POSCO Holdings Inc.

Greetings, everyone. Thank you for coming to attend the conference call for POSCO Holdings earnings release. Today, we will have a presentation from POSCO Holdings first, and then we will have a Q&A with all of you. For those who wish to ask a question, please press star 1. So now, I'd like to begin the POSCO Holdings 2026 second quarter earnings release. Greetings, everyone. I'm head of finance in our division at POSCO Holdings. My name is Kim Sung-Jun. Despite the harsh heat, thank you for attending the second quarter earnings for POSCO Holdings. My sincere thanks go to the investors and the analysts. In the second quarter, the Middle East conflict triggered energy supply risk intensified, while the Korean won continued to lose value. Business faced headwinds. Nevertheless, Posco Holdings recorded consolidated revenue of $19.3 trillion won and $820 billion won in OP, keeping the rising profits curve. Gains were recorded against previous quarter in all three sectors of steel, rechargeable battery materials, and energy. Most notable is our Argentina lithium business that turned a first-ever quarterly profit. So the general RBM sector transitioned to a surplus for the first time in nine quarters. Our still-making affiliate, POSCO, registered its separate OP of $270 billion won, a $60 billion gain over the previous quarter. On third quarter outlook, what is most notable is that POSCO will make more visible performance gains. While some raw material costs will climb, increased production will offset fixed costs. Through effort made to increase sales and sales price, we expect the rise to continue. In the rechargeable battery materials sector, following its first ever quarterly surplus in the second quarter, a temporary slowdown may be observed in the third quarter. Located in the southern hemisphere, it is winter in Argentina. This seasonal factor causes pond evaporation to dwindle. By leveraging this off-season, we plan to replace the LP dryer equipment. Hence, a temporary drop in production volume seems inevitable. Starting in the fourth quarter, however, the plant will run at full operation. Additionally, in Q4, long-term supply agreement will kick in, allowing us to deliver certified products. Therefore, we anticipate a more meaningful level-up in Q4. Besides the performance gains, the first half of this year demonstrated marked progress in building for future growth. One is Kwong Yang's first EAF operation, and the other, the Hy-Rex demo plant construction start. Postco Holdings is committed to upholding the two pillars of growth, which are profit enhancement by sector and strategic investment for future growth. We'll do our best to continue to grow our corporate value. Now I will give the floor to our IR office head to offer more second quarter details.

Next, we will move on to page three of the materials, and I will brief you on the business performance of the second quarter of 2026. The consolidated revenue of the second quarter was $19.3 trillion, which is a $1.4 trillion increase on quarter. The operating profits stood at 819 billion won, a 16% increase on quarter. The quarterly EBITDA stood at 1.9 trillion won, and CAPEX of 2 trillion won was administered this quarter, totaling 3.7 trillion won of CAPEX for the first half. Now, let me elaborate by business. First, steel business profits improved on quarter by 58 billion won. The Middle East conflict impacted logistics and energy costs and foreign exchange rate, driving up short-term cost volatility. However, production and sales volume growth and partial price increase offset the headwinds that lowered profits at the end of last year to drive recovery. The RBN business had, for the past eight consecutive quarters, operated in the red. However, this quarter, we recorded operating profit of 41 billion won swinging to an operating surplus. Until last year, there was a quarterly deficit of around 50 billion won at POSCO Argentina, but this quarter, the subsidiary swung to an operating profit. In infrastructure, highest recording quarterly profits was recorded by Costco International, driving up profit growth of 22% on quarter. The divestment of PVSS and Chinese subsidiaries are now complete, registering one off divestment profit for this quarter's net profit.

Next, I'd like to report on our safety index. Every year and every half year, POSCO Holdings transparently releases updates on our safety metrics and progress made on our policies. In June, we suffered another fatality at POSCO E&C, our construction affiliate. The company takes this very seriously. They're putting all efforts into inspecting and strengthening their safety management system. POSCO Safety Solution, in collaboration with DSS Plus, a global safety solution provider, we are assessing the safety of 33 group affiliates across four key areas. By October, we plan to sort safety risks and identify corrective action plans. You can find more detail on our safety initiatives on page four.