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Weak 4Q results, but rebound expected in 2026

4Q25 review: OP misses consensus by a wide margin

For 4Q25, POSCO Holdings reported consolidated revenue of W16.8tr (-5.4% YoY) and operating profit of W12.6bn (-86.8% YoY; well below the consensus of W397.7bn). Steel shipment volumes declined 6.4% QoQ due to inventory drawdowns at customers and the impact of major maintenance. Spreads also narrowed due to higher coking coal prices.

Overseas steel earnings were weak as one-off costs of W131.9bn (e.g., employee compensation costs) were recognized during the process to sell Zhangjiagang Pohang Stainless Steel (subsidiary). In the infrastructure segment, POSCO E&C posted an operating loss (W190bn) for a second consecutive quarter due to construction suspensions related to the Sinansan Line accident. In the battery materials segment, operating losses widened by more than W100bn QoQ, driven by losses at POSCO Future M and the recognition of ramp-up costs at lithium and precursor plants.

Clear earnings recovery to continue in 2026

For 2026, we forecast operating profit to climb 64% YoY to around W3tr, driven by the absence of one-off costs booked in 2025 and growth in core businesses. In the steel segment, we expect consolidated operating profit to improve YoY on: 1) likely price increases following the imposition of antidumping duties on hot-rolled products as customer inventories are depleted; and 2) the potential finalization of the sale of the Chinese subsidiary (which posted an operating loss of W200bn in 2025).

Battery materials losses are likely to narrow gradually as lithium prices recover and plants transition to commercial operations after ramp-ups. Infrastructure operating profit should improve YoY on a favorable base effect from large-scale cost recognition at POSCO E&C in 2025, alongside incremental profit contributions from POSCO International (supported by production expansion at Senex in Australia).

Maintain Buy; lift TP by 12% to W480,000

We raise our target price for POSCO Holdings to W480,000 (from W430,000), reflecting share price gains at key listed subsidiaries (e.g., POSCO Future M). A clear earnings recovery―supported by rising lithium prices and favorable base effects―should underpin further share price upside. Meanwhile, the 20% equity investment in Hyundai Motor Group’s electric arc furnace project in the US (20% stake), along with additional overseas steel initiatives (e.g., upstream investments in India and cooperation with the US’s Cleveland-Cliffs), should help mitigate tariff risks.