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 Postco Holdings earnings call. Today we will have a presentation by Postco 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 Postco Holdings earnings presentation for first quarter of 2025.

Greetings, everyone. I am head of the Finance and IR Division at POSCO Holdings. My name is Kim Seung Joon. 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, which has intensified economic uncertainty. Despite this headwind, POSCO Holdings achieved improvement against the previous quarter. In Q1, consolidated revenue hit $17.4 trillion won and operating profit $570 billion won. 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 stability. In addition, iron ore and coking coal prices have also become more stable. POSCO Future M is selling more CAM and M, while POSCO 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 POSCO Holdings Corporate Value Enhancement Program released in December 2024, we have defined a strategy to invest in overseas upstream seal-making process, and we have been taking a close and hard look at the high-growth market of India and high-profit market of 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 steel making plant in the U.S. 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 U.S. to our auto panel manufacturing plant in Pasco, Mexico. Additionally, we will expand volume supply to our U.S. OEMs to whom our volume was limited due to the export quota. In addition, by focusing the EV battery material 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 a close. Currently, we're in discussions with HMG regarding the size of equity investment into a U.S. 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 4 of the presentation materials. On a consolidated basis, our Q1 revenue and operating profit came in at 17.4 trillion won and 568 billion won respectively due to a market downturn in the previous quarter and structural adjustments. 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 segment. In the still, The operating profit improved from 2.3% to 3% QOQ. What's particularly notable is that Postco's OP margin recovered to 3.9%. Overseas sale 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 POSCO Futuram's turnaround to profit, overall operating losses were reduced by half, QOQ, 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 5, 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 joint technology development. Let me elaborate further on page six. Presco 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 JSW, we're working to establish a specialized automotive steel sheet, specialized company, with an estimated capability capacity of about 5 million tons. And we're proceeding with final site selection and 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 sale 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. POSCO currently uses cold-rolled steel source from molten iron produced at our Kongyang Works in Korea, with which POSCO Mexico produces coated automotive steel sheets. And starting from July 2027, for POSCO 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 usmca now page 7 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. And since last year, the cumulative cash generated reached $949.1 billion, 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 POSCO 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 CAPEX plan for this year. This year we have established a CAPEX plan of $8.8 trillion, 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 operation efficiency. We have budgeted a CAPEX for these initiatives, and as for the energy materials, its CAPEX spending in 2024 was 4.1 trillion, but major production facilities including Argentina were completed at the end of last year, and this year, despite ongoing construction of second brine plant in Argentina and cut that materials plant, CAPEX burden will be slightly lower to 3.1 trillion. As for the infrastructure, we planned the project in Australia, stage four of Myanmar gas field, and construction of the second LNG terminal. Now performance by key area. Page 9, first is POSCO. POSCO's crude steel output in Q1 mainly due to the impact of overall maintenance works declined by 5.5% QQ. But while selling prices slightly increased and raw materials cost remained 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 a demand cut, So in Q2, we believe there's going to be a recovery in terms of sales and so forth. And recently in 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 sheets, which are some positive developments. Now let's move to page 10. Profits from overseas steel operations have 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 Zhangjiagang, due to a rise in regional stainless steel selling prices, has reduced its losses. But subsidiaries in Southeast Asia continue to underperform. Next is Presco Future M. With increased sales volume of cathode materials and higher prices for phasing 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 POSCOM solution domestic downstream subsidiary project has also been rescheduled to the first quarter of 2026 accordingly. As for the POSCO Pilbara 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 Plan 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 Myanmar gas field, operating profit and energy increased. In particular, in the LNG power generation business, there was a completion of major maintenance work, so that led to recovery in sales. Now let's move on to POSCO E&C. As 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 plant and 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 And 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 two. The first question is from Uanta Securities, Mr. Lee. Please pose your question. Hello, my name is Lee.

I'm from Uanta Securities.

low-performing businesses, and restructuring of those businesses are ongoing. The PVSS 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 PVSS, 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 the deficit has been reduced, but still there's an operating deficit of about $100 billion. So I understand that some of these plants are in ramp-up stage and initial stage of operation, so some of this loss is inevitable. But, again, $100 billion of deficits is quite large, and is this a repeating pattern? If this continues for about four quarters, it could add up to about $400 billion. 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 2 o'clock. And I think Chairman Chang 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 PZSS and if there are any plans to improve performance, I think that was the gist of 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 PZSS. 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 PP 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. of the companies 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 capex 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 that we are looking into using other borrowing instruments. 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 from Mr. Park from Station Securities. I'm Mr. Lee from Station Securities. Thank you very much for giving me the opportunity to ask the question. I have two questions. So I would like to ask a question about the production cut that was announced by the steel industry. So about 50 million ton of estimate 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 meal 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 milking 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. from the POSCO Marketing Strategy Office can answer, and I will answer the second question. Yes, I am the head of the Marketing Strategy Office at POSCO. So there was an announcement of the output cut by Pai Spice Steel, and I think the volume is about 1 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 ton of production cut could be feasible. So the output cut perspective seemed highly likely for the time being, but because of the trade war as well as the Chinese government's efforts, production cut feasibility 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 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 sale prices, as for the 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 POSCO. Thank you. Now, the answer to the second question, as presented, the integrated meal investment, the total investment is $8 billion, and in Korea, one is about $11 trillion won. If you look at the 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 CAPEX or investment would be about 0.5 trillion Korean won. So who is implementing the investment? It would be POSCO. And as for POSCO, the annual EBITDA is at least 4 trillion Korean won. So as for POSCO, out of the 4 trillion won of cash generation ability, investing about 550 billion won 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.

As you said,

From IM Securities, we have Kim on the line. My name is Kim Yoon 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 plan. 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 the quota has been eliminated, there is some impact to the steel business. So what are your countermeasures against these? And next is on hot rolled products. And so we have 80 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 adjustment 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 , and I'd like to address the trade barriers. How are our affiliated companies in 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 U.S., but there are no additional tariffs that were imposed on steel products. But U.S.-bound Vietnamese-made coated steel products, the countervailing taxes are between 40% to 140%, so it's very high. So Costco, Vietnam's cold-rolled products, domestic sales could be impacted by this move. But U.S.-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 U.S.-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 impacts. When we analyzed 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. 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 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 will be from Hyundai Motor Securities. Thank you for giving me the opportunity to ask the question. I have a few questions for you. First is regarding the electronic art furnace that will be completed this year. In terms of sourcing, what would 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 PESCO-ENC. So regarding PESCO-ENC, there was an accident in Gwangmyeong. 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 head of raw materials one office. And the second will be by Mr. Hong In-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 EAS, 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 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'll be mostly focused on domestic sourcing. And going forward, when it comes to the high-quality scrap sourcing strategy, so We will collect as much as possible scraps 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 scraps. 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 am in charge of Post Coast 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 the 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 the impurities. And as for the automotive steel sheets, in first, we actually produce the internal interior sheets. And according to the level of maturity and advancement of the technology, we plan to also employ the reinforced sheets going forward. Now, I am in charge of the fiscal 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 Economy confirmed on the 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. 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 the question about the accident in Gwangmyeong. So it was the 9.209 zone of the Sinanseon Line. So it was regarding the, when it comes to the demolition cost, of course, it should be accounted for on the books. But as for the 5-209 zone, the operation has 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 will be covered to a certain level, to a high level by the insurance.

Next question, please. from Nomura Securities. Please ask your question.

Hi, my question is regarding the recent announcement of POSCO trying to issue a dollar bond. This one was announced a few months ago. I'm trying to see if there's any update on that. And my second question is regarding the recently announced Hyundai JV and what impact is expected onto the leverage from it.

Yes, I will translate it again. Last time, you announced that you would issue a bond with the dollar sign. If you have any updates on this, please let me know.

The second question is, if you have any judgment on how the MOU signature with Hyundai Car Group can act as a leverage for us in the future, please let me know.

The first question will be answered by the head of finance office. And the second question by Mr. Ewan Trist, your 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 U.S. 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 signs 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 filmmakers 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. Costco 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 Hisu from DB Securities. Hello, I am from DB Security. I have two questions. First, about the Chinese steel makers, not only in China but also abroad. They are investing in the cooking coal as well as iron ore projects. This is 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 the China's strategy could not be threatening for us. Is that your take? Or I would like to know your strategy or your perspective. And second is regarding the next generation secondary materials, the progress on the precursor development. So I'd like to know about how you're going to secure competitive liveness in pricing or the capacity and updates on testing as well as clients. Regarding the first question, it will be by Gu Zhaoyuan, the head of the Materials One office. And then the second will be by Mr. Lee Sung Won from the Energy Materials Investment Office. POSCO, together with the Chinese filmmakers, 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 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 investments, 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. Yes, I'm the head of the energy materials investments. 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 lithium plants to make low-priced lithium sulfate, and the results have become have realized over 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.

From 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 HVIS 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 rate? 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... Let me address the first question first. In the first quarter, yes, we had a one-time impairment loss assessed. These impairment losses usually occur in the process of restructuring when we sell off assets and close down plans. 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 with 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 the 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 U.S. and India, we're not going to be adding more capacity, 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 still 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 a 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 plan by 2031.

Now this will be the last question. This next question will be by from HSBC. Hello, I am from HSBC. I have two questions. First, I think that it was addressed in your previous answers. So, when it comes to the 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 our negotiations for the second quarter. And I cannot share with you the detailed numbers, but the price negotiations have been taking place reasonably 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 this low market conditions in order to acquire prime assets, not only for brine, but also in terms of mine. And we are also engaged with some specific deals. But they are on the process of private deal process and also competition bidding. So we cannot disclose any further on these initiatives. Please do understand. And Energy Raw 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 ramp-up. 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 a 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.