Good afternoon. Thank you for joining us for the POSCO Holdings Earnings Call. Today we will have a presentation by POSCO Holdings followed by a Q&A session with our participants. [Operator Instructions] Now let us begin POSCO Holdings earnings presentation for the first quarter of 2025.

Greetings, everyone. I am head of the Finance and IR Division at POSCO Holdings. My name is Kim Sung-Jin. I'd like to extend my appreciation to all investors, who are attending this meeting for taking time out of your busy schedule. As we're all aware including investors, the first quarter witnessed the global tariff war materialized, which has intensified economic uncertainty. Despite this headwind, POSCO Holdings achieved improvement against the previous quarter. In Q1, consolidated revenue hit KRW17.4 trillion and operating profit KRW570 billion. Looking at the general overview by key businesses, despite lingering volatility in export volume and FX rates, the domestic steel market is showing moderate signs of stability. In addition, iron ore and coking coal prices have also become more stable. POSCO Future M is selling more CAM and M, while POSCO International's gas field business continues to perform well. While these Q1 results are insufficient to jump to the conclusion that we have made a turn toward clear recovery, we do however have signals that allow positive assessments little by little. Therefore, barring unexpected exigencies out of the left field we are carefully optimistic that things cannot get any worse from here. Next I turn to a topic that I'm sure many have read in the media. I'd like to address our MOU signed with Hyundai Motor Group. As was illustrated in the POSCO Holdings corporate value enhancement program released in December 2024, we have to find a strategy to invest in the overseas upstream steelmaking process and we have been taking a close and hard look at the high growth market of India and high profit market in North America. As an outcome of that plan in October last year we signed a comprehensive MOU with JSW Group in India to seek collaboration in steel,…

Please refer to Page 4 of the presentation materials. On a consolidated basis our Q1 revenue and operating profit came in at KRW17.4 trillion and KRW568 billion respectively, due to a market downturn in the previous quarter and structural adjustments, operating profits dropped to as low as KRW95 billion but has since rebounded across all business segments to KRW568 billion reaching the same level as the previous year. EBITDA reached KRW1.6 trillion and our consolidated CapEx for the quarter amounted to KRW1.5 trillion. Now by business segment. Industrial, the operating profit improved from 2.3% to 3% Q-o-Q. What's particularly notable is that POSCO's OP margin recovered to 3.9%. Overseas steel business also showed improvement. Thanks to strong performance in our engine operations and reduced losses at our China's, Zhangjiagang plant. As for the energy materials, thanks to POSCO Future M's turnaround to profit, overall operating losses were reduced by half Q-o-Q. But due to ramp-up of newly built plants and investment losses continued. As for the infrastructure segment, overall performance remained quite solid. Now looking at Page 5, you will find a summary of the MOU on mutual cooperation with Hyundai Motor Group. Our CFO in his remarks earlier mentioned about the strategic rationale behind what we're seeking to pursue. In essence, it includes cooperation in entering the US upstream Electric Arc Furnace operations and in the Battery Sector, we'll work together on investments in key materials supply chain establishment and joint technology development. Let me elaborate further on page 6. POSCO currently operates not only in Korea, but also in China, Vietnam and Indonesia our upstream steel production basis, while running sales subsidiaries downstream processing lines and processing centers around the world to sell made in Korea products globally. As global steel markets increasingly continue to regionalize and form…

We will begin the Q&A. [Operator Instructions] Yuanta Securities, Mr. Lee. Please pose your question.

Hello, my name is Lee, I'm from Yuanta Securities. Low performing businesses and restructuring of those businesses are ongoing. The PZSS office in China I think deficits have been continuing for some time. I think it's been 12 consecutive terms that it has gone into red ink. For PZSS, do you have any plans to improve its performance? Or has it just fallen into the pit of low-performing businesses and perhaps is it being considered for liquidation? Second question is about energy materials. Of course, the size of the deficit has been reduced, but still there's an operating deficit of about KRW100 billion. So I understand that some of these plants are in ramp up stage initial stage of operation, so some of this loss is inevitable. But again, KRW100 billion of deficits is quite large, and is this a repeating pattern, if this continues for about four quarters, it could add up to about KRW400 billion of deficits. Of course, the energy industry is difficult to predict. However, what are some of the projected revenues as well as operating profits that you forecast for the upcoming quarters. And I know it's difficult to look out to 2026, but last year, during the Value Day event, you proposed some revenues and EBITDA numbers. So at this point based on the numbers released last year in energy materials, what are some of the new projections? What are some adjustments downward? Adjustments that you can make at the moment. My last question. There was an earnings report at two o'clock. And I think Chairman Seong has hinted at the possibility of raising more capital. And so looking at Posco Future M, is there any possibility of raising more capital? Or do you not have any such plans in the works?

The first question will be answered by the sales management department and the second question I will address that.

So on PZSS and if there are any plans to improve performance, I think that was the gist of the question. In China for several years, there has been an overcapacity of stainless steel and so we have very little recourse but to look at restructuring. Same is true for PZSS. We've made diverse efforts to improve its performance. And at headquarters in the first half of last year, because we looked at many offices that may have to fall into low-performing assets subject to liquidation. This obviously fell into that list. But we have to look at the Chinese market situation as well as our own corporate strategy and the stainless steel market. And so we have some restructuring efforts going on, but we do need to read the situation. Within the year, we believe that we will be looking at a few more variables to make a more definitive conclusion on this The second question I would like to address. Energy materials companies include HY Clean Metal and PZSS. These are in their initial stage of operation. Some are still being constructed. So we are in ramp-up stage and some of them are supplying to customers. For those plants in ramp-up until we reach a level of stabilization, there is going to be fixed cost that will be generated. And for those who are filling customer orders, we have to provide a discount because they have not yet received quality certification. So it's going to be difficult to turn to a profit this year. That's what I can say for sure. But sequentially, we will be getting customer certification. And so starting in the latter part of next year, we will begin to see some black numbers in our operating profits. By 2027, most of the companies will…

Next question will be by Hyun Park, Mr. Park from Daishin Securities.

I am Tae Lee from Daishin Securities. Thank you very much for giving me the opportunity to ask the question. I have two questions, so I would like to ask a question about the production cost that was announced by the Steel industry, so about 50 million tons of estimate that has been revealed. So I would like to know if that could be feasible and when can we expect the production to be stabilized and how do you see the future? And do you believe that the production expansion could be possible for the future? And the second is about the integrated mill investment going on in India. So what is the progress on that? And also you've made investments in the secondary battery materials and you're also investing in the steel milking as well. So I would like to know if these two initiatives are taking place in tandem or in parallel.

So the first question I think that Mr. Hong Munsie from the POSCO Marketing strategic Office can answer and I will answer the second question. Yes, I am the head of the marketing strategy office at POSCO. So there was an announcement of the output cut by and I think the volume is about 1 million tons, which is minimal in terms of impact on the market. And at the beginning of March, there was the Chinese Congress party meeting and there was an estimate that the 50 million tons of production cut could be feasible so the output cut. Perspective it seems highly likely for the time being that because of the trade war as well as the Chinese government's production cut feasibility might not be also possible, because of the Chinese government's GDP growth and so forth. And there is an increasing number of private companies in the sector coming from China, so there is an influence coming from the Chinese government. So whether we'll be able to achieve the 50 million tons of production cut or not, I cannot be sure of that, but we can say that it is highly likely. So if the cut is made then of course, it's going to have an impact on the raw material prices and the prices of raw materials may go down. Stabilize, but if you look at the current steel prices as for the price, it is coupled with the raw materials prices, and if you look at the structure of our company, there is the automotive and electronics companies that are our clients. So you can see that we sign contracts price contracts based on semester or based on quarter. So we believe that the spread could go up to give us more profits going forward.…

Next question.

From iM Securities, we have Kim on the line.

My name is Kim Yoon Sang. I have three questions. So tariff barriers on reduced quotas as well as clarification. All of these create more intensified trade barriers. And so this hits not only headquarters but also overseas plants. So because of these intensified trade barriers, it leads to impacts on the sales volume and also impact sales plans. I'd like to know how it's impacting yours. And because of the adverse impact, we have to have some responsive measures. Of course, the possibility seems a little bit low, but because the quota has been eliminated, there is some impact to the steel business. So what are your countermeasures against these? And next is on hot rolled products, and so we have AD complaints have been filed, and if this were to impact Japan as well, how is Japan likely to react to this? And finally, there's been some adjustment in lithium price. I'd like to know what your projections are on the lithium price going forward.

First question will be answered by Mr. Jung Gi Seop [ph], and next by the International Trade Officer Mr. Hong Yoon-Sik, and finally from EJ Young from Energy Materials Business Management. My name is Hong Yoon-Sik and I'd like to address the trade barriers. How are our affiliated companies and overseas locations impacted? We have many overseas in various locations but by region the impact varies. Let's take Vietnam as an example. So even before the Trump administration imposed tariffs, there was already a 25% tariff and there are a lot of exports to the US but there are no additional tariffs that were imposed on steel products. But US bound Vietnamese made coated steel products. The countervailing taxes are between 40% to 140%, so it's very high. So POSCO Vietnam's cold rolled products, domestic sales could be impacted by this move. But US bound cold world products from Vietnam, I think will only be positively impacted by this. And the same goes to Thailand. We have a coating plant in Thailand. And they have US bound exports that are subject to the same level of tariffs. So the coating plant in Thailand also is likely to be positively impacted by this move and Mexico is the most largely impacted and originally we anticipated high impact, but when we analyze some of the final decisions that were made because of the USMCA mandate. For home electronics still if it is built in North America then there are some provisions that act in favor of some of the products that we make for the region. With the quota eliminated are we going to be able to sell more to the United States? While the quota may have been removed still that is imported into the United States, not only from Korea, but from all other countries are closely monitored, so we anticipate more sanctions, more restrictions and so I think our sales volume is going to be very similar to what we sold last year.

I'm the head of ITO. I'd like to answer the second question. In global steel market, we are seeing various movements such as the EU safeguards, as well as the UK safeguards that are being reassessed. Canada is also imposing new safeguards and they are collecting a team. Turkey and some of the ASEAN nations are also making separate movements in order to look into some anti-dumping issues. So in order to address all of these, I think protectionist measures are going to continue for some time. So the anti-dumping regulations against Japan by the Korean government, as well as other protectionist measures that we are seeing in the market right now, we are going to have to look at some of the traded volumes, as well as prices and to be able to devise diverse countermeasures. Exactly what kinds of countermeasures to take? We cannot give you any conclusions at the moment.

I am in charge of Energy materials investment office. You asked about the lithium price. Because of demand rise with EV market recovery, we are projecting a gradual price increase, but because of the tariff policies that are coming out of the United States that has added uncertainty and therefore it's become more difficult to predict. There are six agencies that predicted prices. Going forward, after 2025 all of those six agencies expect the price to rise and on average by 2028, the price will reach about $20,000.

Next question please.

Next question will be from Park Hyun-Wook from Hyundai Motor Securities.

Thank you for giving me the opportunity to ask the question. I have a few questions for you. First is regarding the Gwangyang electronic arc furnace that will be completed this year. So in terms of sourcing what will be the percentage between domestic and overseas, and I believe that it will be very difficult to source the scraps. And as for the Toyota, it acquired Radius recently. So when it comes to POSCO, are you going to acquire any steel scrap companies going forward? And as for the products that are produced from EAC what is the quality of that produced by EAS compared to the blast furnace, if you could elaborate further on that? And the second question is regarding marketing conditions. So in the latter half of this year, how do you anticipate the steel market when it comes to automobiles and ship building? How do you expect the supply prices to be? And recently regarding the Chinese steel plates, 80 tariffs have been imposed, but can we anticipate any price increase or increase demand sales? Do you see some impact or effects coming from those initiatives? And the third is regarding POSCO E&C. So regarding POSCO E&C there was an accident Gwangmyeong. So is there a cost that should be accounted for a one-off in the second semester -- second half?

Regarding the first question it will be answered by POSCO's Head of Raw Materials One Office. And the second will be by Mr. Kyung-Jin Chung [ph] and the third will be by Mr. Vu Yongdai [ph], who is the Head of the Infrastructure Business Management Office.

Yes. I am in charge of the raw materials. Yes the EF as you said will be completed by the end of this year, but according to our internal plan it will be completed by sometime May next year. And as for the steel scrap when it comes to domestic sourcing and investment we're going to safely secure it and HBI is an alternative so we consider investing and acquiring or purchasing HBI. So when it comes to the domestic and overseas sourcing percentage, I cannot clearly say what is the percentage, but we are very much focused on flexible sourcing but we mostly focused on domestic sourcing and going forward when it comes to the high quality scrap sourcing strategy so we will collect as much as possible scrap coming from our clients and then also sign a strategic partnership with our suppliers and in order to meet the increasing demand in Korea, we are going to invest in the collection hub so that we can still high quality scraps as much as possible. And we will also invest in the facilities to transform a low quality to high quality scraps. You also asked the question about our plans going overseas. Of course if there if there is a need we're going to fully consider that and we will explore some investment opportunities if opportunities arise. And when it comes to the quality so…

Hello I'm in charge of POSCO Technology Strategy. So in Gwangyang in 2026 in the first half we're going to complete EAF -- to produce low carbon products. So when we use the scraps as raw materials compared to the BS production there are lots of impurities. Such as nitrogen and so forth, but EAS we are in the current process of developing technologies that will minimize the impurities. And as for the automotive facility sheets in first we actually produce the internal interior sheets and according to the level of maturity and advancement of the technology we plan to also employ the reinforced sheets going forward.

Now I am in charge of the POSCO Marketing Strategy Office. You asked the question about the steel market outlook for the second half. Simply put if you look at the automotive sector in Korea we're seeing the impact of the tariff war and yet it manages to respond to those initiatives and there are some positive signals or developments that are taking place. But as for the construction sector it's been sluggish since last year and as for the home appliances it's very much related with the construction sector as well. So when it comes to the home appliances sector we believe that the market will be not as good in the latter half. But in terms of prices, as for the heavy plate AD filing last year there was the tentative tariff or provisional tariff that was applied and the Ministry of Finance and Economy confirmed on the provisional tariffs today. So this helps to minimize the inflow of products that are subject to unfair trade practices. So compared to last year when it comes to the retail market prices it has gone up quite a bit and we can expect some additional hike going forward. And when it comes to stainless steel products, there was a result regarding delayed in Vietnam products, and we saw more than 18% additional tariffs compared to the preliminary rulings so we believe that this will be very helpful in blocking the influx of products subject to unfair trade practices and this is going to have a positive impact on the prices as well.

Yes I am in charge of the infrastructure business management, so you asked the question about the accident in Gwangyang. So it was the 9.209 zone of the Xinan online. So it was regarding, when it comes to the demolition cost, of course, it should be accounted for on the books, but as for the 5-209 zone the operation has been suspended fully, so it's very difficult to calculate the cost, so we can say that, it will not be accounted for in the second quarter and what is fortunate is that we have an insurance for that construction site. So when it comes to the demolition as well as the restoration work, we'll be able to be covered to a certain level to a high level by the insurance.

Next question, please.

Aishwarya Pai [ph] 0from Nomura Securities. Please ask your question.

Hi. My question is regarding the recent announcement of POSCO trying to issue a $1 bond. This one that announced a few ago. I'm trying to see if there's any update on that. And my second question is regarding the recent announced Hyundai JV and what impact is expected onto the leverage from?

[Foreign language] And the first question will be answered by the head of finance office and the second question by Mr. Ivan [ph] Steel Business Management Office.

So dollar denominated issue bond issuance progress on that let me address that. So we had this in the plan, but on April 1, with the announcement of the US clarification, the financial market fluctuated wildly, so not just us but also in other companies all bond issuances have been put on hold. We are seeing some signs of the market stabilizing, so perhaps by today maybe by Monday, we will be able to have a better assessment about what the market condition is for the issuance. So on the MOU signed with HMG and how that's going to serve as a leverage for our group. This is an MOU that was signed between POSCO Group and Hyundai Motor Group. So Hyundai Motor Group is a partner that we have a relationship that is as old as five decades. Among many of the strategies that we've had up until recently our strategy for the United States has been in flux. We had considering many options, so among those many options, looking at some of the demands that Hyundai Motor Group had in the United States, they made an announcement first about their investment plans and by Asking for Pasco's participation, we believe we can serve a mutually beneficial role here. Of course, there are some risks that could follow. So, the two largest steelmakers in Korea are investing jointly in the United States, so there could be some investment risk there and from POSCO Group's perspective, I think the CFO at Hyundai Motor Group also explained this a few minutes ago, but it proved to be a market where we can generate some competitiveness and it is a market where material flow is insured and there are some links that we can build with our downstream processes as well. So…

Next question will be by Annie Guo from TD Securities.

Hello, I am Annie Guo from TB Security. I have two questions. First -- about the Chinese steelmakers, not only in China, but also abroad. They're investing in the coking coal, as well as iron ore projects. It is quite active. So as for Korea in order to, what would be your strategy in terms of the competitiveness strategy and also the pricing strategies and I believe the raw material prices are likely to go down. So that is why China's strategy could not be threatening for us. Is that your take or I would like to know your strategy or your perspective. And second is regarding the next generation secondary materials the progress on the precursor development. So, I'd like to know about how you're going to secure competitiveness in pricing or the capacity and updates on testing as well as clients.

Regarding the first question, it will be by Mr. [indiscernible], the head of the Materials One office and then the second will be by Mr. [indiscernible] from the Energy Materials Investment Office.

Together with the Chinese steelmakers has the plan to invest in raw materials projects and we are indeed implementing this type of strategy. And as for the iron ore, we are sourcing it by making a 50% investment and as for the coking coal, the level is about 20% because of the ESG issues. So we are considering all of these and making investments in this field. When it comes to iron ore, we believe that investments have been fully made and when it comes to the coking coal. We believe that there are more returns that we can achieve on our investments, so we're going to continue to monitor the ESG developments. And identify mines that will be of interest to us and make active investments and also do natural hedging with regards to price fluctuations.

Yes, I'm the head of the energy materials investments, regarding the lithium sulfate development. So of course there are companies that we have invested in our future institute and we are making – we are researching the intermediate goods coming from a lithium plants to make low priced lithium sulfate and the results have become – have realized these days. So we are now going for a more larger scale that is we are considering implementing a demo plant. And regarding the JKSS, so recently there's been a solid precursor that was produced from here. We thought it was quite promising. So together with OEM companies and battery companies we're conducting a test and for the details, please understand that we cannot disclose the details now. Thank you.

Next question please.

Eugene Securities, Lee Eugen [ph]. Please ask your question.

I am Eugen. There was a one-time impairment loss in the first quarter. Can we assume that no other impairments will be assessed and you mentioned leadership in the auto sector, we believe HBIS was mentioned. If you have any projections on the auto industry profits, please share them with us and based on automotive steel sheets, what is the tonnage? And what is the timeline on hitting these profits as well as volumes? And I'd like to know if we are experiencing a deficit in steel plates.

First question I will address that. Second question will be answered by – let me address the first question first. In the first quarter yes, we had a one-time impairment loss effects. These impairment losses usually occur in the process of restructuring when we sell off assets and close down plants. And there is a disparity between the book price and the selling price. And secondly, when the market turns downward the value of the business also declines. So there is an impairment loss there as well. So in the first quarter, we continued with our restructuring and of course, there were some losses. Last year, because market really soured and we continued to restructure. There were some priorities that we could have defined, but nonprofit and non-essential assets were first on our list. And so because of the market downturn, as well as the liquidation of our assets that were underperforming there were larger impairment losses as last year. This year, we will continue with the restructuring, but in terms of size and intensity it will be smaller than last year. And also this year -- do we anticipate the market will sour as much as last year? We don't think so. I think it's not going to be as bad as last year. And so based on that projection, the impairment losses will not be as big as last year. HBIS joint venture in China. We are looking to hit KRW420 billion in terms of revenues and we believe we'll achieve that. To hit that revenue, we are planning 170,000 tons, but our operating profit is still going to be in the red and the automotives steel sheets how much tonnage are we targeting? For wire, rods and stainless steel, setting those aside, we are looking at about 8.5 million in India. Before we set up the plants in the US and India we're not going to be adding more capacity, so our sales will be based on between 8 million to 9 million tons. The third question was whether our steel plates are suffering from a deficit. Of course each steel grade is a little bit different, but at the end of last year, we did have a lot of deficit bearing plates. But because of the AD filings, many have transitioned into black ink now. The Indian Steel works. I think the question was about the construction schedule. Our JV partner. is working to confirm the plant's site in Odisha. Once we select the site, then we will be able to add more detail to this plan. Once the site is determined we also have to do an environmental impact assessment and go through other procedures as well. But if we can stay on plan I think we'll be completing the plant by 2031.

Now this will be the last question. Last question will be by [indiscernible] from HSBC. Q – Unidentified Analyst: Hello, I’m [indiscernible] from HSBC. I have two questions. First, I think that it was addressed in your previous answers. So when it comes to the AD filing for the heavy plates, I would like to know what are the ongoing negotiations. And I would like to know if there's been any financial evaluation or valuation losses that occurred. And with regards to lithium sourcing, I would like to know if you have acquired any additional assets. So first is -- will be answered by Mr. Hong Yoon-Sik, Marketing Strategy Head Office.

So regarding the answer for the first question, after the AD filing of the Chinese heavy plates, the retail prices are constantly going up. And I think that I cannot disclose all the detailed negotiations taking place in terms of price by client. But with the three shipbuilders, we have completed our negotiations for the second quarter. And I cannot share with you the detailed numbers, but the price negotiations have been taking place reasonably in line with the current trends.

And I will answer the third question first. So it will be by the Head of the Energy Materials Investment. It was about sourcing lithium assets or securing lithium-related assets. So as said, in order to increase our cost competitiveness, we are leveraging this low market conditions in order to acquire prime assets, not only for brine, but also in terms of mine. And we are also engaged with some specific deals, but they are on the process of private deal process and also competition bidding. So we cannot disclose any further on these initiatives, please do understand.

And Energy Raw Materials Office head is going to answer a question about the second. So the metal prices are going down, the nickel as well and going down to $9. So when it comes to the valuation -- asset valuation losses is inevitable. And this is the same situation for all the secondary battery materials sector. And when it comes to the losses level, there is one plant under construction in Argentina and one plant is undergoing ramp-up. And one in Gwangyang Line is under ramp-up and another one is under study. So when it comes to losses, it will be determined by the fixed costs.

I would like to close the first quarter 2025 earnings report call for POSCO Holdings. Through this call, I hope people gained better insight into how we intend to drive our business forward. Once again, I'd like to thank everyone for your participation. Again, I'd like to close the first quarter 2025 earnings report call. Thank you.