Posco Future M (003670) Q2 2024 earnings summary

Executive summary

• Sales declined quarter-over-quarter in 2Q24 due to sluggish N65 sales, despite strong Hi-Ni cathode deliveries, with profitability impacted by AG valuation loss and repair costs in the Lime business.

• Net profit turned negative in 2Q24, with a net loss of KRW 11.2bn compared to a profit of KRW 57bn in 1Q24 and KRW 43.1bn in 2Q23.

• Operates across energy materials (battery cathode/anode), basic materials (refractories, lime/chemical), and global subsidiaries.

• 2024 H1 consolidated revenue: ₩2,053.9B; operating profit: ₩40.6B; net profit attributable to owners: ₩51.4B.

• Ongoing large-scale investments in cathode/anode capacity expansion in Korea, China, and Canada.

Financial highlights

• Revenue for 2Q24 was KRW 915.5bn, down KRW 222.9bn quarter-over-quarter and KRW 277.5bn year-over-year.

• H1 2024 revenue: ₩2,053.9B (down from ₩4,759.9B FY23, ₩3,301.9B FY22).

• Operating profit dropped to KRW 2.7bn in 2Q24, with an operating margin of 0.3%.

• H1 2024 operating profit: ₩40.6B (FY23: ₩35.9B, FY22: ₩165.9B).

• EBITDA for 2Q24 was KRW 47.7bn, down KRW 29.5bn quarter-over-quarter and KRW 38.4bn year-over-year.

Outlook and guidance

• Lithium prices are expected to remain flat in 3Q24 due to subdued spot demand, with potential fluctuations as EV demand remains volatile.

• Nickel prices may weaken early in 3Q24 but could gradually rise if US interest rates are cut.

• Continues to invest in battery materials capacity to meet global EV demand and IRA-compliant supply.

• Faces risks from battery policy volatility (e.g., US IRA), raw material supply, and EV market growth rates.

• Plans further expansion in North America and China, with new plants coming online through 2025.