This article first appeared on GuruFocus.

Release Date: July 30, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

POSCO Holdings Inc (NYSE:PKX) recorded consolidated revenue of $19.3 trillion and $820 billion in operating profit, maintaining a rising profit curve.

The rechargeable battery materials sector turned to a surplus for the first time in nine quarters, driven by the Argentina lithium business achieving its first-ever quarterly profit.

Steel-making affiliate POSCO saw a $60 billion gain in operating profit over the previous quarter, driven by increased production and sales volume.

POSCO International recorded its highest quarterly operating profit, driven by growth in energy and materials segments.

Restructuring efforts generated 475.4 billion won in additional cash in the first half, with plans to generate 3.5 trillion won in free cash flow by 2028.

Negative Points

The Middle East conflict triggered energy supply risks and a weakening Korean won, creating business headwinds.

A fatality occurred at POSCO ENC, highlighting ongoing safety management challenges.

The third quarter may see a temporary slowdown in the rechargeable battery materials sector due to seasonal factors and equipment repairs in Argentina.

POSCO Pilbara Lithium Solution faces profit pressures in the second half due to unfavorable price spreads between spodumene and lithium hydroxide.

European quota reductions and anti-dumping tariffs on steel products pose risks to export volumes and profitability.

Q & A Highlights

Here are the key highlights from the POSCO Holdings Inc (NYSE:PKX) Q2 2026 earnings call, focusing on the most significant Q&A exchanges.

Q: Regarding the lithium business, you demonstrated good performance this quarter. What is the profitability outlook for brine versus hard rock lithium, and what are your plans to improve it? Also, given recent news about mines restarting in Australia, what is your price outlook for lithium? A: (Yideyeong, Energy Materials Business Management Office) For brine lithium, we believe we can achieve about an 80% operating margin. Regarding the long-term outlook, many organizations predict the price to be over $30. We have expansion plans for Phase 3 and Phase 4 with performance projections for 2035.

Q: What is the second-half steel market outlook, especially for automotive, shipbuilding, and home electronics? How will you negotiate prices in the second half? A: (Nho Song Mae, Marketing Office Chief) Due to rising fuel and raw material costs, we will consider market situations and apply necessary price adjustments gradually rather than rapidly. In automotive, we are negotiating based on a formula and will phase in cost variables in the second half. In shipbuilding, strong demand allows us to adjust prices. In home electronics, production bases are shifting to Southeast Asia, keeping prices conservative, but we need to apply costs to final prices.

Q: Starting in July, Europe will begin its quota system. What will be the proportion of sales to Europe, and what are your countermeasures against tariffs, including the temporary ones on hot-rolled products? A: (ITO Head) We are trying to minimize the quota reduction for Korea through government negotiations, giving us a more favorable position than competitors. With reduced quotas, we will focus on high-margin products for the European market. The EU proportion for POSCO is about 10% to 15% of total exports. Regarding the AD investigation on cold-rolled products, we believe the recent determination was due to excessive intervention by the investigating authority, and we will look into the unfair and irrational reasons to make necessary operational adjustments.

Q: Regarding the PTKP Phase 1 in Indonesia, it is not in a good situation. How do you intend to generate profit, especially with overseas investments and steelworks repairs happening in parallel? A: (Householdings at CO Management Office) PTKP Phase 1 is currently profitable and generating cash flow, with about 90% of total invested CapEx recovered through EBITDA. The Phase 2 expansion plan is not new; we waited for more favorable conditions. Phase 2 targets the automotive steel sheet market in Southeast Asia, and because it will produce hot-rolled products (unlike competitors’ cold-rolled products), it is expected to be much more profitable.

Q: At the Investor Day, you provided guidance for rare earths. What is your plan, and what is the status of technology and raw material preparation? A: (Yideyeong, Energy Materials Business Management Office) At the Investor Day, we provided a long-term vision for the rare earth business. We are working on securing the necessary technology and raw materials to dive into this business.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.