POSCO seeks $1 bn restructuring amid weak steel, battery materials sectors

South Korea’s POSCO Holdings Inc. said on Monday it plans to sell 61 unprofitable and non-core assets to raise 1.5 trillion won ($1 billion) as part of widespread restructuring as it suffered a nearly 40% drop in profit due to its sluggish steel and battery materials businesses.

POSCO Holdings, parent of the world’s No. 7 steelmaker POSCO and major battery materials producer POSCO Future M Co., said its operating profit fell 38.5% to 2.2 trillion won on a consolidated basis in 2024 with sales down 5.8% to 72.7 trillion won.

POSCO has been under pressure amid intensifying competition with Chinese rivals, while POSCO Future M has been hurt by the prolonged weakness in the global electric vehicle market.

“We will sell unprofitable businesses and non-core assets this year to improve asset efficiency,” POSCO Holdings said in an earnings call.

“We aim to secure an additional 1.5 trillion won in cash by restructuring 61 units this year after generating 662.5 billion won by selling 45 businesses and assets last year.”

POCO Holdings expects its earnings to improve in the second half.

The restructuring program in 2025 reportedly includes the sale of its stake in POSCO Zhangjiagang Stainless Steel Co. (PZSS), a joint venture with Shagang Group, China’s second-largest steel producer also known as Shasteel.

Among its offloadings last year, POSCO Holdings last year sold its power plant in Papua New Guinea, a service unit in China and shares in KB Financial Group. 

TO INVEST MORE IN FUTURE CASH COWS

POSCO Holdings plans to raise investments in future growth engines such as an integrated steel plant in India.

The group joined hands with India’s JSW Group to build the plant in the South Asian country – with an estimated billions of dollars investment – targeting the sector’s rapid growth in the world’s fifth-largest economy.

POSCO Holdings also aims to spend more on the diversification of secondary battery materials.

POCO Future M decided to increase investments in the development of high-nickel cathodes, high-voltage mid-nickel, lithium-rich manganese-based layered oxide (LMR) and lithium manganese iron phosphate (LMFP).

The EV battery materials producer plans to cooperate with the group’s research units to develop next-generation products.

Write to Sang Hoon Sung at uphoon@hankyung.com
 
Jongwoo Cheon edited this article.