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POSCO Holdings Inc. (NYSE:PKX) Q3 2023 Earnings Name Transcript October 24, 2023 2:00 AM ET
Firm Members
Jeong Ki-Seop – President, Co-CEO, CSO
Han Younger-Ah – Head of Investor Relations
Lee Kyung-seop – Chief of LiB Supplies Enterprise
Convention Name Members
Kim Sang-hoon – HI Funding & Securities
Operator
We’ll now start the 2023 Third Quarter Earnings Launch Convention Name of POSCO Holdings. As for as we speak’s convention name, after the presentation of POSCO Holdings, we can have a Q&A session with the contributors. [Operator Instructions] Now we’ll begin the decision.
Jeong Ki-Seop
Good afternoon, women and gents. I’m Jeong Ki-Seop, CSO of POSCO Holdings. At the start, I want to lengthen my gratitude to all of the buyers and shareholders to your eager curiosity in POSCO Holdings.
In Q3, we noticed growing world geopolitical tensions in addition to persisting worldwide financial slowdown as a result of excessive rate of interest coverage initiated by the U.S., which resulted in additional uncertainties to the enterprise atmosphere. Amidst the continued financial slowdown and rising prices on account of inflation, there have been many challenges in enterprise operations. Nevertheless, by means of proactive pricing changes and cost-cutting efforts, we achieved a consolidated income of KRW18.9 trillion and working revenue of KRW1.1962 trillion.
Particularly, our metal enterprise generated sturdy earnings by means of improved product combine, decrease uncooked materials prices and cost-cutting efforts, regardless of a drop in promoting costs on account of deteriorating market circumstances, a lower in product output ensuing from main gear repairs. Such efficiency underscores that our group’s world competitiveness and effectivity within the metal sector proceed to be a major basis for sustaining earnings and money era, even in difficult financial circumstances.
The secondary battery supplies enterprise is now in its preliminary part, as manufacturing amenities are being accomplished. At this stage, what’s essential is constant and ongoing funding primarily based on a long-term technique. Close to the market adjustments similar to IRA, emergency, LFP battery and adjustments within the value of supplies, we might be intently monitoring and partially supplementing the technique if crucial and when there’s a want. Nevertheless, for probably the most half, funding has been made primarily based on the portions ordered within the mid to long run till 2030 and thus, the goal to construct a worldwide market place within the rising market and to solidly safe a market place by means of fast funding is not going to change.
For a number of years, POSCO Group has repeatedly improved the monetary construction and regardless of funding being made within the gross enterprise, the 3Q debt-to-equity ratio solely amounted to 13.7%. Such sound financials and strong profitability within the metal half will grow to be a basis that enables the expansion technique to be pursued with out faltering. Within the fourth quarter as properly, it appears troublesome to foretell the short-term financial restoration. In keeping with such a troublesome enterprise atmosphere, our firm will first make steady efforts to safe quick to mid-term profitability and secondly, keenly allocate funding sources in order that we will attempt for unwavering development technique that raises the long-term company worth of POSCO Holdings.
To any extent further, head of the IR workforce will present particulars on the third quarter earnings.
Han Younger-Ah
Good afternoon, women and gents. I’ll now present an outline of a efficiency in Q3 2023. In Q3, POSCO Holdings recorded a consolidated income of KRW18.961 trillion, a 5.8% lower in comparison with the earlier quarter, and an working revenue of KRW1.196 trillion, 89.8% decreased Q-o-Q. Regardless of the sluggish financial circumstances, the sale revenue was resilient at round KRW852.7 billion and the inexperienced infrastructure sector additionally generated over KRW400 billion in revenue, just like the earlier quarter. In Q3, we invested a complete of KRW1.9 trillion on a consolidated enterprise foundation, bringing our cumulative annual funding to KRW5.6 trillion.
Let me elaborate on every enterprise. First, within the metal sector, after incurring losses in This autumn final 12 months, we turned a revenue of KRW338.1 billion in Q1 and recorded an OP of KRW1 trillion in Q2. Nevertheless, in Q3, the revenue measurement barely decreased to KRW852.7 billion. As talked about through the Q2 earnings name, [indiscernible] bottomed out in January of this 12 months and commenced to rise. Nevertheless, regardless of the reopening of China’s economic system, the tempo of financial restoration has been slower than anticipated. And consequently, since June onwards, our costs began to say no once more, and this pattern continued till September. Since September, there was a motion in the direction of metal value improve in lots of nations, together with Korea, however given the excessive degree of financial uncertainty, no distinct outcomes are at present evident. However POSCO, with a excessive proportion of long-term contracts, exhibited a comparatively steady efficiency.
Second is the inexperienced infrastructure sector. Each income and working revenue decreased by 9% and seven% respectively in comparison with the earlier quarter. Considering seasonality, working revenue grew by 19.9% year-on-year leading to earnings of over KRW400 billion for 2 consecutive quarters. Final however not least, our inexperienced supplies income jumped 10% to some once more and posted a report quarterly income, however nonetheless it incurred losses. Particularly, POSCO Future M’s are OP contracted on account of margin stress attributable to the decline in costs of key uncooked supplies similar to lithium. Preliminary OpEx and newly established subsidiaries like POSCO Argentina and POSCO Lithium Resolution have additionally added to the losses. As the development of those newly established subsidiaries enters into remaining levels, it’s anticipated that these prices or price burdens will persist for the foreseeable future.
Subsequent, I want to transfer on and temporary you on main enterprise actions in Q3. First, I want to present an replace on the progress of the development of secondary battery materials crops. The completion of POSCO Pure Battery Lithium Options, Lithium Ore, POSCO Sorts line has been delayed from October to November this 12 months. And the commercialized completion has been rescheduled from February to April subsequent 12 months. POSCO excessive purity nickel refining plant development has additionally skilled a delay of roughly one or two months pushing the initially deliberate December completion into Q1 subsequent 12 months. As you in all probability realized by means of information studies, there was a labor dispute involving the [indiscernible] Development Labor Union, which began in early July and lasted longer than anticipated, finally coming to an finish on the finish of September and on account of the development tasks on the best way within the [indiscernible] space skilled some delays however they’re now again on monitor.
Once more, apart from one or two months delay, all the things is again on monitor. Different tasks are continuing as initially deliberate. POSCO Argentina’s lithium plant Part 1 is scheduled to be accomplished in Q2 2024 and the completion schedule for POSCO lithium options brine lithium plant Part 2 in Q2 2025 stays unchanged. There are two plans which can be newly programmed. The primary one is POSCO Silicon Resolution, Pohang plant which goals to provide silicon oxide, silicon anode supplies. Development for this facility commenced in June. The MEP work is progressing sooner than anticipated and is scheduled for completion in Q2 of 2024. Secondly, the nickel smelting mission in Indonesia commenced development in September and it’s scheduled for completion in This autumn of 2024.
Subsequent web page, second is [indiscernible] Pohang and vehicle metal sheet manufacturing JV between POSCO and China’s HBIS has accomplished the development of primary galvanizing plant. The JV has added an extra galvanizing plant to strengthen its presence in China, the biggest auto metal sheet market. Plan quantity two might be accomplished in Could subsequent 12 months. The plan is to include the present Guangdong Pohang Company with a manufacturing capability of 450,000 tons into the JV to equip it with an annual manufacturing capability of 1.35 million tons in China sooner or later. Uncooked supplies together with cold-rolled metal sheet might be equipped collectively by POSCO and HBIS. Beneath its made in China 2025 coverage and inexperienced automotive trade growth plan, China is experiencing a better development of native inexperienced automotive manufacturing in comparison with inner combustion engine autos. Additionally automotive parts and supplies are additionally transitioning from standard chilly rolled metal to zinc plated metal.
Subsequent web page. POSCO Mobility Options constructed the EV motor core plant in Mexico. As defined within the earlier quarter, POSCO is producing electrical metal and hyper-NO of worldwide aggressive high quality and on November of this 12 months, 150,000 ton capability was expanded with a plan for added enlargement of 150,000 within the fourth quarter of subsequent 12 months. Based mostly on such prime quality metal supplies, POSCO Mobility Options used {the electrical} metal to provide EV motor core to be equipped to Hyundai Motor Group in most components now. Since November 2022, you possibly can see from the disclosure the whole order quantity signed with Hyundai Motor Group as a long-term motor core provide contract quantities to KRW10.3 million. In Mexico, a manufacturing base that has the motor core capability to be put in and 1.5 million was accomplished and with this we will now provide to North American vehicle firms together with Hyundai Motor Group. This plant already secured many of the order amount and we imagine that that is the proper instance that RELL represents the worth chain competitiveness that our group has on the eco-friendly inexperienced vehicle materials provider.
Subsequent would be the particulars of the earnings for every of the corporate. First, web page 9 might be about POSCO, the manufacturing quantity of POSCO merchandise decreased by 100,000 as in comparison with the earlier quarter as a result of plant restore of Pohang Metal Plate two plant and [indiscernible] Sizzling Highway three plant. As such, the gross sales quantity additionally dropped by 52,000 tons, however with the rise within the gross sales of excessive worth added WTP product, it helped to defend the profitability.
Subsequent web page will present the P&L. Working revenue of POSCO report is KRW727 billion, which is KRW114 billion decrease than the earlier quarter. The most important cause within the discount is the drop within the gross sales value. Throughout 3Q, the gross sales value dropped by roughly KRW48,000 per ton as in comparison with the earlier quarter. The web drop within the unit value in contrast in opposition to the identical product was KRW53,000 per ton, and this may be thought-about to have been partially recovered with the rise in gross sales of excessive worth added product. Regardless of the drop in uncooked materials price within the third quarter, the value drop was faster, resulting in a lower in mill margins. And that’s the circumstances that we’re going through.
Not too long ago, coking coal value is on the rise. It is because with manufacturing points in key supplying nations, the provision quantity has now recovered to a degree earlier than 2020, and amidst this, strong demand has continued centering on India and Indonesia. Based mostly on such a burden on uncooked materials, [indiscernible] elevated the value for 3 months in a row from August to October, and world metal firms are not too long ago additionally making makes an attempt to boost value. POSCO additionally barely elevated the value of scorching rolled metal in September. Nevertheless, with sluggish demand and uncertainty of the worldwide economic system, the impression of the value improve has not proven but, and there are additionally nonetheless difficulties in finishing up negotiations for the value improve.
As for the value of metal that after once more dropped to the extent of the beginning of the 12 months, contemplating varied components such because the uncooked supplies and the P&L circumstances of the Chinese language competitor, it appears unlikely for the value to drop additional. Nevertheless, confidence for restoration can also be weak and thus at present POSCO is doing its utmost to hold out varied actions similar to product combine and value discount actions to defend the revenue as a lot as potential. And that is why such a troublesome atmosphere, we’re anticipating it to be potential to a sure extent within the fourth quarter.
Subsequent might be web page 11. P&L of abroad metal was impacted extra by the market situation than POSCO. As for gross sales value of [indiscernible], gross sales value dropped by 9% Q-o-Q and it dropped by 6% for [indiscernible] and 1% for PCSS. Even in such a market situation from the structural facet, efforts had been made to reinforce the revenue construction. In Indonesia, home gross sales with greater profitability is being expanded and home gross sales price rose to 73% in 3Q. In India, gross sales share for vehicle rose to as a lot as 50.2%. That is a lower for PCSS and it is because the drop in uncooked materials value similar to ferro nickel value was mirrored.
Subsequent is POSCO Worldwide. Working revenue decreased by 12.9% quarter-on-quarter. Greater than half of revenue discount was from the metal buying and selling half following the drop in metal value and gross sales quantity. As for power with the rise within the gross sales quantity of Myanmar’s gasoline area and the rise in energy era revenue demonstrated a sound revenue era functionality.
Subsequent is POSCO E&C. Income decreased in opposition to earlier quarter, however on account of price discount efforts and so forth, working revenue elevated barely. So we had been in a position to see no huge points right here, and new orders decreased to KRW2.1 trillion in third quarter. Plant is being strategically expanded and subsequently this one elevated, however as for the housing half, there was a lower within the development order amounting to KRW1.1 trillion. POSCO Future M is rising steadily. Regardless of the drop within the [indiscernible] value, gross sales quantity continued to develop to report a income of KRW1.286 trillion, which is 7.8% elevated quarter-on-quarter. It is because N86 merchandise’ autumn income began to contribute in earnest. The share of excessive value N86 gross sales rose from 31% in second quarter to 40% in third quarter. Nevertheless, with the drop within the lithium and nickel value, common gross sales value dropped and on account of time variations within the value drop of merchandise and uncooked supplies and different unprecedented uncertainties within the uncooked materials value, there was a stress on margin.
This was a quick earnings launch of the POSCO Holdings. We’ll now transfer straight into Q&A. Thanks.
Query-and-Reply Session
Operator
We’ll now have Q&A session. [Operator Instructions] The primary query is from Hyundai Motor Safety [indiscernible]. Please go forward.
Unidentified Analyst
Howdy. My title is [indiscernible]. Thanks very a lot for giving me this chance to ask you questions. I’ve three questions altogether. To start with, not too long ago we’ve China actual property coverage. However regardless of the optimistic insurance policies, I do not suppose that the financial restoration outlook is that optimistic. So This autumn, and likewise subsequent 12 months, how do you foresee the sale market? I would prefer to ask to your opinion.
And second query, in the identical line, if you happen to had been to auto, I believe that within the latter half you should have some ASP improve. Nevertheless, for households and for different functions, what’s your forecast for ASP?
And my remaining query has to do with the cell making capabilities. I believe that in the long run the potential will improve. Abroad manufacturing capabilities, what would that be sooner or later? And likewise, HyREX, will they be producing utilizing HyREX applied sciences going ahead? Thanks.
Han Younger-Ah
Thanks very a lot to your questions. From POSCO Advertising, we’ve Mr. [indiscernible] he’s going to take your questions.
Unidentified Firm Consultant
Howdy, my title is [indiscernible] group chief of Advertising Technique Workplace. With regard to China actual property coverage. As you in all probability know, in September, Chinese language authorities launched a coverage to spice up its actual property market. Even when you have some properties acquired previously, if you happen to’re buying housing as we speak, then you are going to be acknowledged as first time purchaser and might be receiving a number of incentives. And at the moment, actual property transactions did improve. Nevertheless, if you happen to take a look at the present state, sure, it’s climbing upward. Nevertheless, I do not suppose that it is that vital to have an effect on the general Chinese language economic system.
And with regard to This autumn metal market outlook and for housing additionally shipbuilding, you’ve got additionally requested for ASP. Properly, principally this 12 months for 2023, our market outlook was that within the first half it is going to be fairly lively. In Q2, we thought that it is going to go up, and likewise ranging from Q3, it is going to flip weak. And This autumn, we thought that the weak spot will proceed. So we stand by that manufacturing. China’s manufacturing discount, which we anticipated will not be actually materializing due to the Chinese language authorities’s coverage and likewise the enterprise deterioration, the manufacturing discount did not actually happen. So I believe that This autumn market outlook goes to remain weak identical to Q3. And likewise ASPs for various industries, for auto, within the letter F in comparison with the primary half, due to the voluntary prices and gasoline prices, we did end discussing the ASPs and for shipbuilding, the shipbuilding trade general is kind of optimistic. Nevertheless, we’ve but to conclude ASP discussions. For dwelling home equipment or housing, the market outlook will not be that good and so we will keep the [indiscernible] priced. Thanks.
Unidentified Firm Consultant
For abroad capability improve, enable me to make some feedback. POSCO does have upstream manufacturing. Now we have about 5 million tons capability. And if you happen to take a look at our long-term coverage or technique, 14 to about 9 million tons addition goes to be made sooner or later. However as you in all probability know, we’ve India and Indonesia and the US the place we plan to make investments. So we have to greater it so we do have a demo plant slightly in 2026 and 2027 goes to be working and for [indiscernible] plant, I believe that we can have it up and working past 2030. So our mid to long run abroad capability addition plan is that the normal arc furnace or electrical arc furnace goes for use. The HyREX, once more, I believe that we’ve to attend till previous 2030. Once more, we are attempting to give attention to the capability will increase in India and likewise Indonesia. Within the case of Indonesia, if you happen to take a look at carbon neutrality, the goal is 2060, and in India, it is 2070. And so, if you happen to take a look at its nations, upstream metal making, we’ve metal arc furnace, the normal methods of creating metal. Thanks.
Operator
Subsequent query might be Mr. Kim Sang-hoon from HI Funding Securities. Go forward.
Kim Sang-hoon
So I’m Kim Sang-hoon from the HI Funding & Securities. I’ve three questions. First is the next. So proper now we see that uncooked materials is kind of robust and I used to be questioning concerning the future prospects and I’m not seeing funding. So I am questioning are we seeing an under-evaluated space turning into robust or not. So there have been some questions on it so I wish to ask you to your forecast. And second is concerning the lithium and as for the battery supplies we’re seeing a lower in value, so I wish to ask to your view on the long run forecast. And within the worth day, you additionally talked about some earnings launch. I used to be questioning had been there any adjustments from the earnings that you just mentioned through the worth days as in comparison with now?
And proper now, [indiscernible] in order in comparison with different metal firms, do we’ve any issues that we will differentiate in opposition to them like OEE or one thing like that? So if we do have any questions, please tell us.
Han Younger-Ah
So let me first reply the query concerning the uncooked supplies. Really, we can have Mr. [indiscernible] from uncooked supplies workplace two answering the query. So head of uncooked supplies workplace one might be answering the primary query. And the second, we can have the pinnacle of lithium battery supplies enterprise, [indiscernible] And as for the hydrogen and ethanol we can have the pinnacle of metal enterprise [indiscernible] answering the query.
Unidentified Firm Consultant
So I’m head of uncooked supplies workplace [indiscernible] so I believe you all skilled the coke and coal expertise within the second quarter so we’re seeing stronger coke and coal for the next cause. So in Canada and Australia we’ve seen a lower within the labor energy and there was a strike within the Australia mine. So this precipitated some issues. So the provision quantity decreased as in comparison with 2020. Nevertheless, by way of demand, India’s ore mines really elevated and expanded. We’re additionally seeing the [indiscernible] plant being operated in India. We had been seeing a strong demand and that is why we noticed a rise. Nevertheless, while you do take a look at the long run forecast, there’s the ESG challenge. So in the intervening time, further funding is not going to be straightforward. And that’s the widespread opinion throughout the trade. And as for demand as properly, we even have ESG in line. Subsequently, there isn’t a huge issue for a rise there. That signifies that subsequent 12 months or the 12 months after, for a 12 months or two, as in comparison with demand, there could possibly be a slight scarcity of the provision, about 1 million to 2 million. And as for the value, it could possibly be maintained or there could possibly be a slight improve, so there’s a risk like that, however in the long run, we do not anticipate the value to extend by massive as a result of there aren’t any components.
And as for POSCO as properly, in keeping with the carbon neutrality roadmap, we’re seeing a lower in demand as properly. And we’re saying that there might be no points in getting the provision from our coking coal mines.
Unidentified Firm Consultant
And I’m head of the lithium battery materials enterprise, [indiscernible]. And as for the cooking coal and the lithium-nickel battery costs, we’ve seen a lower within the value. And also you additionally requested concerning the future enterprise areas. Not too long ago, with the secondary battery metros, we’ve seen a drop in value as in comparison with the earlier 12 months. So final 12 months, the value really there was an irrational value as a result of we couldn’t meet the demand. So it really elevated irrationally as of final 12 months. And once we take a look at the businesses within the trade and when you’re specializing in Chinese language firms, we noticed a drop within the value. So I believe we heard that we’re going again to the tempo the place we’re going to a rational value.
And after the third quarter, the EV demand is going through a short-term adjustment as properly. And this was additionally mentioned within the media some time in the past as for the financial downturn in Europe. And with the electrification, there might be a short-term adjustment. And in opposition to this backdrop, firms like Volkswagen will see the gross sales quantity reducing as in comparison with their plan. And till the tip of this 12 months and till the start of subsequent 12 months, there could possibly be an impression and there have been opinions saying that. And as for the value of the uncooked supplies and the lithium and nickel, it must meet the demand. And as for the lithium value, it’s round KRW23,000 and as for the nickel value, it’s round KRW18.5K.
And proper now [indiscernible] Markets forecast. In 2030 the lithium value is predicted to be between $25,000 to $35,000 {dollars}. So the forecast has dropped by round $5,000 as in comparison with the primary half. So within the July IR we’ve really anticipated it to be round $30,000. Nevertheless, for the short-term value, it’s nonetheless written as round $35,000 to $40,000. Nevertheless, we’re seeing some adjustment out there, however it’s a bit decrease than anticipated. So we expect there to be a restructuring of the costs out there quickly.
And as for our enterprise areas, Within the mid to long-term plan, we’re not that far off from that $30,000 that we anticipated. And as for our income, particularly for — even when there’s a drop within the lithium value, we’re going to see a drop within the unit value as properly. And as for the — as a result of there might be a drop within the lithium ore value as properly, we’re seeing that will probably be fairly steady for us and that might be all.
Unidentified Firm Consultant
So let me give my opinion concerning the hydrogen discount metal. As for the hydrogen discount metal, the HyREX, we do not actually have a proper reply to it. Nevertheless, while you see the areas like Europe, Japan, and Korea, there are totally different approaches to the HyREX. As for Europe, it makes use of the shaft technique after which provides the pellets to cut back the hydrogen. And this has to make use of the excessive grade pellets. And as for our full use of the tactic, we will really use the powder pellet in order that has a bonus there. And the tactic utilized in Japan is to place hydrogen into the furnace and to enter CCU. Nevertheless, there are some skepticisms as for CCU being potential or not. And that is additionally associated to the financial conditions. Proper now in every of the areas, mills are growing their very own approaches and know-how.
And as for the HyREX and the fluidized discount furnace technique that we’re engaged on, that is one thing that the promising metal firms are additionally and we’re additionally finishing up technological cooperation. In order for the fluidized discount furnace technique, we imagine that it is a aggressive technique for us and subsequently we’re persevering with to drive it ahead. However for the shaft technique that’s being utilized in Europe now, we’re monitoring the know-how and if crucial, we will be certain that it’s utilized. So we’re at present monitoring many alternative applied sciences and if they are often utilized, we’ll attempt to work it out.
Operator
Subsequent query is from [Hana] (ph) Securities, we’ve Mr. [indiscernible]. You may have the ground.
Unidentified Analyst
Sure, thanks very a lot. I am from Hana Securities. Thanks very a lot. I even have three questions. To start with, the lithium value. You probably did touch upon it already, however if you happen to take a look at your earlier projections, $25,000 to $35,000 value vary, you talked about that it is going to be someplace comparable. Nevertheless, what we fear about is that in comparison with the present value, the lithium value might go down or [indiscernible] even additional. So that’s the market concern. So do you will have such an expectation? Do you see that the value might plummet that a lot? And likewise, you see them and likewise the U.S. carbon emission-related penalties and commerce obstacles, purposes. With regard to these, I believe that they are going to be carried out ranging from 2026 if that’s the case. Then, like Article 32 Commerce Act of the U.S. And likewise further safeguards from the U.S. for metal. Towards these measures, I believe that — do you suppose that the U.S. and likewise EU will elevate their rules? And eventually, if you happen to take a look at the newest media studies with regard to POSCO, we hear loads about labor strikes. So are you able to present us with some updates about that challenge?
Unidentified Firm Consultant
Sure, thanks very a lot. With regard to lithium value, I want to invite Mr. [indiscernible] head of lithium battery supplies enterprise to reply. And [indiscernible] and likewise commerce rules and carbon emissions associated points, I want to invite Mr. [indiscernible] head of Worldwide Commerce Affairs Workplace to reply. And with regard to labor strikes, I want to ask Mr. [indiscernible] head of Finance Workplace to reply.
Unidentified Firm Consultant
Sure, thanks very a lot. I want to take the primary query about lithium battery supplies, lithium battery costs or lithium costs. Now if you happen to take a look at Chinese language OEMs and procurement websites, what’s the ample degree of the lithium value? That was the query. And the reply from OEM was that, it is round $25,000 to $35,000 per ton. The reply was that from EV’s perspective, that value vary is appropriate. And in actuality, if you happen to take a look at lithium trade $20,000 or if the value goes under $20,000, then new mine growth goes to be delayed. So that’s the general remark. So once more, at present the value is about $22,000, $23,000 per ton. Now if the value goes additional right down to $20,000, I believe that’s going to be the all-time low.
Then if I believe that — if we won’t have a ready yield, I believe that that value vary goes to remain for an prolonged time period. Prior to now, again in 2019, the lithium value was under $10,000 or simply about $10,000, but it surely’s not possible anymore as a result of at that cut-off date that lithium got here from South Lake, lithium, the quantity was actually restricted. Brine lithium was the kind of lithium and the price was really very low. Nevertheless, the lithium — brine lithium that we get now not comes from Argentina or Chile. Most of them are lithium ore and in comparison with Salt Lake lithium the fabric price is far greater. So I imagine that the lithium value is not going to transcend under $10,000 and I believe that with a view to keep the yield it is going to be round $20,000 that’s going to be the value vary going ahead and that’s the trade consensus in the mean time thanks.
Unidentified Firm Consultant
Sure. I’m [indiscernible] from Worldwide Commerce Affairs Workplace. So the query was the US-EU and GSSA or World Sustainable Metal Settlement. And if there’s an settlement, EU CBAM and likewise Part 23, how will they be affected? That is the query, I suppose. Properly, In the event you take a look at the media studies, I believe that it was final Friday, the chief council and likewise President Biden additionally had a summit assembly. And in that assembly, they’d a dialog about GSSA. And we anticipated that there was going to be a conclusive settlement from that assembly. Nevertheless, if you happen to take a look at the joint assertion that was produced, you possibly can see that though there was intensive progress, there must be further dialogue. So they are going to take two months’ time with a view to make some extra dialogue and someday subsequent 12 months, early subsequent 12 months, they are going to announce the conclusion. So October onwards, the 25 tariffs on the sale goes to remain as is. So EU and the US, in the event that they agree on the GSSA, then I believe that POSCO and different Korean steelmakers, if they’re to export to the U.S., then I believe that the export tariffs projection is that relying on the GSSA settlement between the EU and U.S., I believe that our tariff goes to be determined as properly. And GSSA and likewise EU CBAM, I believe that the person firms might be considerably affected and so from going onwards we’re going to attempt to get info additionally, have a standard entrance along with different peer firms. And the Korean authorities can also be very attentive about this challenge as properly. And I believe that it’s having an lively dialogue with the U.S. Thanks.
Unidentified Firm Consultant
Sure, with regard to the labor union, I want to give you some updates. As you in all probability know already, October 2nd, the labor union determined that they might not agree on the collective settlement. And likewise, they’ve requested for a mediation to a authorities authority. And consequently, we had a two-round assembly convened by the labor committee. We attended the assembly and the mediation interval was altogether about 10 days and we really prolonged that to 10 extra days. So by thirtieth of October, we’re going to have a remaining mediation assembly.
So [indiscernible] twenty eighth and twenty ninth, they are going to be having a vote to resolve whether or not or not they are going to go on a strike. So, twenty eighth and twenty ninth of October, the labor union will get their vote outcomes and if the bulk vote agrees to strike and if the mediation assembly breaks down, then it’s potential that they might have a authorized labor strike. However as you in all probability all know, POSCO and the labor union, for the reason that basis of the corporate has constructed a really constructive relationship and to date we’ve by no means had a labor strike. So this time round I believe that our staff will pull their collective knowledge to give you an answer. And, after all, the administration goes to make all our efforts in order that we will give you an inexpensive compromise. Thanks.
Operator
Subsequent query might be from Mr. [indiscernible] of NH Funding and Securities. Please go forward.
Unidentified Analyst
Hello, I’m [indiscernible] of NH Funding and Securities. I’ve two questions. The primary query is a following. So it’s associated to the rise within the shareholders’ fairness. In order for the shareholders’ fairness proper now, so it’s a little over 20% by way of the worth. So I used to be questioning, is that this a bit too massive? So do you will have any plans for extinguishment of these stops?
And secondly, close to the [indiscernible] lithium answer, as soon as it begins its operation, then as for the uncooked supplies, when these are being bought and when the completed items, the lithium oxide is being offered, what would be the benchmark index that you may be utilizing? And when you’re buying the uncooked supplies or when you’re promoting your merchandise, what would be the level the place you’re referencing these benchmarks? So which period level of the benchmark are you going to be utilizing for these indices?
And final query. And as for the Argentinian [indiscernible], it has been carried out. And what’s the money price that you’ve got in thoughts at POSCO?
Unidentified Firm Consultant
So that you requested concerning the shareholders’ fairness. So Ms. Han Younger-Ah from the IR workforce might be answering. And as for lithium and Argentina operation, Mr. Lee Kyung-seop, the pinnacle of lithium battery supplies enterprise might be answering.
Han Younger-Ah
In order of the whole numbers of shares issued, we’ve 10.3% being captive. And we had the convertible bonds that we issued earlier than and that’s underneath the Korean Securities Establishment and that’s round 3.8%. So it’s really lower than 7% by way of the shares that may really be used. And we really extinguished 3% final 12 months. And we really made some shareholders’ restoration final 12 months, I imply, within the earlier years as properly, and we will make further issues. Nevertheless, close to the extinguishment of further treasury shares, we do not have something in plan. And when we’ve further funds afterward, then we’ll take into account our monetary conditions and be capable to report back to you.
Lee Kyung-seop
And I will add concerning the lithium half. As for lithium, By way of gross sales, while you take a look at the current commerce, it is all primarily based on the fiscal markets. And likewise the uncooked materials is predicated on the quick market as properly. Nevertheless, when we’ve long-term buy and contract, then we additionally use different, like Asian steel, Shanghai steel, or [PLATS] (ph), after which different benchmark indices that we’re mixing. So we combine round 5 totally different benchmark indices and we’ll use the imply or the median relying on the buying and selling accomplice. And as for the market value, the one that’s mirrored probably the most properly is the quick market. So the spot buying and selling is usually performed on this market. And as for the time level, as for the PPLS, for the ship, we’ll get a median of these after which we’ll use it as a formulation for the benchmark value. And as for lithium gross sales, we use the typical value from the earlier month on a normal foundation. And that’s what is on the contract for PPLS in the mean time.
And as for PPLS, with Pilbara, we’ve accomplished the uncooked materials buy contract and we have already got 5,200 tons in Gwangyang plant already to arrange for operation. So we’ve already completed with the settlement. And as for Argentina and the money price there, we’ve really made some comparisons and it’s kind of troublesome to inform you the precise worth now, however we’re on the topmost tier. And that’ll be all.
Operator
Subsequent query is from [indiscernible] from [indiscernible] Safety. You may have the ground?
Unidentified Analyst
Sure, thanks very a lot. My title is [indiscernible]. I’ve two questions. First query is that this. Now, on the worth day, you talked concerning the lithium value goes to be round $30,000 and primarily based on that you just talked about EBITDA and likewise income projections, now if that’s the case if our lithium costs — lithium costs really went down $25,000 and likewise $20,000 if that’s the case I believe that Salt Lake and likewise [indiscernible]. What can be the margin per uncooked materials and apart from the margin per materials, what’s money price like? What are the objects on the money price? And what are your presumptions or assumptions?
And query quantity two, I perceive that you just began regular operation of one among your plans. So what’s the cycle and what’s the working margin, working revenue margin at this level?
Unidentified Firm Consultant
Thanks very a lot. On worth day for lithium value, we projected that it is going to be round $25,000 to 2030. Not too long ago, nevertheless, with the costs, there’s a risk of a decline by about KRW5,000. Now, with regard to that, for lithium ore, out of the whole price, iron ore takes about 60% to 70%. So if the lithium value goes down, then the uncooked materials, the most important merchandise of the uncooked supplies may also go down, so it is extremely unstable. So I want to say that it isn’t going to have an effect on the revenue that a lot. And relating to Salt Lake, the uncooked — apart from the pumping price, there should not that many variable prices. So apart from that pumping price, slightly the Salt Lake price, once more, not different price objects are vital. However for long-term projection, OP, I believe that it isn’t going to be that vital a distinct from our authentic projections that we shared on worth day.
In fact, quick time period, this 12 months and subsequent 12 months, sure, I could possibly be fluctuating slightly, however the timing of our commercialization goes to be, PPS goes to be accomplished on the finish of this 12 months and it is going to be licensed early subsequent 12 months and ranging from the second half of subsequent 12 months we might be beginning to produce and promote. In Argentina I believe that we are going to be additionally beginning to promote ranging from 2025. So by the point we promote our merchandise, I believe that lithium costs will grow to be — might be again on the traditional monitor.
Unidentified Firm Consultant
And as to your [indiscernible] query. I believe that final Could we began our operation. At this cut-off date, certification-wise, the Korean authorities really grants certification and we’ve some uncooked supplies that associated firms getting the certifications and the targets for us is that by the tip of this 12 months we do regular operations and qualify for all the standard requirements in order that by first half of subsequent 12 months we full all certification course of in order that within the second half of subsequent 12 months we will begin rolling out licensed high quality degree merchandise. What’s optimistic at this cut-off date is that we are attempting to align ourselves with the yield goal.
Now the restoration charge I imagine is kind of good for lithium. Our goal was about 85% restoration. Nevertheless, final month it reached as much as 93%. That is for lithium. So technology-wise, I believe that we see outcomes that’s larger than our expectations. So sure, we’re going to get this certification by early subsequent 12 months and begin producing, ranging from the letter of subsequent 12 months.
Operator
Subsequent query might be [indiscernible] Securities. Please go forward.
Unidentified Analyst
So whats up, I am [indiscernible] Securities. I’ve two questions. First, as mentioned earlier than, curiosity as for POSCO [indiscernible] completion, even while you do take into account it and it takes round six months to 1 12 months for the tip of the certification, then as for POSCO [indiscernible] what’s the utilization charge that you just’re anticipating for subsequent 12 months and while you take a look at your entire lithium enterprise what’s the revenue steering that you’ve got in thoughts so if you happen to might tell us that might be very useful.
And secondly as for the lithium enterprise and as for the nickel, will we additionally want battery certification? And as for the lithium enterprise, and in the identical method, do we’ve to undergo a six month to a 12 month certification? Is there a commodity that requires that lengthy by way of certification. And likewise with the EV metal plate, how a lot of the EV motor core can we produce with {the electrical} metal? And likewise, can we really promote it as one thing that we will use for the EV motor core.
Unidentified Firm Consultant
Close to PPLS, let me present a solution to it. So within the earlier IR and in our Worth Day, we talked concerning the following. In order for ramp up interval, we thought we’re concentrating on round 12 months. And in TRUCE, the inner goal is the next. In order for the ramp up interval, we are attempting to tug it in to round 9 months, so we hope to speed up that interval. And if we will be quick, then as for PPLS, we’re anticipating within the second half of subsequent 12 months or the third quarter, we will really goal regular operation. As for the certification for lithium within the precursor, we add the lithium there. And subsequently, for the cathode firm and the battery firm, we want certification each for each.
And proper now, Future M already has the cathode enterprise being licensed in there. So subsequently, we imagine that we can shorten the certification interval. Usually, certification takes round 9 months to 12 months, however with Future M and with the battery firm, we’ve talked and mentioned that we will goal round six months of the certification interval. And that’s the discussions that we carried out. And as for the lithium companies, import steering and the revenue steering, we are attempting to ramp it up inside six to 9 months. And afterwards, if we will promote it at a traditional degree, that’s one thing that we’ve in goal. And as for lithium and as for PPLS, upfront, even with out certification.
As for the lithium electrolyzer materials and et cetera, we are attempting to cooperate with these firms in order that we will promote our [indiscernible]. So we’re already specializing in the advertising actions that we will do earlier than we get the certification and that has been considerably accomplished. Concerning the kill, the certification course of is a bit totally different from that of lithium. So that is 1 that goes right into a precursor. And in [indiscernible], if we get a certification from the cathode firm, then that might be the tip. Nevertheless, generally, battery firms, once we are coping with a brand new manufacturing facility, we undergo one other quick type of the certification course of.
And close to electrical, metal, and EV motor core, I believe Mr. [indiscernible] group chief of the advertising technique, would be capable to reply that.
Unidentified Firm Consultant
So I believe you requested concerning the variety of the EV motor cores per ton. Normally in 65 kilograms, will probably be round 15 items being made. And as for detailed knowledge, the IR workforce might be sending you the main points.
Operator
Subsequent query is from [indiscernible] from BBS. Please go forward.
Unidentified Analyst
Sure, thanks very a lot for the chance. I’ve two questions. Principally, This autumn, what’s your projection to your earnings? And subsequent 12 months, I believe that there are a number of uncertainties. So what’s your small business efficiency outlook for subsequent 12 months? I want to ask the general profitability projection. And second has to do with nickel profitability. I believe that on the Worth Day there was a presentation made and primarily based on that I believe that with regard to nickel there have been three huge funding associated objects. You talked about Indonesia and second precursor in Korea, the nickel refinery, I suppose. I believe that it is nickel surfate or precursor and likewise Indonesia MHP. So these tasks, are these nonetheless ongoing? That is my query. The rationale why I ask is as a result of the Indonesian authorities not too long ago, due to nickel costs, determined that it isn’t going to grant any new tasks. In order that was launched as information to report. And likewise, nickel mission, I perceive that in September you’ve got launched the mission already and I perceive that POSCO Holdings has 49% of the stakes and the opposite accomplice has 51% stakes. I want to ask who your Indonesian accomplice is, who your JV accomplice is. I believe it is one thing that you would be able to present us. And likewise, what’s the money price? So these are a few of the questions associated to your nickel tasks. Thanks.
Unidentified Firm Consultant
Thanks very a lot. I am the pinnacle of promoting technique workplace. You talked about This autumn end result. Properly, as I discussed earlier, This autumn market outlook will not be that optimistic. I believe that it is going to be kind of keep weak in continuation of Q3 outcomes. So principally, with regard to our gross sales methods, we will give attention to shipbuilding and likewise auto making industries the place the enterprise outlook is kind of optimistic. So we’ll be specializing in these for ourselves. And as I discussed earlier, we’re going to give attention to cost-cutting efforts as properly internally so we will keep excessive profitability. And home demand will not be that good so we might be specializing in exports. In fact, export costs are nonetheless low however we will give attention to altering our gross sales combine and attempt to promote extra excessive worth added merchandise with a view to keep profitability.
And the second query has to do with 2024 market projection. Properly, not too long ago, I believe that in October at WSE, there was a worldwide metal market projection and the outlook was that it is going to develop by about 2.9%, which is kind of just like 2023. However in Korea, it is going to be round 1.1%. So in comparison with 3.3% of this 12 months, I believe that it is going to decelerate even additional subsequent 12 months. And China, I believe that it is going to be staying flat. So Q1, 2024, till then, I believe that This autumn market outlook, that weak spot goes to proceed. And if you happen to take a look at SNS and Russian Putin-related points are developing. So once more, the Ukraine and Russia warfare and the current Israel and Palestine warfare. And we even have a excessive rate of interest and likewise excessive oil value points. So due to all these combined components, I believe that we’ve to attend till Q1 subsequent 12 months to get some clear understanding concerning the 2024 market projection. Thanks.
Unidentified Firm Consultant
I would prefer to touch upon nickel. I believe that as I discussed earlier, Nicole met, I believe that we acquired all of the permissions and we’ve damaged floor and we’re constructing at present actually quick and likewise MHP enterprise. In Indonesia we did not have any points concerning approval and permission. And with regard to [indiscernible] money name, I discover it troublesome to share with you the concrete numbers. However relating to price evaluation, in comparison with our competitors, I believe that we’re producing [indiscernible] at a really low value. It is like $1,000 cheaper in comparison with our competitors. So we imagine our product might be very aggressive.
And with regard to JV accomplice, I believe that we can disclose the title of the JV accomplice at an applicable time sooner or later. Thanks.
Operator
We’ll take the final query. And final query might be coming from Ms. [indiscernible] Funding and Securities. Please go forward.
Unidentified Analyst
So Howdy, I am [indiscernible] Funding and Securities. I’ve a query about Argentina. Since we’re at 4,000 meters sea degree, I heard that there are some prices related to it, so I used to be questioning concerning the transportation prices. Since we do not know concerning the highway scenario in Argentina, I used to be questioning what you are doing together with your transportation prices and what’s the anticipated price of transportation in Argentina.
And secondly, you mentioned you even have a number of the long-term contracts as properly. So might you give some concepts concerning the spot costs by way of these long-term costs as properly and what can be the give attention to the nickel costs as properly?
Unidentified Firm Consultant
So really as for the transport and the transportation price and as for the logistics route, we’re working with one other POSCO subsidiary, so we’re making an attempt to develop the optimum route for transportation. There are two methods to go from excessive altitude. 1 is to go straight from Chile. There’s the best way of additionally going by means of Buenos Aires of Argentina by ship. If you end up within the ocean, as for the transportation price, it’s actually not that totally different from the earlier transportation price utilizing ships. However while you’re going from the excessive altitude to the marine areas, so while you’re going from the Salt Lake to Chile and to Buenos Aires, once we calculated the transportation price, it is fairly tough, but it surely was barely over $300. However as for the correct quantity, we’re nonetheless within the means of calculation. However nonetheless, as in comparison with the precise lithium value, the transportation price will not be too burdensome.
And as for the long-term contract for lithium, earlier than 2019, we used to have 5 to 10 12 months deep low cost to a long-term contract. However since 2020, as we are the present lithium enterprise homeowners, we do not take it for too lengthy. Some we’ll promote at spot and a few we’ve round three to 5 12 months contracts. And as for us, our plan is the next. And along with our group firm Future M we will prioritize provide, so we will prioritize the amount that we want first. And customarily, we will have a contract that goes much more than 10 years if crucial. So we’re proper now within the preparation of creating the contract. So if potential, we wish to have greater than 70% of the amount as a long-term contract that lasts greater than 5 years or 10 years. And just some we can have spot contracts and be responding to the market by way of the market situation. And as for the value of nickel, it is round $18.3K. And till second quarter, the value of nickel, really it is for nickel sulfite, till final 12 months we had round $2,000 premium. However on the first half this 12 months in China, close to nickel licensed, there was a provide. Subsequently, it went to a destructive worth. However in October, As for the value of nickel sulfide, we’re seeing a plus $1,000 premium. And as for nickel in EV, we’re seeing a steady place. However for the present value, the long-term projection that we’ve was $20,000, however as for till 2025 to 2026, we expect it to be round $19,000, and that’s the forecast out there.
Unidentified Firm Consultant
So we want to thank all of the contributors who’ve joined us as we speak. So we’ve confronted some financial difficulties. Nevertheless, POSCO is specializing in long-term development methods with out faltering. And now we’ll conclude the 2023 Third Quarter Earnings Launch Convention Name. Thanks.
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