POSCO Holdings Inc.

Hello, everyone. We'd like to begin the Pascal Holdings Earnings Call presentation. Thank you all for coming. Today, we will have a presentation from Pascal Holdings first, and then we will have a Q&A session with all those in attendance. For those who want to ask a question, please press star one. So let us now begin the earnings call for 2025 second quarter.

Hello, everyone. I head up finance and IR at POS Goldings.

My name is Kim Sung Joon. As you have already seen, I would like to first begin by thanking all of you for taking time out of your busy schedule to attend this earnings conference call. As you know, the past second quarter was marred by the intensifying global tariff war that began early this year. It was a time that saw incremental uncertainties, more so than ever before. Regardless of the hardship and challenges, Posco Holdings did its best to generate sustained growth. As a result, our consolidated revenue hit $17.6 trillion, operating price was $610 billion. By key business area, we observed noticeable improvement in steel. In both local and overseas steel businesses, quarter-on-quarter sales volume grew to push up revenues. With lower prices of iron ore and coking coal, mill margin improved, helping to grow our OPs. Most notable is POSCO's second quarter OP margin rate of 5.7%. Taking the fourth quarter of 2024 as the low point, we've been recording growth for two consecutive quarters. Moderate improvements in the domestic market is cited as the reason for no margin growth, but I believe there's more. We have added efficiency to our facilities to improve cost structure. Also, energy and raw materials ratios have been cut. We've introduced AI, so this is the outcome of multiple efforts that have come together. And still, despite the equivocations in the global tariff policies, I dare to be cautiously optimistic that we will sustain these profit levels into the third quarter. Improving efficiency is a project that is ongoing offshore as well. We've designated POSCO Zhangjiagang Stainless Steel, or PCSS, a stainless steel production subsidiary in China. Detailed negotiations are underway for this sale as we speak. Established in 1997, PZSS has consistently performed. However, due to oversupply from Chinese competition and local Chinese government policies to limit stainless steel production volume, we have been registering sizable deficits since 2022. Once the negotiations and legal procedures are completed, the PZSS subsidiary, which continues to remain in Redlink, will be removed from our consolidated account. Rechargeable battery materials operating companies completed two new plants at the end of last year. They are both in ramp-up stages. Due to initial operation cost increases and falling lithium prices, the size of the deficit in the second quarter will grow. However, we don't believe the current losses will increase any further. We're on track to take steady steps toward customer certification, commercial production, and product sales. So, again, we're on track. Additionally, in this market, this is an opportune time for lithium business. Yesterday, at Costco Argentina, there was an LOI signed with a Canadian company for joint investment, and the size is $620 billion. So we will be taking mining rights in a mine, I suppose, to our Argentina mine. And because of this close proximity, should this be successful from an operational perspective, I think we will be able to generate a lot of synergy. And there's a lot of upward market incentives that we'll be able to take advantage of. So from now on, I'd like to ask our IR office leader to report the details of our earnings report.