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Strong results driven by improved subsidiary earnings

1Q26 review: OP beats consensus by 19%

For 1Q26, POSCO Holdings reported consolidated revenue of W17.9tr (+2.5% YoY) and operating profit of W707bn (+24.3% YoY), beating the consensus of W592.2bn by 19%. Steel operating profit declined 24% YoY as spreads narrowed on higher raw material costs, despite increased shipment volumes (+2% YoY, +7% QoQ). In contrast, infrastructure operating profit rose 33% YoY, driven by strong earnings at POSCO International and POSCO E&C’s return to profit. In the battery materials segment, profit improved by around W150bn QoQ, reflecting narrower losses at lithium-producing subsidiaries on higher lithium prices, higher utilization rates, and inventory valuation gains.

2026 outlook: Resilience in steel + improvement in non-steel businesses

For 2026, we forecast consolidated operating profit to rise 67% YoY to W3.05tr, supported by resilient steel earnings and favorable base effects in non-steel businesses. In the steel segment, we expect earnings to remain resilient throughout the year, helped by the March announcement of price hikes across all products and efforts to raise automotive steel prices in 2H26 (following hikes for shipbuilding steel). In the battery materials segment, losses at key lithium subsidiaries should continue to narrow off a low base in 2025. Infrastructure operating profit should also improve sharply, with POSCO E&C returning to profit on a favorable base effect (stemming from the impact of the Sinansan Line accident).

Maintain Buy; lift TP by 29% to W620,000

We maintain our Buy rating on POSCO Holdings and raise our target price by 29% to W620,000 (from W480,000), reflecting the increased value of key listed subsidiaries such as POSCO Future M and adjustments to segment multiples.

Alongside its preliminary results, the company announced its 2026?28 shareholder return policy, setting a target shareholder return level of 35?40% of adjusted net profit attributable to owners of the parent (excluding one-offs). The company also shared plans to flexibly combine cash dividends with share buybacks/cancellations.