profits from overseas steel operations partially recovered. First, our Indian subsidiary has steadily expanded sales of high margin products like automotive steel sheet, thus seeing improved profit. And second, China's Jiangjiagang, due to a rise in regional stainless steel selling prices, has reduced its losses. But subsidiaries in Southeast Asia continue to underperform. Next is Postco Future M. With increased sales volume of cathode materials and higher prices for basic materials, operating profits improved, resulting in a turnaround in the first quarter. In particular, the sales volume of high nickel cathode materials, our main product, rose by 64% QoQ. And as for the sales of natural graphite-based atom materials, mostly driven by the demand from customers seeking non-China origin atom materials, the sales increased by 33% QoQ. Page 12. At the end of last year, Argentina Plant 1 completed its construction. Ramp-up is underway and it's implementing client certification process. On the other hand, Plant 4, in light of the delayed recovery in lithium prices and continued market sluggishness, the completion has been postponed to the first quarter of 2026. So the lithium post-cum solution, domestic downstream subsidiary project, has also been rescheduled to the first quarter of 2026 accordingly. As for the post-covara lithium solution, Plant 1, which completed full construction in November last year, it began full-scale shipments of contracted volume starting in the Q2. And as for the Plant 2, which was completed at the end of last year, we aim for a client certification in Q3. Thus, we will focus on testing and ramp-up. Next is Postco International. Due to increased electricity sales during the winter and solid domestic sales from gasfields, operating profit and energy increased. In particular, in the LNG power generation business, there was a completion of major maintenance works that led to recovery in sales. Several major large projects were completed at the end of last year. First quarter revenue decreased. However, as completion-related profits were accounted for, operating profit in both the infrastructure segments increased slightly. Lastly, let me update you on our recent ESG-related developments. Our group, as a company with operations all around the world, is striving to establish principles and systems for global standard human rights management, not just in Korea but around our business sites around the world. In Q1, the chairman and the CEOs of each affiliate jointly proclaimed the Postco Group human rights commitment. We would like to report that we have established a human rights management framework aligned with the UNGC standards, including trends in the global legislative landscape and human rights due diligence and grievances redress mechanisms. Now this ends the presentation. We'll move on to the Q&A session.

We will begin the Q&A. For those who would like to ask a question, please press star 1. If you'd like to cancel your question, please press star 2. The first question is from Uwanta Securities. Mr. Lee, please pose your question. Hello, my name is Lee. I'm from Uwanta Securities.

The

low performing businesses and restructuring of those businesses are ongoing. The PZSS office in China, I think, deficits have been continuing for some time. I think it's been 12 consecutive terms

that

it has gone into red ink. For PZSS, do you have any plans to improve its performance? Or has it just fallen into the pit of low performing businesses and perhaps is it being considered for liquidation? Second question is about energy materials. Of course, the size of still there's an operating deficit of about 100 billion ones. So I understand that some of these plants are in ramp up stage, in the initial stage of operation, so some of this loss is inevitable. But again, 100 billion one of deficits is quite large and is this a repeating pattern? If this is a continuous trend, it's going to be about 800 billion one of deficits. Of course, the energy industry is difficult to predict. However, what are some of the projected revenues as well as operating profits that you forecast for the upcoming quarters? And I know it's difficult to look out to 2026, but last year during the value day event, you proposed some revenues and EBITDA numbers. So at this point, based on the numbers released last year

in

energy materials, what are some of the new projections? What are some adjustments downward, adjustments that you can make at the moment? My last question, there was an earnings report at two o'clock. And I think Chairman Cheng has hinted at the possibility of raising more capital. And so looking at POSCO Future M, is there any possibility of raising more capital or do you not have any such plans in the works? The first question will be answered by the Steel Management Department and the second question, I will address that. So on PCSS and if there are any plans to improve performance, I think that was just the question. In China, for several years, there has been an overcapacity of stainless steel and so we have very little recourse but to look at restructuring. Same is true for PCSS. We've made diverse efforts to improve its performance. And at headquarters in the first half of last year, because we looked at many offices that may have to fall into low performing assets subject to liquidation, this obviously fell into that list. But we have to look at the Chinese market situation as well as our own corporate strategy and the stainless steel market. And so we have some restructuring efforts going on but we do need to read the situation. Within the year, we believe that we will be looking at a few more variables to make a more definitive conclusion on this. The second question I would like to address. Energy materials companies include HY Clean Metal and PPS. These are in their initial stage of operation. Some are still being constructed. So we are in ramp up stage and some of them are supplying to customers. For those plants in ramp up, until we reach a level of stabilization, there is going to be fixed costs that will be generated. And for those who are filling customer orders, we have to provide a discount because they have not yet received quality certifications. So it's going to be difficult to turn to a profit this year. That's what I can say for sure. But sequentially, we will be getting customer certification. And so starting in the latter part of next year, we will begin to see some black numbers in our operating profits. By 2027, most of the companies will have, or plants will have reached stable operation and that's when we will see all of our ink turn to black. So I cannot give you any more specifics on that at this point. Please understand. And on raising more capital, paid in capital, for POSCO Future M, we did provide some funding in about $500 billion one and about $600 billion in terms of hybrid securities. And so this is a lot more capital than we had originally anticipated. That's for sure. There is some time lag between when the investment is made and when our sales can hit our books. So yes, there is a lot more need than previously anticipated to assist this business. We are looking into using other borrowing instruments. But S&P ratings have turned a little bit negative. But our regular assessment from Moody's is already available. So whether we need to look into more borrowings or not, we are assessing that. Future M's financial status as well as the financing situation and raising more paid in capital, all of these things are variables that we are looking at. And based on our conclusion, we will be making a decision shortly.

Next

question,

please.

This question will be by Mr. Park from Taishin Securities. I'm Mr. Lee from Taishin Security. Thank you very much for giving me the opportunity to ask the question. I have two questions. I would like to ask a question about the production cut that was announced by the steel industry. So about 50 million tons of estimates that has been revealed. So I would like to know if that could be feasible. And when can we expect the production to be stabilized? And how do you perceive the future? And do you believe that the production expansion could be possible for the future? And the second is about the integrated mill investment going on in India. So what is the progress on that? And also you've made investments in the secondary battery materials and you're also investing in the steel as well. So I would like to know if these two initiatives are taking place in tandem or in parallel. So the first question, I think that Mr. Hongmin-Jae from the Postsco Marketing Strategy Office can answer and I will answer the second question. Yes, I am the head of the Marketing Strategy Office at Postsco. So there was an announcement of the output cut by Pi Spice Steel. And I think the volume is about one million tons, which is minimal in terms of impact on the market. And at the beginning of March, there was the Chinese Congress Party meeting and there was an estimate that the 50 million tons of production cut could be feasible. So the output cut perspective is highly likely for the time being that because of the trade war, as well as the Chinese government's production cut feasibility, it might not be also possible because of the Chinese government's GDP growth and so forth. And there is an increasing number of private companies in the sector coming from China. So there is an influence coming from the Chinese government. So whether we'll be able to achieve the 50 million tons of production cut or not, I cannot be sure of that. But we can say that it is highly likely. So if the cut is made, then of course it's going to have an impact on the raw material prices and the prices of raw materials may go downward and stabilize. But if you look at the current steel prices, as for the spices prices, it is coupled with the raw materials prices. And if you look at the client structure of our company, there is the automotive and electronics companies that are our clients. So you can see that we sign contracts, price contracts, based on semester or based on quarter. So we believe that the spread could go up to give us more profits going forward. So if there are additional cuts in production or output, then the over export volume coming from China could go down and we could have a positive impact on post-gold. Thank you. Now the answer to the second question. As presented, the integrated mill investment, the total investment is $8 billion and in Korea, one is about $11 trillion. If you look at investment structure, so in that project, the capital is 50% and the borrowing is 50%. And as for the capital of 50%, we go in 50% of that 50%. So our fund is only about one fourth of the total investment. So if that is the case, that will be $2.75 trillion out of $11 trillion. And it will be implemented over the next five years. So the annual K-Pax or investment would be about $0.5 trillion. So who is implementing the investment? It would be Post-Go. And as for Post-Go, the annual AVIDA is at least $4 trillion. So as for Post-Go, out of the $4.1 trillion of cash generation ability, investing about $550 billion per year is no problem. And as for the second battery materials investment, the initiatives are ongoing. And on a consolidated basis, our cash reserve is about $16 trillion. So when it comes to the secondary battery materials, making investments in this sector would be not challenging. Next

question.

From IAM Securities, we have Kim on the line. My name is Kim Yun-Sang. I have three questions. So tariff barriers on reduced quotas as well as tarifications, all of these create more intensified trade barriers. And so this hits not only headquarters, but also overseas plants. So because of these intensified trade barriers, it leads to impacts on the sales volume. And also impacts sales plans. So I'd like to know how it's impacting yours. And because of the adverse impact, we have to have some responsive measures. Of course, the possibility seems a little bit low. But because quota has been eliminated, there is some impact to the seal business. So what are your countermeasures against these? And next is on hot rolled products. And so we have AD complaints have been filed. And if this were to impact Japan as well, how is Japan likely to react to this? And finally, there's been some adjustments in lithium price. I'd like to know what your projections are on the lithium price going forward. First question will be answered by Mr. Hong Yun-Sik. And next by the International Trade Office head, Mr. Hong Joon-Young. And finally, from Lee Jae-Young from Energy Materials Business Management. My name is Hong Yun-Sik. And I'd like to address the trade barriers. How are our affiliated companies and overseas locations impacted? We have many overseas in various locations, but by region, the impact varies. Let's take Vietnam as an example. So even before the Trump administration imposed tariffs, there was already a 25% tariff. And there are a lot of exports to the US, but there are no additional tariffs that were imposed on steel products. But US bound Vietnamese made coated steel products. The countervailing taxes are between 40 to 140%. So it's very high. So Pasco Vietnam's cold rolled products, domestic sales could be impacted by this move. But US bound cold rolled products from Vietnam, excuse me, I think will only be positively impacted by this move. And the same goes to Thailand. We have a coating plant in Thailand, and they have US bound exports that are subject to the same level of tariffs. So the coating plant in Thailand also is likely to be positively impacted by this move. And Mexico is the most largely impacted. And originally, we anticipated high impact. But when we analyze some of the final decisions that were made, because of the USMCA mandate for home electronics steel, if it is built in North America, then there are some provisions that act in favor of some of the products that we make for the region. So with the quota eliminated, are we going to be able to sell more to the United States? While the quota may have been removed, steel that is imported into the United States, not only from Korea, but from all other countries, are closely monitored. So we anticipate more sanctions, more restrictions. And so I think our sales volume is going to be very similar to what we sold last year. I'm the head of ITO. I'd like to answer the second question. In global steel market, we are seeing various movements, such as the EU safeguards, as well as the UK safeguards that are being reassessed. Canada is also imposing new safeguards, and they are collecting opinions. Turkey and some of the ASEAN nations are also making separate movements in order to look into some anti-dumping issues. So in order to address all of these, I think protectionist measures are going to continue for some time. So the anti-dumping regulations against Japan by the Korean government, as well as other protectionist measures that we are seeing in the market right now, we are going to have to look at some of the traded volumes as well as prices, and to be able to devise diverse countermeasures. Exactly what kinds of countermeasures to take, we cannot give you any conclusions at the moment. I am in charge of Energy Materials Investment Office. You asked about the lithium price. Because of demand rise with EV market recovery, we are projecting a gradual price increase. But because of the tariff policies that are coming out of the United States, that has added uncertainty, and therefore it's become more difficult to predict. There are six agencies that predicted prices going forward. After 2025, all of those six agencies expect the price to rise. And on average, by 2028, the price will reach about $20,000.

Next question, please. Next question will be from Hyundai Motor Security. Thank you for giving me the opportunity to ask a question. I have a few questions for you. First, it is regarding the Kwongyang Electronic Art Furnace that will be completed this year. So in terms of sourcing, what will be the percentage between domestic and overseas? And I believe that it will be very difficult to source the scraps. And as for the Toyota, it acquired radius recently. So when it comes to Postco, are you going to acquire any steel scrap companies going forward? And as for the products that are produced from EAC, what is the quality of that produced by EAS compared to the blast furnace? If you could elaborate further on that. And the second question is regarding marking conditions. So in the latter half of this year, how do you anticipate the steel market? When it comes to automobiles and shipbuilding, how do you expect the supply prices to be? And recently, regarding the Chinese steel plates, 80 tariffs have been imposed. But can we anticipate any price increase or increase demand sales? Do you see some impact or effects coming from those initiatives? And third is regarding Postco ENC. So regarding Postco ENC, there was an accident in Kwongyang. So is there a cost that should be accounted for one-off in the second semester, second half? Regarding the first question, it will be answered by Postco's Department of Materials, one office. And the second will be by Mr. Hong Yun-sik. And the third will be by Mr. Oh Young-dal, who is the head of the Infrastructure Business Management Office. Yes, I am in charge of the raw materials. Yes, the EAF, as you said, will be completed by the end of this year. But according to our internal plan, it will be completed by sometime May next year. And as for the steel scrap, when it comes to domestic sourcing and investment, we're going to safely secure it. And the HBI is an alternative. So we consider investing and acquiring or purchasing HBI. So when it comes to the domestic and overseas sourcing percentage, I cannot clearly say what is the percentage. But we are very much focused on flexible sourcing, but we will be mostly focused on domestic sourcing. And going forward, when it comes to the high-quality scrap sourcing strategy, we will collect as much as possible scrap coming from our clients and then also sign a strategic partnership with our suppliers. And in order to meet the increasing demand in Korea, we are going to invest in the collection hub so that we can source high-quality scraps as much as possible. And we will also invest in the facilities to transform a low-quality to high-quality scrap. You also asked a question about our plans going overseas. Of course, if there is a need, we're going to fully consider that. And we will explore some investment opportunities if opportunities arise. And when it comes to the quality, so... Hello, I'm in charge of postcode technology strategy. So in Gwangyang in 2026, in the first half, we're going to complete EAS to produce low-carbon products. So when we use scraps as raw materials, compared to the BS production, there are lots of impurities, such as nitrogen and so forth. But EAS, we are in the current process of developing technologies that will minimize impurities. And as for the automotive steel sheets, in first, we actually produce the internal interior sheets. And according to the maturity and advancement of the technology, we plan to also employ the reinforced sheets going forward. Now, I am in charge of the postcode marketing strategy office. You asked a question about the steel market outlook for the second half. Simply put, if you look at the automotive sector in Korea, we're seeing the impact of the tariff war, and yet it manages to respond to those initiatives. And there are some positive signals or developments that are taking place. But as for the construction sector, it's been sluggish since last year. And as for the home appliances, it's very much related with the construction sector as well. So when it comes to home appliances sector, we believe that the market will be not as good in the latter half. But in terms of prices, as for the heavy plate AD filing last year, there was the tentative tariff or provisional tariff that was applied. And the Ministry of Finance and the Economy confirmed on provisional tariffs today. So this helps to minimize the inflow of products that are subject to unfair trade practices. So compared to last year, when it comes to the retail market prices, it has gone up quite a bit. And we can expect some additional hike going forward. And when it comes to stainless steel products, there was a result regarding the made in Vietnam products. And we saw more than 18% additional tariffs compared to the preliminary rulings. So we believe that this will be very helpful in blocking the influx of products subject to unfair trade practices. And this is going to have a positive impact on the prices as well. Yes, I am in charge of the infrastructure business management. So you asked a question about the accident in Gwangmyeong. So it was the 9.209 zone of the Sinan Line. So it was regarding the, when it comes to the demolition costs, of course, it should be accounted for on the books. But as for the 5-209 zone, the operations have been suspended fully. So it's very difficult to calculate the cost. So we can say that it will not be accounted for in the second quarter. And what is fortunate is that we have an insurance for that construction site. So when it comes to the demolition as well as the restoration work, we'll be able to be, we'll be covered to a certain level, to a high level by the insurance.

Next question, please.

Aishahari Apai from Nomura Securities. Please ask your question.

Hi. My question is regarding the recent announcement of POSPO trying to issue a dollar bond. This one I announced a few blocks ago. I am trying to see if there's any update on that. And my second question is regarding the recently announced Hudail JV and what impact is expected onto the leverage from that.

The first question will be answered by the head of finance office. And the second question by Mr. E. Wan Chua, CEO, business management office. So dollar denominated issue, bond issuance, progress on that. Let me address that. So we had this in the plan, but on April 1st with the announcement of the US tarification, the financial market fluctuated wildly. So not just us, but also in other companies, all bond issuances have been put on hold. We are seeing some signs of the market stabilizing. So perhaps by today, maybe by Monday, we will be able to have a better assessment about what the market condition is for the issuance. So on the MOU signed with HMG and how that's going to serve as leverage for our group, this is an MOU that was signed between POSCO Group and Hyundai Motor Group. So Hyundai Motor Group is a partner that we have a relationship that is as old as five decades. Among many of the strategies that we've had up until recently, our strategy for the United States has been in flux. We have been considering many options. So among those many options, looking at some of the demands that Hyundai Motor Group had in the United States, they made an announcement first about their investment plans. And by asking for POSCO's participation, we believe we can serve a mutually beneficial role here. Of course, there are some risks that could follow. So the two largest steelmakers in Korea are investing jointly in the United States. So there could be some investment risk there. And from POSCO Group's perspective, I think the CFO at Hyundai Motor Group also explained this a few minutes ago. But it proves to be a market where we can generate some competitiveness. And it is a market where material flow is ensured. And there are some links that we can build with our downstream processes as well. So investing in the United States and jointly with Hyundai Motor Group, we believe there are many more positive impacts than negative ones, not only in steel, but also in rechargeable battery materials, as well as the potential to extend our cooperation into other parts of the United States as well. So dollar-denominated bond issuance, I'd like to add a few more comments. So once again, other companies' attempts to issue bonds have been put on hold as well. So we have to look at the financial situation as well as some of the other companies and how they are moving on these bond issuances as well as the spread. Those are the variables we'll look at before we assess bond issuance next week. At Hyundai Motor Group, I think they mentioned, had a question about financial leverage. Building a plant in the United States, Hyundai Motor Group will be the major shareholder, the equity holder. So we will not be determining our shares in that plant. But according to Hyundai Steel, an equity ratio will be 50-50. This is what Hyundai Steel announced. Posco Group will be a minor shareholder. And I think our shares will be assessed by our equity. We will not be defining our equity before the investment. So I hope this helps to better explain how it will be structured. We'll take the next question.

Next question will be by An Hei Su from TV Security. Hello, I am An Hei Su from TV Security. I have two questions. First, about the Chinese steelmakers, not only in China but also abroad. They're investing in the cooking coal as well as iron ore projects. It's quite active. So as for Korea, what would be your strategy in terms of the competitiveness strategy and also the pricing strategies? And I believe the raw material prices are likely to go down. So that is why China's strategy could not be a threat for us. Is that your take? Or I would like to know your perspective. And second is regarding the next generation secondary materials, the progress on the precursor development. So I would like to know about how you're going to secure competitiveness in pricing or the capacity and updates on testing as well as clients. So regarding the first question, it will be by Gu Zahyun, the head of the Materials One office. And then the second will be by Mr. Yi Songwon from the Energy Materials Investment Office. First of all, together with the Chinese steelmakers, INVEST has the plan to invest in raw materials projects. And we are indeed implementing this type of strategy. And as for the iron ore, we are sourcing it by making a 50% investment. And as for the cooking coal, the level is about 20% because of the ESG issues. So we are considering all of these and making investments in this field. When it comes to iron ore, we believe that the investments have been fully made. And when it comes to the cooking coal, we believe that there are more returns that we can achieve on our investment. So we're going to continue to monitor the ESG developments and identify mines that will be of interest to us and make active investments and also do natural hedging with regards to price fluctuations. Okay, so I'm the head of the Energy Materials Investment. So regarding the lithium sulfate development, so of course there are companies that we have invested in our future institutes. And we are researching the intermediate goods coming from the lithium plants to make low-priced lithium sulfate. And the results have become realized these days. So we are now going for a more larger scale. That is, we are considering implementing a demo plant. And regarding the JKSS, so recently there's been a solid precursor that was produced from here. We thought it was quite promising. So together with OEM companies and battery companies, we're conducting a test. And for the details, please understand that we cannot disclose the details now. Thank you.

Next question,

please. Eugene Securities, Lee Eugene, please ask your question. My name is Lee Eugene. There was a one-time impairment loss in the first quarter. Can we assume that no other impairments will be assessed? And you mentioned leadership in the auto sector. We believe HBIS was mentioned. If you have any projections on the auto industry profits, please share them with us. And based on automotive steel sheets, what is the tonnage and what is the timeline on hitting these profits as well as volumes? And I'd like to know if we are experiencing a deficit in steel plates. First question, I will address that. Second question will be answered by Dr. Hsu. Let me address the first question first. In the first quarter, yes, we had a one-time impairment loss effect. These impairment losses usually occur in the process of restructuring when we sell off assets and close down plants. And there is a disparity between the book price and the selling price. And secondly, when the market turns downward, the value of the business also declines. So there is an impairment loss there as well. So in the first quarter, we continued our restructuring and of course there were some losses. Last year, because market severely soured and we continued to restructure, there were some priorities that we could have defined. But non-profit and non-essential assets were first on our list. And so because of the market downturn as well as the liquidation of our assets that were underperforming, there were larger impairment losses as set last year. This year, we will continue with the restructuring. But in terms of size and intensity, it will be smaller than last year. And also this year, do we anticipate the market will sour as much as last year? We don't think so. I think it's not going to be as bad as last year. And so based on that projection, the impairment losses will not be as big as last year. HBI's joint venture in China, we are looking to hit $420 billion in terms of revenues and we believe we'll achieve that. To hit that revenue, we are planning 170,000 tons. But our operating profit is still going to be in red. And the automotive steel sheets, how much tonnage are we targeting? For wire rods and stainless steel, setting those aside, we are looking at about $8.5 million. In India, before we set up the plants in the US and India, we're not going to be adding more capacities. So our sales will be based on between 8 to 9 million tons. The third question was whether our steel plates are suffering from a deficit. Of course, each steel grade is a little bit different. But at the end of last year, we did have a lot of deficit-bearing plates. But because of the AD filings, many have transitioned into black ink now. The Indian steel works, I think the question was about the construction schedule. Our JV partner is working to confirm the plant site in Odisha. Once we select the site, then we will be able to add more detail to this plan. Once the site is determined, we also have to do environmental impact assessment and go through other procedures as well. But if we can stay on plan, I think we'll be completing the plant by 2031.

Now this will be the last question. Last question will be by Park Yusin from HSBC. Hello, I am Park Yusin from HSBC. I have two questions. First, I think that it was addressed in your previous answers. So when it comes to the AD filling for the heavy plates, I would like to know what are the ongoing negotiations. And I would like to know if there's been any financial evaluation or valuation losses that occurred. And with regards to lithium sourcing, I would like to know if you have acquired any additional assets. So first will be answered by Mr. Hong Min-sik, Marketing Strategy Office. So regarding the answer for the first question, after the AD filing of the Chinese heavy plates, the retail prices are constantly going up. And I think that I cannot disclose all the detailed negotiations taking place in terms of price by client. But with the three shipbuilders, we have completed a negotiation for the second quarter. And I cannot share with you the detailed numbers, but the price negotiations have been taking place recently in line with the current trends. And I will answer the third question first. So it will be by the head of the Energy Materials Investment. It was about sourcing lithium assets or securing lithium related assets. So as said, in order to increase our cost competitiveness, we are leveraging these low market conditions in order to acquire prime assets, not only for blind, but also in terms of mine. And we are also engaged with some specific deals, but they are under the process of private deal process and also competition bidding. So we cannot disclose any further on these initiatives. Please do understand. And Energy Materials Office head is going to answer a question about the second. So the metal prices are going down, the nickel as well, and going down to $9. So when it comes to the asset valuation losses, it's inevitable. And this is the same situation for all the secondary battery materials sector. And when it comes to the losses level, there is one plant under construction in Argentina, and one plant is undergoing ramp up, and one in Gwangyang Line is under ramp up, and another one is under study. So when it comes to losses, it will be determined by the fixed costs.

I would like to close the first quarter 2025 earnings report call for POSCO Holdings. Through this call, I hope people gained better insight into how we intend to drive our business forward. Once again, I'd like to thank everyone for your participation. Again, I'd like to close the first quarter 2025 earnings report call. Thank you.