POSCO Holdings Inc.

Greetings. I head up the Finance and IR Division at Posco Holdings. My name is Kim Sung-Chun. This is Posco Holdings' 2025 full-year earnings release. I'd like to welcome the participants, investors, and analysts. Thank you. In 2025, we experienced global trade policy shifts and economic slowdown. It was a challenging environment. We put our effort into protecting our short-term profits. At the same time, as a business group, we built a foundation for future growth. 2025 consolidated revenues declined 5% year-on-year, recording 69.1 trillion won. Operating profit declined 16% to 1.8 trillion won. While POSCO's OP grew from 3.9% to 5%, we failed to meet our goals due to the accidents at POSCO EMC that led to construction halt, as well as the ramp-up costs that enter the books for the new lithium and precursor plants that were commissioned at the end of 2024. The fourth quarter profits were especially weak. The reason was communicated in last quarter's release. Kohang HR plant and other facilities have gone into major repair schedules, triggering production volume cuts. Also, large volume imports that flooded our market prior to the preliminary AD tariffs on HR products were still being consumed, causing a temporary drop in sales volume. There's more. The divestment of PZS's plant in China caused employee compensation to enter our books, too. This is in addition to the loss incurred by construction stop issued at POSCO EMC, so sizable one-time costs were accounted for all at once. In 2026, we will likely serve up some significant inflection points for POSCO Holdings. First, we have for some time studied various ways to go overseas in steel. This year, we'll see some specific actions. Last year, we identified strategic partners, signed MOUs with the U.S. and Indian JV partners to begin negotiations. With these partners, we're in final stages discussing the terms of our action plan, so this year we'll be able to witness some action on our long-sought entry strategies into overseas markets. In parallel, we intend to strengthen our core by focusing on high-margin products in the domestic market. Secondly, asset-based lithium operations will begin to generate profits. Our Argentina Lithium Plant 1 will ramp up and begin commercial operation this year. Last year, we signed deals with Australia's Regina and Mount Marian mines. The acquisition procedures will complete in the second half of the year, making immediate contributions to group-level profits. In the past several years, we completed phase one of our investments, involving the purchase of lithium resources and plant building and ramp-up. With commercial production around the corner, lithium prices have recovered just in time. We're excited to enter the next phase of our business when we will begin to generate real profits. By business model, an examination of the sequence of benefits accrued to parties impacted by the lithium price hikes illustrate that lithium ores, a.k.a. spodumene, so Australian hard rock lithium producers, will be the first to enjoy the benefits. Next will be the brine-based lithium business in Argentina. Then the lithium processors, namely PPLS, who process the imported raw materials will be the last to enjoy the impact. Third, value chain expansion of the infrastructure business will drive up margins. Therefore, we believe 2026 will see the impact of portfolio management. And as long as we can keep the price at our current levels, we'll be able to see more profit. As a result of the infrastructure business expansion, again, we'll see the impact of our portfolio management reflected in our financial statements this year. Australia's Cenex Energy built out its expansion facilities for gas production in October, and in November, we acquired new palm oil production farms in Indonesia. The return on these investments will be fully reflected in our 26th annual performance. Also, last year, PZSS plant in China that registered $200 billion in red ink recently was approved by the Chinese government for divestment. Once the procedure runs through, it will be removed from our consolidated books. Please understand that we're also aware that regardless of the rosy picture, we also have other challenges to confront. Stagnant domestic steel demand, formation of global blocks, tariff wars that restrict trade, and the weakening one currency that has the effect of driving up costs and the risk of lithium price fluctuation, to name a few. This year, by taking advantage of the various positive factors on our doorstep, we hope to turn the tide that held us back in the past few years. So we hope this year will prove to be the inflection point. Thank you. Now I'll invite the head of IR to deliver our 2025 performance results and 26 business plan.

Page three. 2025 consolidated OP decreased 347 billion won year on year, recording 1.8 trillion with consolidated EBITDA of 5.9 trillion won. POSCO's OP grew from quarter one to quarter three. Quarterly OP was on the rise with a slight decline in quarter four to 12.7 billion. First, POSCO E&C had construction stoppage and bad debt expenses, recording 190 billion yuan of quarterly deficit. Second, PZSS divestment is ongoing and employee compensation and other temporary costs were administered, deficit totaling 131.9 billion yuan. And end of December, Chinese merger approval was completed and the sale will be completed within Q1. Third, Costco's OP recorded 337 billion won, decreasing from Q3. Op season is one factor, but another factor is stockpiling of cheap imports prior to the hot-rolled 80 measures. And we decreased our sales volume by 6% quarter on quarter. Also, Pohang hot-rolling line is under major maintenance, so production was adjusted by 4%. With these efforts, Market inventory of low-priced imports are balancing out, and from quarter one, we expect production and sales volume to return to previous levels. In 2026, as our CFO mentioned, restructuring of businesses in the red will show the impacts, and Argentina lithium phase one will begin commercial production, and we can expect RBM profits to improve. Last year, we acquired a palm farm, expanded capacity of Australia Cenex gas fields, and these new investments will also contribute to profits, page four. This year, group-wide serious injury cases increased to nine. POSCO Group is enhancing safety systems, increasing employee participation, and boosting operability on the ground as priority goals. focusing our best efforts to foster a safe workplace. Last year, we established the Group Safety Innovation TF Team as CEO direct report and launched POSCO Safety Solution to strengthen safety expertise. Furthermore, we applied world-class safety consulting techniques to supplier companies. Also, we have outside specialized organizations regularly perform unscheduled inspections. We will continue to share our safe workplace metrics, improvements, and actions with you transparently each quarter. Page five. In 2026, I will describe the key business activities in steel. In 2026, for domestic steel, we will develop decarbonization technologies and promote high margin products to strengthen our business. In overseas steel, we will establish JVs to drive our end-to-end localization growth strategy. First, to address the carbon-reduced steel market, we will begin construction of the HIREX demo plant in Pohang. Also, Gwangyang EAF will continue operation in June. To enhance our profit structure in the domestic market, we will pursue growth in premium steel and specialized products. We will advance specialized capacity at each steelworks. At Pohang Works, we – Pohang Works will lead hydrogen, LNG, and power grid innovation. as leading mill of energy, and Guangyang Works will be specialized for future mobility markets. We will continue to manage these aspects to increase our mix. We will continue to leverage technology to structurally cut costs under Cost Innovation 2030. Finally, will be the year we act on overseas expansion. In the U.S., we have the Hyundai Motor Group EAF integrated mill project for which we confirmed share participation. Cooperation with Cleveland Cliffs and the India integrated steel mill project with JSWR also ongoing. Page six. First, Costco Argentina's ramp-up is near its completion stage. Generally, South American brine-based plants take two to three years to ramp up, but we have worked with the goal of completing it within a year. Major parts that needed to be replaced had some supply issues, delaying normal operation for two to three months, but by March end, we will boost utilization rate to more than 60%, and from July to August, we will be in full operation, meaning it will be our first year of commercial production. Recently, lithium prices increased substantially. Argentina plant owns brine assets, so we have a lot of operating leverage in face of lithium price hikes. In Q1, we still have volumes remaining for low priced orders, and the utilization rate is rather low, but it will rapidly increase thereafter, and profit improvements are in sight. Furthermore, in the first few years of commercial production, production efficiency improves gradually, boosting cost competitiveness. So we believe this can be the beginning of a positive cycle. As for POSCO Argentina Phase 2, considering the brine charge and evaporation schedule, construction is planned to be completed by Q4. Once completed, technical grade lithium carbonate production capacity will be at 25,000 tons per annum. Recently, we acquired LIS brine asset at a competitive price, which will serve as a valuable asset for future expansion. Next, POSCO Pilbara lithium solution. TPLS's major clients include POSCO Futur-M and other domestic and North American customers in its sales structure. However, demand from these customer base has been slowing down, requiring the company to diversify its customers. European and global top-tier OEM companies are among the new customers that we are working to secure. And there are some positive developments. Regarding the recent lithium price hike, PPLS imports spodumene from Australia to produce lithium. Recently, spodumene price increase has been higher than lithium price increase. with the spodumene to lithium hydroxide price ratio reaching 11%. Therefore, the higher lithium price has not been an immediate positive factor, and there are some temporary difficulties with margin spread, but in the long term, we expect positive impacts. Third, the JV investment with Australia's mineral resources. Currently, foreign investment approval and merger filing is currently underway. Once they are complete, the final contract will take place near March, and the payment will take place within Q2. Therefore, profits from this mine will be included from the second half through gains on equity method valuation. Once investment is approved for the next four years, the spodumene concentrate price we estimated was around $1,000 per ton, but currently the price rose to more than $2,000. Considering the market situation, we expect the mine to immediately begin contributing to gain on equity method valuation. And next year, the impact of the price hike will be bigger. For production volume, cash costs, and other basic details, please refer to MINRA's website.

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