Posco Future M (003670) Q3 2024 earnings summary

Executive summary

• Profitability weakened due to lackluster anode sales and cathode inventory valuation losses, though base material business normalized after furnace revamp.

• Achieved cumulative consolidated sales of KRW 2,976.7 billion and operating profit of KRW 42.0 billion for the nine months ended September 2024, with energy materials accounting for 65.8% of sales.

• Maintained strong market position as the only domestic supplier of both cathode and anode battery materials, with major customers including Ultium Cells, POSCO, Samsung SDI, and LG Energy Solution.

• Continued large-scale investments in capacity expansion for battery materials in Korea, China, and North America, targeting rapid growth in the EV and ESS markets.

Financial highlights

• 3Q24 revenue was KRW 922.8bn, up 0.8% sequentially but down 28.2% year-over-year.

• Operating profit was KRW 1.4bn (0.2% margin) for 3Q24, down from KRW 2.7bn in 2Q24 and KRW 37.1bn in 3Q23.

• Net profit was a loss of KRW 1.2bn in 3Q24, an improvement from a KRW 11.2bn loss in 2Q24 but down from KRW 23.2bn profit in 3Q23.

• Cumulative sales for 2024 Q3 reached KRW 2,976.7 billion, down from KRW 4,759.9 billion in 2023, while operating profit was KRW 42.0 billion, up from KRW 35.9 billion in 2023.

• Net income attributable to controlling interests was KRW 53.9 billion, up from KRW 28.7 billion in 2023.

Outlook and guidance

• Lithium prices expected to remain under downward pressure in 4Q24 due to low demand and new supply.

• Nickel prices may rise in 4Q24 on hopes of demand recovery from US rate cuts and China stimulus.

• Ongoing investments in cathode and anode material capacity in Korea, China, and Canada to meet growing global EV demand.

• Anticipates continued growth in energy materials, supported by global EV adoption and government policies.

• Risks include raw material price volatility, regulatory changes (e.g., IRA), and potential delays in customer demand.