POSCO NYSE: PKX executives said first-quarter 2026 results improved from the prior quarter despite heightened volatility tied to geopolitical tensions, while the company advanced major steel decarbonization projects and outlined a new performance-linked shareholder return framework.
Quarterly results and macro headwinds
Kim Seung-Jun, Head of Financial IR Division at POSCO Holdings, said the quarter was shaped by “the U.S.-Iran war” disrupting the energy supply chain and creating fluctuations in financial markets, including “unstable exchange rates.” Despite those headwinds, Kim said POSCO Holdings posted consolidated revenue of KRW 17.9 trillion and operating profit of KRW 710 billion, with both metrics improving versus the previous quarter.
Han Young-Ah, Head of IR Office, provided additional financial detail, saying consolidated revenue rose by “around KRW 1 trillion” quarter over quarter and operating profit totaled KRW 707 billion. Han also cited EBITDA of KRW 1.8 trillion, up KRW 721 billion quarter over quarter, and said results reflected a normalization from the prior quarter, which had been weighed down by one-off factors.
Lithium and battery materials: ramp-up drives narrowing losses
Management highlighted a sharp improvement in rechargeable battery materials performance, helped by higher lithium prices and increased production. Kim Seung-Jun said lithium prices rose during the quarter, boosting performance at lithium production subsidiaries and “significantly reducing losses.” He pointed to POSCO Argentina’s ramp-up and said the operation recorded its “first-ever monthly KRW profit” in March, adding that the company expected the momentum to continue into the second quarter and anticipated POSCO Argentina’s “first-ever quarterly KRW profit” in the second quarter.
Han said rechargeable battery materials losses narrowed by about KRW 150 billion quarter over quarter, driven by a higher operating rate at the Argentina lithium plant and improvements at POSCO Pilbara Lithium Solution, including “the rebound in lithium prices and reversal of inventory valuation losses.”
On operations, Han said POSCO Argentina was entering the commercial production phase for its phase I plant and the operating rate reached around 70% in March. She also noted a long-term supplier agreement with SK On for 25,000 tons was signed during the quarter. Phase II construction is progressing toward completion in October, with additional brine resource 확보 and test commissioning underway, according to Han.
In Q&A, Yoon Tae-il, Head of Energy Materials Business Management Office, attributed POSCO Argentina’s profitability improvement primarily to higher utilization and a shift away from low-price contracts signed when lithium prices were depressed. He said customer certification is underway and selling prices are now “very much close to the index level.” Yoon added that phase II depreciation would begin in October, and he expected phase II to generate about KRW 15 billion in losses, but said phase I and II combined “will definitely turn to profit this year.”
Executives also discussed spreads in the lithium concentrate business. Han said POSCO Pilbara Lithium Solution cut losses to KRW 3 billion from KRW 50 billion, but cautioned performance would be influenced by spreads between lithium and spodumene. Yoon later said hard-rock lithium supply is tight—particularly tied to ESS demand—and that higher spodumene prices have been a key driver of margin pressure.
Steel business: cost pressure, restructuring, and low-carbon transition
Steel results improved modestly at the group level, but executives emphasized continuing cost pressure. Han said steel business profit increased by KRW 91 billion quarter over quarter, though at POSCO, higher FX rates, logistics costs, and raw material prices kept margins under pressure. She said overseas steel results improved, citing recovery in India and Vietnam and a base effect tied to the prior loss at Zhangjiagang, which was later divested.
Han also said POSCO’s first-quarter operating profit declined quarter over quarter to KRW 213 billion, even as sales volume recovered and utilization normalized. She attributed the decline to higher raw material prices, rising FX, and freight costs linked to the Iran war, adding that cost pressure would remain a burden in the second quarter.
Management framed 2026 as a year when strategic changes in steel are “coming to fruition.” Kim Seung-Jun said the company finalized investment actions involving PDSS, described as an underperforming China subsidiary, and retired No. 2 FINEX to reduce high costs tied to aging facilities. He said the company’s largest new electrical furnace with 2.5 million tons of capacity would begin operation in June to expand its low-carbon production system. He also said a 300,000-ton HyREX demo plant had broken ground and permits were obtained for the Pohang HyREX plant site.
Hong Yoon-Sik, Head of Steel Business Management Office, addressed expected cost impact from the EAF start-up. He said costs would be higher than initially expected due to demand conditions and a phased utilization plan. Hong estimated that at a 10% utilization rate, annual costs would rise by about KRW 70 billion to KRW 80 billion, adding that higher selling prices and a potential premium could offset some of the impact.
India JV: 50/50 integrated steel mill targeted for 2031 completion
POSCO Holdings also detailed its integrated steelworks joint venture with JSW in India. Kim Gwang-mu, Head of Strategic Investment Division, said POSCO and JSW signed a joint venture agreement on April 20 for an integrated steel mill. He described the governance structure as a 50/50 JV, with each company appointing three directors and alternating CEO appointments for a five-year term.
Kim said the project targets a 6 million-ton, blast furnace-based facility focused on high-premium steel products. Because automotive steel products require customer certification, Kim said the JV plans to initially supply construction steel to generate profit before moving into automotive steel sheets. He also said POSCO would initially export some materials from Korea for processing in India, but the longer-term goal is to localize sourcing. Kim said the site in Odisha offers raw material access and infrastructure advantages, and emphasized that prior site acquisition reduces permitting and licensing risk compared with past efforts.
On timing, Kim said construction is expected to be completed by 2031. In response to later questions, he said the plan is to “set up by 2031” and begin operation in 2032.
When asked how the JV might affect exports to POSCO Maharashtra, Kim said exports of hot-rolled products would likely continue at similar volumes until the JV begins operating, and that exports should not be impacted initially because automotive steel sheets would not be produced immediately.
Kim also argued the project’s competitiveness would come from low-cost labor and lower-cost iron ore. He said Indian iron ore prices are “about 50%-60% lower” than global index prices and described a 30% tariff meant to discourage exports. He added that Odisha’s proximity to mines and JSW’s capabilities should support stable procurement.
Shareholder return: shift to earnings-linked policy
POSCO Holdings outlined a “third interim shareholder return policy” beginning in 2026. Kim Seung-Jun said the company intends to move toward an earnings-based, performance-linked policy, targeting a 35% to 40% shareholder return ratio based on net income attributable to controlling interests, using a mix of cash dividends and share buybacks and cancellations.
Han said the prior three-year framework (2023–2025) delivered KRW 3.5 trillion in shareholder returns, including KRW 2.3 trillion in cash dividends and KRW 1.2 trillion in canceled treasury shares. She said the company plans to base returns on “adjusted net profit” excluding non-recurring gains and losses to improve payout visibility and sustainability as strategic investments increase.
During Q&A, executives also addressed the operational impacts of Middle East tensions. Ha Seong-Yeol, Head of Finance at POSCO, said POSCO is among the most impacted group companies due to FX, oil prices, and LNG prices. He said POSCO is shifting settlement currency and seeking to bring in more dollars, diversifying LNG supply routes such as to Indonesia, and working to raise energy efficiency, while acknowledging it would be difficult to offset all cost increases and some would need to be reflected in product pricing.
Kim Seung-Jun added that while FX has a negative impact on POSCO, POSCO International and POSCO Future M can benefit from FX fluctuations, and he estimated those positives cover “about 50%” of losses experienced at POSCO from FX moves.
About POSCO NYSE: PKX
POSCO NYSE: PKX is a South Korea–based integrated steel producer founded in 1968 as Pohang Iron and Steel Company. Headquartered in Pohang, the company grew rapidly as part of South Korea's industrialization program and developed large, integrated steelworks—most notably in Pohang and Gwangyang—that helped establish POSCO among the world's largest steelmakers. It is structured as a diversified industrial group with steelmaking at its core and a range of downstream and trading businesses.
The company's primary activities include ironmaking and steelmaking, producing a wide array of steel products such as hot-rolled and cold-rolled sheets, coated steels, plates, stainless and special steels, long products (bars and wire rods), and seamless pipes.
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