エドガーで原本を確認する
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REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
POSCO HOLDINGS INC. |
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(Translation of Registrant’s name into English) |
(Jurisdiction of incorporation or organization) |
Title of Each Class |
Trading symbol |
Name of Each Exchange on Which Registered |
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one-fourth of one share of common stock |
PKX |
New York Stock Exchange, Inc. |
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Common Stock, par value Won 5,000 per share * |
PKX |
New York Stock Exchange, Inc. * |
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Not for trading, but only in connection with the registration of the American Depositary Shares. |
TABLE OF CONTENTS
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ii
GLOSSARY
| “ADR” |
American Depositary Receipt evidencing ADSs. | |
| “ADR depositary” |
Citibank, N.A. | |
| “ADS” |
American Depositary Share representing one-fourth of one share of Common Stock. | |
| “Commercial Code” |
Commercial Code of the Republic of Korea. | |
| “common stock” |
Common stock, par value Won 5,000 per share, of POSCO HOLDINGS INC. | |
| “deposit agreement” |
Deposit Agreement, dated as of July 19, 2013, among POSCO (currently named POSCO HOLDINGS INC.), the ADR Depositary and all holders and beneficial owners from time to time of ADRs issued thereunder. | |
| “U.S. dollars,” “$” or “US$” |
The currency of the United States of America. | |
| “FSCMA” |
Financial Investment Services and Capital Markets Act of the Republic of Korea. | |
| “Government” |
The government of the Republic of Korea. | |
| “Gwangyang Works” |
Gwangyang Steel Works. | |
| “IASB” |
International Accounting Standards Board. | |
| “IFRS” |
International Financial Reporting Standards. | |
| “Korea” |
The Republic of Korea. | |
| “K-IFRS” |
Korean International Financial Reporting Standards. | |
| “Pohang Works” |
Pohang Steel Works. | |
| “POSCO Group” |
POSCO HOLDINGS INC. and its consolidated subsidiaries. | |
| “Securities Act” |
The United States Securities Act of 1933, as amended. | |
| “Securities Exchange Act” |
The United States Securities Exchange Act of 1934, as amended. | |
| “SEC” |
The United States Securities and Exchange Commission. | |
| “tons” |
Metric tons (1,000 kilograms), equal to 2,204.6 pounds. | |
| “U.S. GAAP” |
Generally accepted accounting principles in the United States of America. | |
| “We” |
POSCO HOLDINGS INC. and its consolidated subsidiaries, unless otherwise specified or the context otherwise requires. Accordingly, in the context of discussing our steel operations, “we” refers to the steel-producing operations of the subsidiaries of POSCO HOLDINGS INC., including POSCO, POSCO (Zhang-jiagang), PT. Krakatau POSCO and POSCO YAMATO VINA. | |
| “Won” or “￦” |
The currency of the Republic of Korea. | |
| “Yen” |
The currency of Japan. | |
| “Yuan” |
The currency of the People’s Republic of China. | |
Any discrepancies in any table between totals and the sums of the amounts listed are due to rounding.
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PART I
Item 1. Identity of Directors, Senior Managers and Advisers
Item 1.A. Directors and Senior Management
Not applicable
Item 1.B. Advisers
Not applicable
Item 1.C. Auditor
Not applicable
Item 2. Offer Statistics and Expected Timetable
Not applicable
Item 2.A. Offer Statistics
Not applicable
Item 2.B. Method and Expected Timetable
Not applicable
Item 3. Key Information
Item 3.A. [Reserved]
Item 3.B. Capitalization and Indebtedness
Not applicable
Item 3.C. Reasons for Offer and Use of Proceeds
Not applicable
Item 3.D. Risk Factors
You should carefully consider the risks described below.
The global economic downturn may adversely affect our business and performance. The global economic outlook for the near future remains uncertain.
Our business is affected by highly cyclical market demand for our products and services. In particular, POSCO and our other subsidiaries that engage in steel production activities are affected by market demand from a number of industries, including the construction, automotive, shipbuilding and electrical appliances industries as well as downstream steel processors, which are sensitive to general conditions in the global economy. Macroeconomic factors, such as the economic growth rate, employment levels, interest rates, inflation rates, exchange rates, commodity prices, demographic trends and fiscal policies of governments can have a significant effect on such industries. From time to time, these industries have experienced significant and sometimes prolonged downturns, which in turn have negatively impacted our steel business.
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Global economic conditions have deteriorated in recent years, with global financial and capital markets experiencing substantial volatility. In particular, the COVID-19 pandemic that began in late 2019 and rapid increases in interest rates globally starting in the second half of 2021 to combat inflation have materially and adversely affected the global economy and financial markets. See “— Earthquakes, tsunamis, floods, severe health epidemics (including the global COVID-19 pandemic and any possible occurrences of other types of widespread infectious diseases) and other natural calamities could materially and adversely affect our business, results of operations or financial condition.” Such developments have also been caused by, and continue to be exacerbated by, among other things, the invasion of Ukraine by Russia in February 2022 that has destabilized the global energy sector, the slowdown of economic growth in China and other major emerging market economies, adverse economic and political conditions in Europe and Latin America and continuing geopolitical and social instability in North Korea and various parts of the Middle East, including the escalation of hostilities in the Middle East following the Israel-Hamas war, as well as a deterioration in economic and trade relations between the United States and its major trading partners, particularly China. See “— Korea and the rest of Asia are our most important markets, and our current business and future growth could be materially and adversely affected if economic conditions in the region deteriorate.”
Actual or anticipated further deterioration of global economic conditions may result in a decline in demand for our products. In the case of a prolonged decrease in demand, we may need to rationalize our production capacity and reduce fixed costs, and we will likely face pressure to reduce prices of our products. From time to time, we have adjusted our crude steel production levels and sales prices in response to sluggish demand from our customers in industries adversely impacted by the deteriorating economic conditions. We decreased our production of crude steel from 43.0 million tons in 2021 to 38.6 million tons in 2022 primarily due to a general decrease in global demand for steel products reflecting deterioration in global economic conditions. In 2022, our production level was also negatively impacted by temporary suspension of crude steel production activities following flooding of some of the Pohang Works’ facilities caused by Typhoon Hinnamnor in September 2022. In 2023, our production of crude steel was relatively stable as we incrementally increased our production to 39.9 million tons. The weighted average unit sales price for our semi-finished and finished steel products produced by us and directly sold to external customers increased from Won 1,225,209 per ton in 2021 to Won 1,435,642 per ton in 2022, reflecting strong market conditions in the first half of 2022 in part due to global steel supply chain concerns caused by Russia’s invasion of Ukraine, which market conditions weakened beginning in the second half of 2022 reflecting a decrease in global demand for steel products, as well as depreciation of the Won against the U.S. dollar in 2022 that increased our export prices in Won terms during 2022. Such weighted average unit sales price decreased from Won 1,435,642 per ton in 2022 to Won 1,272,754 per ton in 2023 primarily reflecting general deterioration of the global steel market conditions. Such weakening demand and a general oversupply in the market have negatively impacted our results of operations for 2023. Our revenue decreased by 9.3%, or Won 7,947 billion, from Won 85,004 billion in 2022 to Won 77,057 billion in 2023, and our profit decreased by 48.5%, or Won 1,740 billion, from Won 3,586 billion in 2022 to Won 1,846 billion in 2023.
We expect fluctuation in demand for our steel products and trading services to continue at least in the near future. We may decide to further adjust our future crude steel production or our sales prices on an ongoing basis subject to market demand for our products, the production outlook of the global steel industry and global economic conditions in general. In addition, economic downturns in the Korean and global economies could result in market conditions characterized by weaker demand for steel products from a number of industries as well as falling prices for export and import products and reduced trade levels. Deterioration of market conditions may result in changes in assumptions underlying the carrying value of certain assets, which in turn could result in impairment of such assets, including intangible assets such as goodwill. Our ability to reduce expenditures for production facilities and research and development during an industry downturn is limited because of the need to maintain our competitive position.
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If we are unable to reduce our expenses sufficiently to offset reductions in price and sales volume, our margins will suffer and our business, financial condition and results of operations may be materially and adversely affected.
We operate in the highly competitive steel, trading, construction and energy industries, and our failure to successfully compete would adversely affect our market position and business.
Steel Segment. Our subsidiaries that produce steel products, including POSCO, our wholly-owned subsidiary, operate in the highly competitive steel industry and face intense global competition. China is the largest steel-producing country in the world by a significant margin, with the balance between its domestic production and demand being an important factor in the determination of global steel prices. In recent years, a slowdown in domestic demand for steel products in China resulting from slowed economic growth as well as the impact from the COVID-19 pandemic, combined with an expansion in steel production capacity, led to production over-capacity in the Chinese steel industry, which in turn led the Chinese government to pursue aggressive consolidation in the Chinese steel industry that has resulted in fewer but larger steel manufacturers that are able to compete more effectively in the global steel industry. Competition from such global steel manufacturers with expanded production capacity as well as competitors from emerging markets, especially from China and India, has resulted in significant price competition and may result in declining margins and reductions in revenue in the future. POSCO’s larger competitors may use their resources, which may be greater than POSCO’s, against POSCO in a variety of ways, including by making additional acquisitions, investing more aggressively in product development and capacity and displacing demand for our export products.
Increased production capacity, combined with decreased demand resulting from a slowdown of the global economy, has from time to time resulted in production over-capacity in the global steel industry which in turn has resulted in downward pressure on global steel prices. Although global demand for steel products increased in 2021 and the first half of 2022, such demand weakened in the second half of 2022. In 2023, global demand for steel products remained weak reflecting general deterioration of the global steel market conditions. Production over-capacity in the global steel industry may further intensify if the global economy slows or demand from developing countries, particularly from China, continues to lag behind the growth in production capacity. Production over-capacity in the global steel industry is likely to:
| • | reduce export prices in U.S. dollar terms of our principal products, which in turn may lead to decreases in our sales prices in Korea as well; |
| • | increase competition in the Korean market as foreign producers seek to export steel products to Korea as other markets experience a slowdown; |
| • | negatively affect demand for our products abroad and our ability to expand export sales; and |
| • | affect our ability to increase steel production in general. |
Steel also competes with other natural and synthetic materials that may be used as steel substitutes, such as aluminum, cement, composites, glass, plastic and wood. Government regulatory initiatives mandating the use of such materials instead of steel, whether for environmental or other reasons, as well as the development of attractive alternative substitutes for steel products, may reduce demand for steel products and increase competition in the global steel industry.
As part of our strategy to compete in this challenging landscape, our steel subsidiaries will continue to invest in developing innovative products that offer the greatest potential returns and enhance the overall quality of our products, as well as make additional investments in the development of new manufacturing technologies. However, there is no assurance that they will be able to continue to compete successfully in this economic environment or that the prolonged slowdown of the global economy or production over-capacity will not have a material adverse effect on our business, results of operations or financial condition.
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Trading Segment of the Green Infrastructure Business. POSCO International Corporation (“POSCO International”), our consolidated subsidiary, competes principally with other Korean general trading companies that are affiliated with major domestic business groups, as well as global trading companies based in other countries. In the domestic market, competition for export transactions on behalf of domestic suppliers and import transactions on behalf of domestic purchasers was historically limited, as most affiliated general trading companies of large Korean business groups generally relied on affiliate transactions for the bulk of their trading business. However, many of these Korean general trading companies have reduced their reliance on their affiliated business group and transactions carried out on behalf of their member companies and instead have generally evolved to focus on segments of the import and export markets in which they have a competitive advantage. As a result, competition among Korean general trading companies in the area of traditional trade has become more intense.
The overseas trading markets in which POSCO International operates are also highly competitive. POSCO International’s principal competitors in overseas trading markets include Korean trading companies that operate in various international markets, as well as foreign trading companies, particularly those based in Japan. As POSCO International diversifies into businesses other than traditional trading such as natural resources development, it also increasingly competes with other Korean and international companies involved in these businesses. Some of POSCO International’s competitors may be more experienced and have greater financial resources and pricing flexibility than POSCO International, as well as more extensive global networks and wider access to customers. There is no assurance that POSCO International will be able to continue to compete successfully in this economic environment or that the prolonged slowdown of the global economy will not have a material adverse effect on our business, results of operations or financial condition. We recognized impairment of goodwill of Won 185 billion in 2021 and Won 338 billion in 2022 as a result of a decrease in value-in-use of POSCO International.
On January 1, 2023, POSCO Energy Corporation (“POSCO Energy”), Korea’s largest domestic private power utility company and a provider of alternative environmentally-friendly energy solutions, merged into POSCO International. POSCO International’s power generation business competes principally with private-sector power generation companies in Korea that are affiliated with major domestic business groups, including SK E&S and GS EPS.
Construction Segment of the Green Infrastructure Business. POSCO Eco & Challenge Co., Ltd. (“POSCO E&C” and formerly known as POSCO Engineering & Construction Co., Ltd.), our consolidated subsidiary, operates in the highly competitive construction industry. Competition is based primarily on price, reputation for quality, reliability, punctuality and financial strength of contractors. Intense competition among construction companies may result in, among other things, a decrease in the price POSCO E&C can charge for its services, difficulty in winning bids for construction projects, an increase in construction costs and difficulty in obtaining high-quality contractors and qualified employees.
In Korea, POSCO E&C’s main competition in the construction of residential and non-residential buildings, EPC (or engineering, procurement and construction) projects, urban planning and development projects and civil works projects consists of approximately ten major domestic construction companies, many of which are member companies of other large business groups in Korea and are capable of undertaking larger-scale, higher-value-added projects that offer greater potential returns. A series of measures introduced by the Government over the past several years to regulate housing prices in Korea, as well as increasing popularity of low-bid contracts in civil works project mandates, have contributed to increased competition in the Korean construction industry in recent years.
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Competition for new project awards in overseas markets is also intense. In these markets, POSCO E&C faces competition from local construction companies and other major Korean construction companies with overseas operations, as well as international construction companies from other countries. Construction companies from other developed countries may be more experienced, have greater financial resources and possess more sophisticated technology than POSCO E&C, while construction companies from developing countries often have the advantage of lower wage costs. Some of these competitors have achieved higher market penetration than POSCO E&C has in specific markets in which it competes, and POSCO E&C may need to accept lower margins in order for it to compete successfully against them. POSCO E&C’s failure to successfully compete in the domestic or overseas construction markets could adversely affect its market position and our results of operations and financial condition.
Logistics and Others Segment of the Green Infrastructure Business. POSCO DX Co., Ltd. (“POSCO DX” and previously named POSCO ICT Co., Ltd.) competes principally with system integration service providers in Korea that are affiliated with major domestic business groups, including Samsung SDS, LG CNS and SK Inc. C&C. POSCO FLOW Co., Ltd. (“POSCO FLOW”) competes principally with logistics service providers in Korea that are affiliated with major domestic business groups, including Hyundai Glovis, Samsung SDS and LX Pantos.
Green Materials and Energy Segment. In the energy materials market, POSCO Future M Co., Ltd. (“POSCO Future M” and previously named POSCO Chemical Co., Ltd.) competes with other global leading manufacturers of cathode and anode materials, including LG Chemical Co., Ltd. and Ecopro BM Co., Ltd. In its legacy business areas of refractories and lime chemicals, POSCO Future M competes principally with Chosun Refractories ENG Co., Ltd. and Korea Refractories Co, Ltd.
Korea and the rest of Asia are our most important markets, and our current business and future growth could be materially and adversely affected if economic conditions in the region deteriorate.
We are a holding company incorporated in Korea, and a substantial portion of our subsidiaries’ operations and assets are located in Korea. Korea is our most important market, and our customers located in Korea accounted for 65.7% of our revenue, prior to basis difference adjustments related to the difference in recognizing revenue and expenses of the Construction Segment of our Green Infrastructure Business, in 2023. See Note 41(d) to the Consolidated Financial Statements. Domestic demand for steel products is affected by the condition of major steel consuming industries, such as construction, shipbuilding, automotive, electrical appliances and downstream steel processors, and the Korean economy in general. In addition, the trading operations of POSCO International are affected by the general level of trade between Korea and other countries, which in turn tends to fluctuate based on general conditions in the Korean and global economies. As a result, we are subject to political, economic, legal and regulatory risks specific to Korea, and our performance and successful fulfillment of our operational strategies are largely dependent on the overall Korean economy.
In recent years, adverse conditions and volatility in the global financial markets, fluctuations in oil and commodity prices, supply chain disruptions and the increasing weakness of the global economy, in particular due to the COVID-19 pandemic, and rapid increases in interest rates globally starting in the second half of 2021 to combat inflation have contributed to the uncertainty of global economic prospects in general and have adversely affected, and may continue to adversely affect, the Korean economy. The value of the Won relative to major foreign currencies has fluctuated significantly and, as a result of uncertain global and Korean economic conditions, there has been significant volatility in the stock prices of Korean companies recently. Future declines in the KOSPI, and large amounts of sales of Korean securities by foreign investors and subsequent repatriation of the proceeds of such sales may adversely affect the value of the Won, the foreign currency reserves held by financial institutions in Korea, and the ability of Korean companies to raise capital. Any future deterioration of the Korean economy could adversely affect our business, financial condition and results of operations and the market price of our ADSs.
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Developments that could have an adverse impact on Korea’s economy include:
| • | declines in consumer confidence and a slowdown in consumer spending, including as a result of severe health epidemics; |
| • | hostilities or, political or social tensions involving Russia (including the invasion of Ukraine by Russia and ensuing actions that the United States and other countries have taken and may take in the future) and any resulting adverse effects on the global supply of oil and other natural resources or the global financial markets; |
| • | adverse conditions or developments in the economies of countries and regions that are important export markets for Korea, such as China, the United States, Europe and Japan, or in emerging market economies in Asia or elsewhere, including as a result of the deteriorating economic and trade relations between the United States and China and increased uncertainties in the global financial markets and industry; |
| • | adverse changes or volatility in foreign currency reserve levels, commodity prices (including oil prices), exchange rates (including fluctuation of the U.S. dollar, the Euro or the Japanese Yen exchange rates or revaluation of the Chinese Yuan), interest rates, inflation rates or stock markets; |
| • | the occurrence of severe health epidemics in Korea or other parts of the world, such as the COVID-19 pandemic; |
| • | deterioration in economic or diplomatic relations between Korea and its trading partners or allies, including deterioration resulting from territorial or trade disputes or disagreements in foreign policy; |
| • | increased sovereign default risk in select countries and the resulting adverse effects on the global financial markets; |
| • | deterioration in the financial condition or performance of small- and medium-sized enterprises and other companies in Korea due to the Government’s policies to increase minimum wages and limit working hours of employees; |
| • | investigations of large Korean business groups and their senior management for possible misconduct; |
| • | a continuing rise in the level of household debt and increasing delinquencies and credit defaults by retail and small- and medium-sized enterprise borrowers in Korea; |
| • | the economic impact of any pending or future free trade agreements or of any changes to existing free trade agreements; |
| • | social and labor unrest; |
| • | substantial changes in the market prices of Korean real estate; |
| • | a substantial decrease in tax revenues and a substantial increase in the Government’s expenditures for fiscal stimulus measures, unemployment compensation and other economic and social programs, in particular in light of the Government’s ongoing efforts to provide emergency relief payments to households and emergency loans to corporations in need of funding in light of COVID-19 as well as interest rate increases, which, together, would likely lead to a national budget deficit as well as an increase in the Government’s debt; |
| • | financial problems or lack of progress in the restructuring of Korean business groups, other large troubled companies, their suppliers or the financial sector; |
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| • | loss of investor confidence arising from corporate accounting irregularities or corporate governance issues concerning certain Korean companies; |
| • | increases in social expenditures to support an aging population in Korea or decreases in economic productivity due to the declining population size in Korea; |
| • | geopolitical uncertainty and the risk of further attacks by terrorist groups around the world; |
| • | political uncertainty or increasing strife among or within political parties in Korea; |
| • | hostilities or political or social tensions involving oil-producing countries in the Middle East (including the escalation of hostilities in the Middle East following the Israel-Hamas war) and Northern Africa and any material disruption in the global supply of oil or sudden increase in the price of oil; |
| • | natural or man-made disasters that have a significant adverse economic or other impact on Korea or its major trading partners; and |
| • | an increase in the level of tensions or an outbreak of hostilities between North Korea and Korea or the United States. |
We rely on export sales for a significant portion of our total sales. Adverse economic and financial developments in Asia in the future may have an adverse effect on demand for our products in Asia and increase our foreign exchange risks.
We rely on export sales for a significant portion of our total sales. In particular, the Steel Segment’s export sales and overseas sales to customers abroad accounted for 60.4% of the Steel Segment’s total revenue in 2023. The Steel Segment’s export sales to customers in Asia, including China, Japan, Indonesia, Thailand and Malaysia, accounted for 56.8% of the Steel Segment’s total export sales revenue in 2023, and we expect our sales to these countries to remain important in the future. In particular, the Steel Segment’s export sales to Asia (other than China and Japan) accounted for 24.6% of the Steel Segment’s total export sales revenue in 2023. Accordingly, adverse economic and financial developments in these countries may have an adverse effect on demand for our products. Unfavorable or uncertain economic and market conditions, which can be caused, among others, by difficulties in the financial sector, corporate, political or other scandals that may reduce confidence in the markets, declines in business confidence, increases in inflation, natural disasters or pandemics, outbreaks of hostilities or other geopolitical instability. Deterioration in economic or diplomatic relations between Korea and its trading partners or allies, including deterioration resulting from territorial or trade disputes or disagreements in foreign policy, or a combination of these or other factors, have, in the past adversely affected, and may in the future adversely affect, demand for our products.
Economic weakness in Asia may also adversely affect our sales to the Korean companies that export to the region, especially companies in the construction, shipbuilding, automotive, electrical appliances and downstream steel processing industries. Weaker demand in these countries, combined with an increase in global production capacity, may also reduce export prices in U.S. dollar terms of our principal products sold to customers in Asia. For a discussion of production over-capacity in the global steel industry, see “— We operate in the highly competitive steel, trading, construction and energy industries, and our failure to successfully compete would adversely affect our market position and business.” We attempt to maintain and expand our export sales to generate foreign currency receipts to cover our foreign currency purchases and debt service requirements. Consequently, any decrease in our export sales could also increase our foreign exchange risks.
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Depreciation of the value of the Won against the U.S. dollar and other major foreign currencies may have a material adverse effect on the results of our operations and on the price of the ADSs.
Our consolidated financial statements are prepared from our local currency denominated financial results, assets and liabilities and our subsidiaries around the world, which are then translated into Won. A substantial proportion of our consolidated financial results is accounted for in currencies other than the Won. Accordingly, our consolidated financial results and assets and liabilities may be materially affected by changes in the exchange rates of foreign currencies. In 2023, 60.4% of the Steel Segment’s total revenue was from overseas markets outside of Korea. To the extent that we incur costs in one currency and make sales in another, our profit margins may be affected by changes in the exchange rates between the two currencies. Since the currency in which sales are recognized may not be the same as the currency in which expenses are incurred, foreign exchange rate fluctuations may materially affect our results of operations. Depreciation of the Won may materially affect the results of our operations because, among other things, it causes:
| • | an increase in the amount of Won required for us to make interest and principal payments on our foreign currency-denominated debt; |
| • | an increase in Won terms in the costs of raw materials and equipment that we purchase from overseas sources and a substantial portion of our freight costs, which are denominated primarily in U.S. dollars; and |
| • | foreign exchange translation losses on foreign currency-denominated liabilities, which lower our earnings for accounting purposes. |
Appreciation of the Won against major currencies, on the other hand, causes:
| • | our export products to be less competitive by raising our prices in U.S. dollar, Yen and Yuan terms; and |
| • | a reduction in net sales and accounts receivables in Won from export sales, which are primarily denominated in U.S. dollars and to a lesser extent in Yen and Yuan. |
The overall net impact from fluctuations of the Won against major currencies is difficult to estimate and varies from year to year. We strive to naturally offset our foreign exchange risk by matching foreign currency receivables with our foreign currency payables and our overseas subsidiaries have sought to further mitigate the adverse impact of exchange rate fluctuations by conducting business transactions in the local currency of the respective market in which the transactions occur. In particular, POSCO International’s exposure to fluctuations in exchange rates, including the Won/U.S. dollar exchange rate, is limited because trading transactions typically involve matched purchase and sale contracts, which result in limited settlement exposure, and because POSCO International’s contracts with domestic suppliers of products for export and with domestic purchasers of imported products are generally denominated in U.S. dollars. Although the impact of exchange rate fluctuations is partially mitigated by such strategies, we and our subsidiaries, particularly POSCO International and POSCO E&C, also periodically enter into derivative contracts, primarily foreign currency swaps and forward exchange contracts, to further hedge some of our foreign exchange risks. However, our results of operations have historically been affected by exchange rate fluctuations and there can be no assurance that such strategies will be sufficient to reduce or eliminate the adverse impact of such fluctuations in the future.
Fluctuations in the exchange rate between the Won and the U.S. dollar will also affect the U.S. dollar equivalent of the Won price of the shares of our common stock on the KRX Korea Composite Stock Price Index (the “KOSPI”) Market and, as a result, will likely affect the market price of the ADSs. These fluctuations will also affect the U.S. dollar conversion by the depositary for the ADRs of cash dividends, if any, paid in Won on shares of common stock represented by the ADSs.
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We are dependent on imported raw materials, and significant increases in market prices of essential raw materials could adversely affect our margins and profits.
We purchase substantially all of the principal raw materials we use from sources outside Korea, including iron ore and coal. POSCO imported approximately 49 million dry metric tons of iron ore and 25 million wet metric tons of coal in 2023. Iron ore is imported primarily from Australia, Brazil and Canada. Coal is imported primarily from Australia, Canada and Mozambique. Although we have not experienced significant unanticipated supply disruptions in the past, supply disruptions, which could be caused by political or other events in the countries from which we import these materials, could adversely affect our operations. In addition, we are particularly exposed to increases in the prices of coal, iron ore and nickel, which represent the largest components of our cost of goods sold. The prices of our key raw materials have fluctuated significantly in recent years. For example, the average market price of iron ore per dry metric ton (Iron Ore 62% Fe, CFR China Index announced by Platts) was US$160 in 2021, US$120 in 2022 and US$120 in 2023. The average market price of coal per wet metric ton (Premium Low Vol Coking Coal, FOB Australia Index announced by Platts) was US$226 in 2021, US$364 in 2022 and US$296 in 2023. Such fluctuations in the price of coal in recent years was in large part attributable to sanctions imposed on Russia, a large exporter of coal, following its invasion of Ukraine in February 2022.
Our long-term supply contracts generally have terms of three to ten years and provide for periodic price adjustments to the then-market prices. We typically adjust the prices on a quarterly basis and maintain approximately one month of inventory of raw materials. Such price adjustments are driven by various factors, including the global economic outlook, global market prices of raw materials and steel products, supply and demand outlook of raw materials and production costs of raw materials. For both coal and iron ore, we typically agree on the purchase price with the suppliers primarily based on the spot market price periodically announced by Platts (Premium Low Vol Coking Coal, FOB Australia Index and Iron Ore 62% Fe, CFR China Index). As of December 31, 2023, 43 million tons of iron ore and 15 million tons of coal remained to be purchased under long-term supply contracts. Future increases in prices of our key raw materials and our inability to pass along such increases to our customers could adversely affect our margins and profits. Increased prices may also cause potential customers to defer purchase of steel products, while rapidly falling prices may increase loss on valuation of raw material inventory purchased when prices were higher, either of which could have an adverse effect on our business, financial condition and results of operations.
Earthquakes, tsunamis, floods, severe health epidemics (including the global COVID-19 pandemic and any possible occurrences of other types of widespread infectious diseases) and other natural calamities could materially and adversely affect our business, results of operations or financial condition.
If earthquakes, tsunamis, floods, severe health epidemics or any other natural calamities were to occur in the future in any area where any of our assets, suppliers or customers are located, our business, results of operations or financial condition could be adversely affected. For example, Typhoon Hinnamnor, a powerful tropical cyclone that landed in South Gyeongsang Province, Korea on September 5, 2022, caused substantial flooding and property damage in cities located near the coastline, including Pohang. The typhoon caused electricity blackouts and flooded some of the Pohang Works’ facilities located adjacent to Youngil Bay on the southeastern coast of Korea, causing disruptions to our downstream production activities, which adversely impacted our sales in the fourth quarter of 2022 following the flood.
A number of suppliers of our raw materials and customers of our products are also located in countries that have historically suffered natural calamities from time to time, such as Australia, China and Japan, as well as Korea. Any occurrence of such natural calamities in countries where our suppliers are located may lead to shortages or delays in the supply of raw materials. In addition, natural calamities in areas where our customers are located, including China, Southeast Asia, Japan, Europe, North America and Korea, may cause disruptions in their businesses, which in turn could adversely impact their demand for our products.
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Furthermore, COVID-19, an infectious disease caused by severe acute respiratory syndrome coronavirus 2, was declared a “pandemic” by the World Health Organization in March 2020. The global outbreak of COVID-19 had led to global economic and financial disruptions and had adversely affected our business operations.
Risks associated with COVID-19 or other types of widespread infectious diseases include:
| • | an increase in unemployment among, and/or decrease in disposable income of, consumers who purchase the products manufactured by our customers and a decline in overall consumer confidence and spending levels, which in turn may decrease demand for our products; |
| • | disruption in the normal operations of the businesses of our customers, which in turn may decrease demand for our products; |
| • | disruption in supply of raw materials from our suppliers and vendors; |
| • | disruption in delivery of our products to our customers; |
| • | disruption in the normal operations of our business resulting from contraction of infectious diseases by our employees or quarantine measures imposed by governments, which may necessitate our employees to be quarantined and/or our manufacturing facilities or offices to be temporarily shut down; |
| • | disruption resulting from the necessity for social distancing, including implementation of temporary adjustment of work arrangements requiring employees to work remotely, which may lead to a reduction in labor productivity (for example, from time to time, we implemented staggered remote working arrangements for our employees at our headquarters); |
| • | depreciation of the Won against major foreign currencies, which in turn may increase the cost of imported raw materials; |
| • | unstable global and Korean financial markets, which may adversely affect our ability to meet our funding needs on a timely and cost-effective basis; and |
| • | impairments in the fair value of our investments in companies that may be adversely affected by the pandemic. |
In the event that a future recurrence of COVID-19 or an occurrence of other types of widespread infectious diseases cannot be effectively and timely contained, our business, financial condition and results of operations may be materially and adversely affected.
Expansion of our operations abroad is important to our long-term success, and our limited experience in the operation of our business outside Korea increases the risk that our international expansion efforts will not be successful.
We conduct steel, international trading, construction and energy operations abroad, and our business relies on a global trading network comprised of overseas subsidiaries, branches and representative offices. Although many of our subsidiaries and overseas branches are located in developed countries, we also operate in numerous countries with developing economies. In addition, we intend to continue to expand our production operations internationally by carefully seeking out investment opportunities in regions that we believe offer promising growth prospects. We may enter into additional joint ventures with foreign companies that would enable us to rely on these businesses to conduct our operations, establish local networks and coordinate our sales and marketing efforts abroad. To the extent that we enter into these arrangements, our success will depend in part on the willingness of our partner companies to dedicate sufficient resources to their partnership with us.
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In other situations, we may decide to establish manufacturing facilities by ourselves instead of relying on partners. The demand and market acceptance for our products produced abroad are subject to a high level of uncertainty and are substantially dependent upon global market conditions. We cannot assure you that our international expansion plan will be profitable or that we can recoup the costs related to such investments.
Expansion of our operations abroad requires management attention and resources. In addition, we face additional risks associated with our expansion outside Korea, including:
| • | challenges caused by distance, language and cultural differences; |
| • | higher costs associated with doing business internationally; |
| • | legal and regulatory restrictions, including foreign exchange controls that might prevent us from repatriating cash earned in countries outside Korea; |
| • | longer payment cycles in some countries; |
| • | credit risk and higher levels of payment fraud; |
| • | currency exchange risks; |
| • | potentially adverse tax consequences; |
| • | political and economic instability; and |
| • | seasonal reductions in business activity during the summer months in some countries. |
We have limited insurance coverage and may incur significant losses resulting from operating hazards, product liability claims from customers or business interruptions.
The normal operation of our manufacturing facilities may be interrupted by accidents caused by operating hazards, power supply disruptions and equipment failures, as well as natural disasters. For example, we experienced significant losses related to flooding caused by Typhoon Hinnamnor in September 2022. See “— Earthquakes, tsunamis, floods, severe health epidemics (including the global COVID-19 pandemic and any possible occurrences of other types of widespread infectious diseases) and other natural calamities could materially and adversely affect our business, results of operations or financial condition.” As with other industrial companies, our operations involve the use, handling, generation, processing, storage, transportation and disposal of hazardous materials, which may result in fires, explosions, spills and other unexpected or dangerous accidents causing property damage as well as personal injuries or death. We are also exposed to risks associated with product liability claims in the event that the use of the products we sell results in injury. We maintain property insurance for our property, plant and equipment that we believe to be consistent with market practice. However, we may not have adequate resources to satisfy a judgment in excess of our insurance coverage in the event of a successful claim against us. Any occurrence of accidents or other events affecting our operations could result in potentially significant monetary damages, diversion of resources, production disruption and delay in delivery of our products, which may have a material adverse effect on our business, financial condition and results of operations.
Further increases in, or new impositions of, anti-dumping, safeguard or countervailing duty proceedings may have an adverse impact on our export sales.
Our subsidiaries engage in global operations, and we are involved in trade remedy proceedings in markets worldwide, including in the United States. We actively participate in such proceedings to minimize any adverse effects and associated risks. While there has been an increase in the number of trade cases in recent years, and an increased focus on trade issues by government officials, such cases have been limited in scope relative to our global sales and operations.
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We continue to carefully monitor developments with respect to trade remedy policy in all markets in which we participate and, where necessary, vigorously defend our rights through litigation before tribunals such as the U.S. Court of International Trade. Our products that are subject to anti-dumping duties, safeguard duties, countervailing duties, quotas or tariffs in the aggregate have not had a material adverse impact on our business and operations in recent years. However, there can be no assurance that increases in, or new impositions of, anti-dumping duties, safeguard duties, countervailing duties, quotas or tariffs on our exports of products abroad may not have a material adverse impact on our exports in the future.
We participate in overseas natural resources exploration, development and production projects, which expose us to various risks.
As part of our efforts to diversify our operations, we carefully seek out promising overseas natural resources exploration, development and production opportunities. We also participate in natural resources projects as part of consortia or through acquisitions of minority interests. We may also selectively acquire or invest in companies or businesses that engage in such activities. To the extent that we enter into these arrangements, our success in these endeavors will depend in part on the willingness of our partner companies to dedicate sufficient resources to their partnership with us, as well as our ability to finance such investments.
The demand and market acceptance for such activities abroad are subject to a substantially higher level of uncertainty than our traditional steel business and are substantially dependent upon the market condition of the global natural resources industry as well as the political and social environment of the target countries. The performance of projects in which we participate may be adversely affected by the occurrence of military hostility, political unrest or acts of terrorism. In addition, some of our current exploration, development and production projects involve drilling exploratory wells on properties with no proven amount of natural resource reserves. Although all drilling, whether developmental or exploratory, involves risks, exploratory drilling involves greater risks of dry holes or failure to find commercial quantities of natural resources. Other risks to which such activities are subject include obtaining required regulatory approvals and licenses, securing and maintaining adequate property rights to land and natural resources, and managing local opposition to project development. A decrease in the market price of raw materials may also adversely impact the value of our investments related to natural resources projects, potentially resulting in impairment losses. We have limited experience in this business, and we cannot assure you that our overseas natural resources exploration, development and production projects will be profitable, that we will be able to meet the financing requirements for such projects, or that we can recoup the costs related to such investments, which in turn could materially and adversely affect our business, financial condition and results of operations.
We may encounter problems with joint overseas natural resources exploration, development and production projects and large-scale infrastructure projects, which may materially and adversely affect our business.
We typically pursue our natural resources exploration, development and production projects jointly with consortium partners or through acquisition of minority interests in such projects, and we expect to be involved in other joint projects in the future. We sometimes hold a majority interest in the projects among the consortium partners, but we often lack a controlling interest in the joint projects. Therefore, we may not be able to require that our joint ventures sell assets or return invested capital, make additional capital contributions or take any other action without the vote of at least a majority of our consortium partners. If there are disagreements between our consortium partners and us regarding the business and operations of the joint projects, we cannot assure you that we will be able to resolve them in a manner that will be in our best interests. Certain major decisions, such as selling a stake in the joint project, may require the consent of all other partners. These limitations may adversely affect our ability to obtain the economic and other benefits we seek from participating in these projects.
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In addition, our consortium partners may:
| • | have economic or business interests or goals that are inconsistent with ours; |
| • | take actions contrary to our instructions, requests, policies or objectives; |
| • | be unable or unwilling to fulfill their obligations; |
| • | have financial difficulties; or |
| • | have disputes with us as to their rights, responsibilities and obligations. |
Any of these and other factors may have a material adverse effect on the performance of our joint projects and expose us to a number of risks, including the risk that the partners may be incapable of providing the required financial support to the partnerships and the risk that the partners may not be able to fulfill their other obligations, resulting in disputes not only between our partners and us, but also between the joint ventures and their customers. Such a material adverse effect on the performance of our joint projects may in turn materially and adversely affect our business, results of operations and financial condition.
The Korean electric power industry is heavily regulated by the Government, whose policies may have a material adverse impact on POSCO International’s power generation business.
The Korean electric power industry is heavily regulated by the Government, which seeks to ensure balanced overall electricity supply and demand in Korea at affordable rates to end users while taking into consideration various other factors, including economic conditions, national standard of living, long-term energy supply and demand plans and seasonality. To achieve such objectives, the Government has, from time to time, adopted various policy initiatives to foster efficiency in the Korean electric power industry, and has also adopted policy measures that affect electricity tariff rates in order to ease the burden on certain consumers. In addition, these policy initiatives have not always been fully implemented as originally planned and in some cases have been amended or replaced by new initiatives, among others, due to economic or policy considerations or a change in administration. No assurance can be provided that such policies, as well as changes therein, will not have a material adverse effect on POSCO International’s power generation business, results of operations or financial condition.
Cyclical fluctuations based on macroeconomic factors may adversely affect POSCO E&C’s business and performance.
We engage in engineering and construction activities through POSCO E&C. The Construction Segment of our Green Infrastructure Business is highly cyclical and tends to fluctuate based on macroeconomic factors, such as consumer confidence and income, employment levels, interest rates, inflation rates, demographic trends and policies of the Government. From time to time, the construction industry has experienced significant and sometimes prolonged downturns, and our construction revenues have fluctuated in the past depending on the level of public and private sector construction activities in Korea and abroad. In addition, the performance of POSCO E&C’s domestic residential property business is highly dependent on the general condition of the real estate market in Korea. The overall prospects for Korean construction companies remain uncertain, and a prolonged general downturn in the construction market resulting in weaker demand may adversely affect our business, results of operations or financial condition.
Many of POSCO E&C’s domestic and overseas construction projects are on a fixed-price basis, which could result in losses for us in the event that unforeseen additional expenses arise with respect to the project.
Many of POSCO E&C’s domestic and overseas construction projects are carried out on a fixed-price basis according to a predetermined timetable, pursuant to the terms of a fixed-price contract.
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Under such fixed-price contracts, POSCO E&C retains all cost savings on completed contracts but is also liable for the full amount of all cost overruns and may be required to pay damages for late delivery. The pricing of fixed-price contracts is crucial to POSCO E&C’s profitability, as is its ability to quantify risks to be borne by it and to provide for contingencies in the contract accordingly.
POSCO E&C attempts to anticipate costs of labor, raw materials, parts and components in its bids on fixed-price contracts. However, the costs incurred and gross profits realized on a fixed-price contract may vary from its estimates due to factors such as:
| • | unanticipated variations in labor and equipment productivity over the term of a contract; |
| • | unanticipated increases in labor, raw material, parts and components, subcontracting and overhead costs, including as a result of bad weather; |
| • | delivery delays and corrective measures for poor workmanship; and |
| • | errors in estimates and bidding. |
If unforeseen additional expenses arise over the course of a construction project, such expenses are usually borne by POSCO E&C, and its profit from the project will be correspondingly reduced or eliminated. If POSCO E&C experiences significant unforeseen additional expenses with respect to its fixed price projects, it may incur losses on such projects, which could have a material adverse effect on its financial condition and results of operations.
We may not succeed in implementing our strategy to take advantage of, or fail to realize the anticipated benefits of, our holding company structure and diversification strategy.
We became a holding company on March 2, 2022, and one of our principal strategies is to take advantage of our holding company structure to invest in promising businesses. In part to prepare for the eventual maturation of the Korean steel market, we have made investments in the past decade to secure new growth engines by diversifying into new businesses related to our steel operations that we believe will offer greater potential returns, as well as entering into new businesses not related to our steel operations such as production of cathode and anode materials for rechargeable batteries, development and production of natural resources (particularly for lithium and nickel used in production of rechargeable batteries), hydrogen-related businesses, energy solutions (particularly liquefied natural gas (“LNG”) trading), innovative architectural works and infrastructure projects, and agricultural trading. From time to time, we may selectively acquire or invest in companies to pursue such diversification strategy. The implementation of this strategy may require additional investments of capital, infrastructure, human resources and management attention. This strategy entails certain risks, including the possibility that we may face significant competition from other holding companies and operating companies in particular segments. If our strategy does not succeed, we may incur losses on our investments and our results of operations and financial condition may suffer.
Furthermore, our success under a holding company structure depends on our ability to realize the anticipated synergies, growth opportunities and cost savings from coordinating the businesses of our various subsidiaries. Although we may integrate certain aspects of our subsidiaries’ operations into our holding company structure, our subsidiaries will generally continue to operate as independent entities with separate management and staff, and our ability to direct our subsidiaries’ day-to-day operations may be limited.
We may continue to increase our equity interest in our subsidiaries or investees and may also consider acquiring or merging with other companies to achieve more balanced growth and further diversify our revenue base. The integration of our new subsidiaries’ or investees’ separate businesses and operations, as well as those of any companies we may acquire or merge with in the future, under our holding company structure could require a significant amount of time, financial resources and management attention. Moreover, that process could disrupt our operations, reduce employee morale, produce unintended inconsistencies in our standards, controls, procedures or policies, and affect our relationships with customers and our ability to retain key personnel.
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The realization of the anticipated benefits of our holding company structure and any mergers or acquisitions we decide to pursue may be blocked, delayed or reduced as a result of many factors, some of which may be outside our control. These factors include:
| • | unforeseen contingent risks, including lack of required capital resources or increased tax liabilities, relating to our holding company structure; |
| • | difficulties in integrating the diverse activities and operations of our subsidiaries or investees or any companies we may merge with or acquire; |
| • | unforeseen contingent risks or latent liabilities relating to the acquisition that may become apparent in the future; |
| • | difficulties in managing a larger business; |
| • | unexpected business disruptions; |
| • | loss of key management personnel or customers; and |
| • | labor unrest. |
Accordingly, we may not be able to realize the anticipated benefits of our holding company structure, and our business, results of operations and financial condition may suffer as a result.
We depend on limited forms of funding to fund our operations at the holding company level.
We are a holding company with no significant assets other than the shares of our subsidiaries. We expect our primary sources of funding and liquidity to be dividends from our subsidiaries, direct borrowings and issuances of equity or debt securities at the holding company level. Our ability to meet our obligations to our direct creditors and employees and our other liquidity needs and regulatory requirements at the holding company level depends on timely and adequate distributions from our subsidiaries and our ability to sell our securities or obtain credit from our lenders.
The ability of our subsidiaries to pay dividends to us depends on their financial condition and operating results. In the future, our subsidiaries may enter into agreements, such as credit agreements with lenders, that impose restrictions on their ability to make distributions to us, and the terms of future obligations and the operation of Korean law could prevent our subsidiaries from making sufficient distributions to us to allow us to make payments on our outstanding obligations. See “— As a holding company, we depend on receiving dividends from our subsidiaries to pay dividends on our common shares.” Any delay in receipt of or shortfall in payments to us from our subsidiaries could result in our inability to meet our liquidity needs, and may disrupt our operations at the holding company level.
In addition, creditors of our subsidiaries will generally have claims that are prior to any claims of our creditors with respect to their assets. Furthermore, our inability to sell our securities or obtain funds from our lenders on favorable terms, or at all, could also result in our inability to meet our liquidity needs and may disrupt our operations at the holding company level.
As a holding company, we depend on receiving dividends from our subsidiaries to pay dividends on our common shares.
Since our principal assets at the holding company level are the shares of our subsidiaries, our ability to pay dividends on our common shares largely depends on dividend payments from those subsidiaries. Those dividend payments are subject to the Korean Commercial Code and regulatory limitations, generally based on capital levels and retained earnings.
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For example, under the Korean Commercial Code, dividends may only be paid out of distributable income, an amount which is calculated by subtracting the aggregate amount of a company’s paid-in capital and certain mandatory legal reserves as well as certain unrealized profits from its net assets, in each case as of the end of the prior fiscal period.
Our subsidiaries may not continue to meet the applicable legal and regulatory requirements for the payment of dividends in the future. If they fail to do so, they may stop paying or reduce the amount of the dividends they pay to us, which would have an adverse effect on our ability to pay dividends on our common shares.
POSCO HOLDINGS INC. and POSCO remain jointly and severally liable for each other’s liabilities existing prior to the spin-off.
On March 1, 2022, we spun off our domestic steel production and sales business (through a vertical spin-off in accordance with Articles 530-2 through 530-12 of the Korean Commercial Code) to establish a wholly-owned subsidiary, and we converted into a holding company within the meaning of the Monopoly Regulation and Fair Trade Act (the “Spin-off”). The registration of the Spin-off occurred on March 2, 2022. As part of the Spin-off, we amended our name from POSCO to POSCO HOLDINGS INC., and the newly created wholly-owned subsidiary was named POSCO.
Under the relevant provisions of the Commercial Act of Korea relating to spin-offs, both the operating company and the holding company remain jointly and severally liable after the corporate spin-off for all of their liabilities existing prior to the corporate spin-off unless such joint and several liability has been successfully eliminated through a special resolution adopted at a general meeting of shareholders of the splitting company and consents of creditors of the affected debt, including consent by resolutions at bondholders’ meetings, which resolutions are approved by the court. POSCO HOLDINGS INC. and POSCO remain jointly and severally liable for each other’s debts and other liabilities that existed prior to March 1, 2022 that currently remain outstanding. POSCO is the successor-in-title to all the assets and liabilities and rights and obligations that were related to the domestic steel production and sales business transferred in the Spin-off, as well as all authorized licenses, employment relations, contracts and lawsuits that were directly related to such business, and POSCO HOLDINGS INC. remains jointly and severally liable for such liabilities. The remaining assets and liabilities and rights and obligations related to other business areas remain with POSCO HOLDINGS INC., and POSCO is jointly and severally liable for such liabilities. Defaults by POSCO of such liabilities, if significant, could have a material adverse effect on our results of operations and financial condition.
We are subject to environmental regulations, and our operations could expose us to substantial liabilities.
We are subject to national and local environmental laws and regulations, including increasing pressure to reduce emission of carbon dioxide relating to our manufacturing process, and our steel manufacturing and construction operations could expose us to risk of substantial liability relating to environmental or health and safety issues, such as those resulting from discharge of pollutants and carbon dioxide into the environment, the handling, storage and disposal of solid or hazardous materials or wastes and the investigation and remediation of contaminated sites. We may be responsible for the investigation and remediation of environmental conditions at currently and formerly operated manufacturing or construction sites. We may also be subject to associated liabilities, including liabilities for natural resource damage, third party property damage or personal injury resulting from lawsuits brought by the Government or private litigants. In the course of our operations, hazardous wastes may be generated at third party-owned or operated sites, and hazardous wastes may be disposed of or treated at third party-owned or operated disposal sites. If those sites become contaminated, we could also be held responsible for the cost of investigation and remediation of such sites, for any associated natural resource damage, and for civil or criminal fines or penalties.
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Furthermore, heightened global awareness and international and national commitments to reduce greenhouse gas emissions and counteract climate change (including increased activism by non-governmental and political organizations campaigning against fossil fuel extractions) may lead to increased costs for us. Investor preferences and sentiments are also influenced by environmental, social and corporate governance considerations including climate change and the transition to a lower carbon economy. Changes in such preferences and sentiment, including increased scrutiny from market participants, environmental organizations or the press, as well as compliance with such new and more stringent environmental obligations relating to greenhouse gas emissions may require additional capital expenditures or modifications in operating practices, as well as additional reporting obligations.
Significant breaches of information security could lead to legal and financial exposure, damage to our reputation and a loss of confidence by our customers.
Our business relies heavily on mission-critical, complex and interdependent information technology systems that support our business processes. It involves the storage and transmission of confidential information relating to us as well as our customers and suppliers. Any significant breach in our information security could expose us to a risk of loss, improper use or disclosure of such information, and could give rise to significant liability or litigation, any of which could harm our reputation and adversely affect our business.
We believe that there has been no instance of a material breach in our information security to date that resulted in significant disruption of our operations and had a significant adverse effect on our operational results, or on third parties, including our customers and suppliers. However, there can be no assurance that we will be able to continue to prevent security incidents or other breaches in our information security from having a material adverse effect on our business, results of operations, financial viability or reputation. In addition, our information security measures may fail due to external and internal security threats, outages, malicious intrusions and attacks, programming or human errors and malfeasance, or other similar events.
Instituting appropriate access controls and safeguards across our information technology infrastructure is challenging. For a discussion of our cybersecurity risk management and strategy, see “Item 16.K. Cybersecurity.” Furthermore, outside parties may attempt to fraudulently induce employees to divulge sensitive information to gain access to our data or our customers’ data or access credentials. Because the techniques used to obtain unauthorized access, disable or degrade services or sabotage systems change frequently and often are not recognized until attacks are launched against a target, we may be unable to anticipate these techniques or implement adequate preventative measures. If an actual or perceived breach of our cybersecurity occurs or the market perception of the effectiveness of our information security measures is compromised, this may lead to significant legal and financial exposure, including legal claims and regulatory fines and penalties, reputational harm and a loss of confidence of our customers, which could have an adverse effect on our business, financial condition and results of operations.
Failure to protect our intellectual property rights could impair our competitiveness and harm our business and future prospects.
We believe that developing new steel manufacturing technologies that can be differentiated from those of our competitors, such as FINEX, automotive steel manufacturing technology and high-manganese steel manufacturing technology, is critical to the success of our business. We take active measures to obtain protection of our intellectual property by obtaining patents and undertaking monitoring activities in our major markets. However, we cannot assure you that the measures we take will effectively deter competitors from improper use of our proprietary technologies. Our competitors may misappropriate our intellectual property, disputes as to ownership of intellectual property may arise and our intellectual property may otherwise become known or independently developed by our competitors.
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Any failure to protect our intellectual property could impair our competitiveness and harm our business and future prospects.
We rely on trade secrets and other unpatented proprietary know-how to maintain our competitive position, and unauthorized disclosure of our trade secrets or other unpatented proprietary know-how could negatively affect our business.
We rely on trade secrets and unpatented proprietary know-how and information. We enter into confidentiality agreements with each of our employees and consultants upon the commencement of an employment or consulting relationship. These agreements generally provide that all inventions, ideas, discoveries, improvements and patentable material made or conceived by the individual arising out of the employment or consulting relationship and all confidential information developed or made known to the individual during the term of the relationship is our exclusive property. We cannot assure the enforceability of these types of agreements, or that they will not be breached. We also cannot be certain that we will have adequate remedies for any breach. The disclosure of our trade secrets or other know-how as a result of such a breach could adversely affect our business.
We face the risk of litigation proceedings relating to infringement of intellectual property rights of third parties, which, if determined adversely to us, could cause us to lose significant rights, pay significant damage awards or suspend the sale of certain products.
Our success depends largely on our ability to develop and use our technology and know-how in a proprietary manner without infringing the intellectual property rights of third parties. The validity and scope of claims relating to technology and patents involve complex scientific, legal and factual questions and analysis and, therefore, may be highly uncertain. In addition, because patent applications in many jurisdictions are kept confidential for an extended period before they are published, we may be unaware of other persons’ pending patent applications that relate to our products or manufacturing processes. Accordingly, we face the risk of litigation proceedings relating to infringement of intellectual property rights of third parties.
The plaintiffs in actions relating to infringement of intellectual property rights typically seek injunctions and substantial damages. Although patent and other intellectual property disputes are often settled through licensing or similar arrangements, there can be no assurance that such licenses can be obtained on acceptable terms or at all. Accordingly, regardless of the scope or validity of disputed patents or the merits of any patent infringement claims by potential or actual litigants, we may have to engage in protracted litigation. The defense and prosecution of intellectual property suits, patent opposition proceedings and related legal and administrative proceedings can be both costly and time-consuming and may significantly divert the efforts and resources of our technical and management personnel. An adverse determination in any such litigation or proceedings could subject us to pay substantial damages to third parties, require us to seek licenses from third parties and pay ongoing royalties or redesign certain products, or subject us to injunctions prohibiting the manufacture and sale of our products or the use of technologies in certain jurisdictions. The occurrence of any of the foregoing could have a material adverse effect on our reputation, business, financial condition and results of operations.
Labor laws and a recent Supreme Court decision on contract-based workers dispatched by third-party contractors could restrict flexibility in our labor management and result in an increase in our labor-related costs.
In July 2022, the Supreme Court of Korea held that 59 workers employed by our third-party contractors and dispatched to our production facilities who brought a claim under the Dispatched Worker Protection Act (“DWPA”) of Korea were in a direct employment relationship with us. The DWPA limits the maximum period that a worker may be dispatched to a company to two years.
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Under the DWPA, worker dispatch exceeding such period may result in a company’s obligation to directly hire such dispatched workers in certain situations, including where such workers were directly supervised by the company rather than the third-party contractor. Pursuant to such judgment, we hired 55 of such workers that met our working age criteria as our full-time direct employees. In October 2022, all 59 original plaintiffs collectively filed a complaint at the Gwangju District Court claiming an aggregate amount of Won 3.0 billion as unpaid wages for the three-year period that they should have been recognized as our full-time direct employees. The lawsuit is still in progress, and we intend to vigorously defend against such lawsuit.
In addition to the decision rendered by the Supreme Court in July 2022, fourteen lawsuits brought by a total of approximately 2,671 workers employed by our third-party contractors who worked at our production facilities related to such workers’ employment status with us remain pending as of April 23, 2024. Many of these cases also seek unpaid wages for the period they claim should have been recognized as our full-time direct employees. Eleven of such fourteen lawsuits remain pending at the district courts. With respect to the first of the three remaining lawsuits, which involves eight workers, the district court ruled in our favor but the appellate court ruled against us. We appealed the decision in February 2022, which remains pending at the Supreme Court. With respect to the second of the three remaining lawsuits, which involves 215 workers, both the district court and the appellate court ruled against us. We appealed the appellate court’s decision in February 2022, which remains pending at the Supreme Court. With respect to the last remaining lawsuit, which involves 247 workers, the district court ruled against us. We appealed the district court’s decision in February 2024, which remains pending at the appellate court. We intend to vigorously defend against such lawsuits.
We cannot provide any assurance that there will not be additional lawsuits related to the employment status of workers employed by our third-party contractors who worked at our production facilities, and we have not made any provisions related to any of the pending proceedings. The application of the applicable labor law will be based on the specific facts of the cases, and the general applicability of the July 2022 Supreme Court ruling cannot be determined with certainty at this time. However, if similar judgments were to be rendered against us, they could restrict our ability to manage our labor force flexibly and significantly increase our labor-related costs, which in turn may have a material adverse effect on our results of operations.
We may be exposed to potential claims for unpaid wages and become subject to additional labor costs arising from the Supreme Court of Korea’s interpretation of ordinary wages.
Under the Labor Standards Act, an employee’s “ordinary wage” is used as the basis for calculating various statutory benefits. Prior to the Supreme Court of Korea’s decision described below, we and other companies in Korea had interpreted the previous guidelines issued by the Ministry of Employment and Labor as excluding fixed bonuses that are paid other than on a monthly basis, such as bi monthly, quarterly or biannually paid bonuses, from employees’ ordinary wages.
In December 2013, the Supreme Court of Korea ruled that regularly paid bonuses, including those that are paid other than on a monthly basis, are included in the scope of employees’ ordinary wages if these bonuses are paid (i) “regularly,” (ii) “uniformly” and (iii) on a “fixed basis,” notwithstanding differential amounts based on seniority. Under this decision, any provision of a collective bargaining agreement or other agreements that attempt to exclude such regular bonuses from employees’ ordinary wages will be deemed void for violation of the mandatory provisions of Korean law.
The Supreme Court of Korea’s decision clarified that if payment of a regular bonus is limited only to those working for the employer on a specific date, such bonus is not fixed and thus does not constitute part of an employee’s ordinary wage. The Ministry of Employment and Labor subsequently published guidelines in January 2014 (the “Guidelines”). According to the Guidelines, the Government excludes, from ordinary wages, regular bonuses contingent on employment on a specific date.
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Based on the Supreme Court of Korea’s decision and the Guidelines, we believe that regular bonuses we have paid to our employees are likely not required to be included in their ordinary wages because we have paid regular bonuses only to those working for us on the date of payment calculation, the 15th day of each month. However, if we are nonetheless determined to have underpaid employees by under-calculating their ordinary wages over the past three years or in the future, we may be liable for additional payments reflecting the expanded scope of employees’ ordinary wages. Any such additional payments may have an adverse effect on our financial condition and results of operations.
Escalations in tensions with North Korea could have an adverse effect on us and the market value of our common shares and ADSs.
Relations between Korea and North Korea have been tense throughout Korea’s modern history. The level of tension between the two Koreas has fluctuated and may increase abruptly as a result of current and future events. In particular, there have been heightened security concerns in recent years stemming from North Korea’s nuclear weapon, ballistic missile and satellite programs as well as its hostile military actions against Korea. Some of the significant incidents in recent years include the following:
| • | North Korea renounced its obligations under the Nuclear Non-Proliferation Treaty in January 2003 and has conducted six rounds of nuclear tests since October 2006, including claimed detonations of hydrogen bombs, and warheads that can be mounted on ballistic missiles. Over the years, North Korea has also conducted a series of ballistic missile tests, including missiles launched from submarines and intercontinental ballistic missiles that it claims can reach the United States mainland. North Korea has increased the frequency of such activities since the beginning of 2022, firing numerous ballistic missiles, including intercontinental ballistic missiles, and in November 2023, successfully launched its first spy satellite. In response, the Government has repeatedly condemned the provocations and flagrant violations of relevant United Nations Security Council resolutions. In February 2016, the Government also closed the inter-Korea Gaeseong Industrial Complex in response to North Korea’s fourth nuclear test in January 2016. Internationally, the United Nations Security Council has passed a series of resolutions condemning North Korea’s actions and significantly expanding the scope of sanctions applicable to North Korea. Over the years, the United States and the European Union have also expanded their sanctions applicable to North Korea. |
| • | In March 2010, a Korean naval vessel was destroyed by an underwater explosion, killing many of the crewmen on board. The Government formally accused North Korea of causing the sinking, while North Korea denied responsibility. Moreover, in November 2010, North Korea fired more than 100 artillery shells that hit Korea’s Yeonpyeong Island near the Northern Limit Line, which acts as the de facto maritime boundary between Korea and North Korea on the west coast of the Korean peninsula, causing casualties and significant property damage. The Government condemned North Korea for the attack and vowed stern retaliation should there be further provocation. |
North Korea’s economy also faces severe challenges, which may further aggravate social and political pressures within North Korea. Although bilateral summit meetings between Korea and North Korea were held in April, May and September 2018 and between North Korea and the United States in June 2018, February 2019 and June 2019, there can be no assurance that the level of tensions affecting the Korean peninsula will not escalate in the future. Any further increase in tensions, which may occur, for example, if North Korea experiences a leadership crisis, high-level contacts between Korea and North Korea or between the United States and North Korea break down or military hostilities occur, could have a material adverse effect on the Korean economy and on our business, financial condition and results of operations and the market value of our common shares and ADSs.
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If you surrender your ADRs to withdraw shares of our common stock, you may not be allowed to deposit the shares again to obtain ADRs.
Under the deposit agreement, holders of shares of our common stock may deposit those shares with the ADR depositary’s custodian in Korea and obtain ADRs, and holders of ADRs may surrender ADRs to the ADR depositary and receive shares of our common stock. However, under current Korean laws and regulations, the depositary bank is required to obtain our prior consent for the number of shares to be deposited in any given proposed deposit that exceeds the difference between (i) the aggregate number of shares deposited by us for the issuance of ADSs (including deposits in connection with the initial and all subsequent offerings of ADSs and stock dividends or other distributions related to these ADSs) and (ii) the number of shares on deposit with the depositary bank at the time of such proposed deposit. It is possible that we may not give the consent. As a result, if you surrender ADRs and withdraw shares of common stock, you may not be able to deposit the shares again to obtain ADRs. See “Item 10. Additional Information — Item 10.D. Exchange Controls.”
You may not be able to exercise preemptive rights for additional shares of common stock and may suffer dilution of your equity interest in us.
The Commercial Code and our articles of incorporation require us, with some exceptions, to offer shareholders the right to subscribe for new shares in proportion to their existing ownership percentage whenever new shares are issued. If we issue new shares to persons other than our shareholders (See “Item 10.B. Memorandum and Articles of Association — Preemptive Rights and Issuance of Additional Shares”), a holder of our ADSs will experience dilution of such holding. If none of these exceptions is available, we will be required to grant preemptive rights when issuing additional common shares under Korean law. Under the deposit agreement governing the ADSs, if we offer any rights to subscribe for additional shares of our common stock or any rights of any other nature, the ADR depositary, after consultation with us, may make the rights available to you or use reasonable efforts to dispose of the rights on your behalf and make the net proceeds available to you. The ADR depositary, however, is not required to make available to you any rights to purchase any additional shares unless it deems that doing so is lawful and feasible and:
| • | a registration statement filed by us under the Securities Act is in effect with respect to those shares; or |
| • | the offering and sale of those shares is exempt from or is not subject to the registration requirements of the Securities Act. |
We are under no obligation to file any registration statement under the Securities Act to enable you to exercise preemptive rights in respect of the common shares underlying the ADSs, and we cannot assure you that any registration statement would be filed or that an exemption from the registration requirement under the Securities Act would be available. Accordingly, if a registration statement is required for you to exercise preemptive rights but is not filed by us, you will not be able to exercise your preemptive rights for additional shares and may suffer dilution of your equity interest in us.
U.S. investors may have difficulty enforcing civil liabilities against us and our directors and senior management.
We are incorporated in Korea with our principal executive offices located in Seoul. The majority of our directors and senior management are residents of jurisdictions outside the United States, and the majority of our assets and the assets of such persons are located outside the United States. As a result, U.S. investors may find it difficult to effect service of process within the United States upon us or such persons or to enforce outside the United States judgments obtained against us or such persons in U.S. courts, including actions predicated upon the civil liability provisions of the U.S. federal securities laws. It may also be difficult for an investor to enforce in U.S.
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courts judgments obtained against us or such persons in courts in jurisdictions outside the United States, including actions predicated upon the civil liability provisions of the U.S. federal securities laws. It may also be difficult for a U.S. investor to bring an action in a Korean court predicated upon the civil liability provisions of the U.S. federal securities laws against our directors and senior management and non-U.S. experts named in this annual report.
We engage in activities relating to countries targeted by United States, European Union and United Kingdom economic sanctions.
The U.S. Department of the Treasury’s Office of Foreign Assets Control, or “OFAC,” enforces certain laws and regulations (“U.S. Sanctions”) that impose prohibitions or restrictions on U.S. persons and, in some instances, foreign entities owned or controlled by U.S. persons, with respect to activities or transactions with or involving certain countries, governments, entities and individuals that are the subject of U.S. Sanctions, including countries and territories subject to a comprehensive embargo (currently Cuba, Iran, North Korea, Syria, the so-called Donetsk People’s Republic, the so-called Luhansk People’s Republic, the non-government controlled areas of the Zaporizhzhia and Kherson and Crimea regions of Ukraine), as well as parties that are subject to, or majority owned by one or more parties subject to, so-called blocking sanctions. U.S. persons are also generally prohibited from facilitating such activities or transactions. Similarly, the European Union enforces certain laws and regulations (“E.U. Sanctions”) that impose restrictions on nationals of E.U. member states, persons located within E.U. member states, entities incorporated or constituted under the law of an E.U. member state, or business conducted in whole or in part in E.U. member states with respect to activities or transactions with certain countries, governments, entities and individuals that are the subject of E.U. Sanctions. E.U. persons are also generally prohibited from activities that promote such activities or transactions. The United Kingdom also enforces certain laws and regulations (“UK Sanctions”) that impose restrictions upon UK persons with respect to activities or transactions with parties that are the subject of UK Sanctions. In light of recent international developments, particularly the ongoing war in Ukraine, the United States, European Union, United Kingdom and other jurisdictions have imposed enhanced sanctions targeting Russia.
We and our subsidiaries engage in limited business activities in Russia and the Crimea region of Ukraine. In particular, we produce and export, typically through our sales subsidiaries, steel products to such countries, including steel materials. In addition, we purchase raw materials from non-Russian third parties that are sourced from mines in Russia. We believe that such activities do not involve any U.S. goods or services and otherwise do not implicate or violate U.S. Sanctions, E.U. Sanctions or UK Sanctions. To our knowledge, none of our business in Russia involves parties subject to U.S. Sanctions. Our activities in Russia and the Crimea region of Ukraine together accounted for approximately 0.19% of our consolidated revenue in 2021, 0.03% in 2022 and 0.03% in 2023. In addition, we did not recognize any revenue from business operations in Iran in 2021, 2022 and 2023, and we currently do not have any plans to engage in business operations in Iran in the foreseeable future, other than collecting outstanding receivables.
POSCO Steeleon Co., Ltd. (“POSCO Steeleon”), a subsidiary of POSCO, holds a 70% interest in Myanmar POSCO C&C Co., Ltd. (“Myanmar POSCO C&C”), a joint venture with Myanmar Economic Holdings Public Company Limited (“MEHL”). MEHL was designated for U.S. Sanctions on March 25, 2021. Myanmar POSCO C&C engages in the production and sale of coated steel roofing sheets in Myanmar, and its sales accounted for approximately 0.02% of our consolidated revenue in 2021, 0.02% in 2022 and 0.03% in 2023. POSCO Steeleon is monitoring changes in Myanmar’s business environment and assessing its shareholding arrangement. U.S. Sanctions that apply to MEHL do not apply to us, POSCO, POSCO Steeleon or Myanmar POSCO C&C.
POSCO International holds a 51.0% interest in a gas field project in Myanmar. Myanma Oil and Gas Enterprise (“MOGE”) holds a 15.0% interest in the project and the remaining interests are held by non-sanctioned persons. On February 21, 2022, MOGE was designated for E.U. Sanctions, and certain managers of MOGE have also been subsequently designated for U.S. Sanctions. Such sanctions do not extend to POSCO International, POSCO or, to our knowledge, the gas field project.
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On October 31, 2023, OFAC issued Burma-related Directive 1 under Executive Order 14014, which prohibits U.S. persons from providing, exporting or re-exporting, directly or indirectly, financial services to, or for the benefit of, MOGE, regardless of the currency in which any prohibited transaction is denominated. POSCO International is operating the Myanmar gas field project in compliance with such directive. Our revenue recognized from the gas field project accounted for approximately 0.59% of our consolidated revenue in 2021, 1.10% in 2022 and 0.80% in 2023.
We expect to continue to engage in business activities and make investments in countries or territories on which comprehensive U.S. Sanctions have been imposed and also plan to continue to engage in business in Russia. Although we believe that U.S. Sanctions, E.U. Sanctions and UK Sanctions under their current terms are not applicable to our current activities, the relevant authorities may take a different view, our reputation may be adversely affected, and some of our investors may be required to divest their investments in us, including under the laws of certain U.S. states or under internal investment policies or may decide for reputational reasons to divest such investments. We are aware of initiatives by U.S. governmental entities and U.S. institutional investors, such as pension funds, to adopt or consider adopting laws, regulations or policies prohibiting transactions with or investment in, or requiring divestment from, entities doing business with countries identified as state sponsors of terrorism. There can be no assurance that the foregoing will not occur, that sanctions regimes around the world will not change in a way that impacts our business, or that such occurrences will not have a material adverse effect on the value of our securities.
U.S. investors could be subject to adverse U.S. federal income tax consequences if we are treated as a passive foreign investment company (“PFIC”) for any taxable year during which they hold our common stock of ADSs.
We will be classified as a PFIC for U.S. federal income tax purposes if, for any taxable year, either (i) 75 percent or more of our gross income for the taxable year is passive income or (ii) at least 50 percent of the value of our assets (generally determined on the basis of a quarterly average) is attributable to assets that produce or are held for the production of passive income. The determination of whether we are a PFIC must be made annually based on the facts and circumstances at the relevant time, some of which may be beyond our control, including the valuation of our assets as implied by the market price for our common stock or ADSs. Accordingly, we could be classified as a PFIC in the current or a future taxable year, and that possibility may be increased significantly by market volatility or a decline in the price of our common stock or ADSs.
If we were to be classified as a PFIC in any taxable year during which a U.S. holder (as defined in “Item 10.E. Taxation — United States Taxation”) holds our common stock or ADSs, such U.S. holder could be subject to a special tax at ordinary income rates on “excess distributions,” including certain distributions by us and gain that the U.S. holder recognizes on the sale of our common stock or ADSs. The amount of income tax on any excess distributions would be increased by an interest charge to compensate for tax deferral, calculated as if the excess distributions were earned ratably over the period the U.S. holder held the common stock or ADSs. See “Item 10.E. Taxation — United States Taxation — Shares of Common Stock and ADSs — Passive Foreign Investment Company Rules.”
This annual report contains “forward-looking statements” that are subject to various risks and uncertainties.
This annual report contains “forward-looking statements” that are based on our current expectations, assumptions, estimates and projections about our company and our industry. The forward-looking statements are subject to various risks and uncertainties. These forward-looking statements include, but are not limited to, those statements using words such as “anticipate,” “believe,” “continues,” “expect,” “estimate,” “intend,” “project,” “aim,” “plan,” “likely to,” “target,” “contemplate,” “predict,” “potential” and similar expressions and future or conditional verbs such as “will,” “would,”
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“should,” “could,” “might,” “can,” “may,” or similar expressions generally intended to identify forward-looking statements. Those statements include, among other things, the discussions of our business strategy and expectations concerning our market position, future operations, margins, profitability, liquidity and capital resources. We caution you that reliance on any forward-looking statement involves risks and uncertainties, and that although we believe that the assumptions on which our forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and, as a result, the forward-looking statements based on those assumptions could be incorrect. The uncertainties in this regard include, but are not limited to, those identified in the risk factors discussed above. In light of these and other uncertainties, you should not conclude that we will necessarily achieve any plans and objectives or projected financial results referred to in any of the forward-looking statements. We do not undertake to release the results of any revisions of these forward-looking statements to reflect future events or circumstances.
Item 4. Information on the Company
Item 4.A. History and Development of the Company
We were established by the Government on April 1, 1968, under the Commercial Code, to manufacture and distribute steel rolled products and plates in the domestic and overseas markets. The Government owned more than 70% of our equity until 1988, when the Government reduced its ownership of our common stock to 35% through a public offering and listing our shares on the KRX KOSPI Market. In December 1998, the Government sold all of our common stock it owned directly, and The Korea Development Bank completed the sale of our shares that it owned in September 2000. The Government no longer holds any direct interest in us, and our outstanding common stock is currently held by individuals and institutions. See “Item 7. Major Shareholders and Related Party Transactions — Item 7A. Major Stockholders.”
On March 1, 2022, we spun off our domestic steel production and sales business (through a vertical spin-off in accordance with Articles 530-2 through 530-12 of the Korean Commercial Code) to establish a wholly-owned subsidiary (POSCO), and we converted into a holding company (POSCO HOLDINGS INC.) within the meaning of the Monopoly Regulation and Fair Trade Act in order to more effectively promote the growth of the group’s businesses, enhance synergies among the group’s businesses and actively explore diversification opportunities in promising business areas. The registration of the Spin-off occurred on March 2, 2022. As part of the Spin-off, we amended our name from POSCO to POSCO HOLDINGS INC., and the newly created wholly-owned subsidiary was named POSCO.
Our legal and commercial name is POSCO HOLDINGS INC. Our principal executive offices are located at POSCO Center, 440 Teheran-ro, Gangnam-gu, Seoul, Korea 06194, and our telephone number is +82-2-3457-0114. The address of our English website is http://www.posco-inc.com.
The SEC maintains a website (http://www.sec.gov), which contains reports, information statements and other information regarding issuers that file electronically with the SEC.
Item 4.B. Business Overview
The Company
We are a holding company, and we operate through our consolidated subsidiaries including POSCO, one of the largest steel producers in the world. We also engage in businesses that complement our steel manufacturing operations and also carefully seek out promising investment opportunities to diversify our businesses both vertically and horizontally. One of our principal strategies is to take advantage of our holding company structure to invest in promising businesses. We have made investments in the past decade to secure new growth engines by diversifying into new businesses related to our steel operations that we believe will offer greater potential returns, as well as entering into new businesses not related to our steel operations.
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We have six reportable segments as follows:
| • | Steel Segment. Our Steel Segment includes the production and sale of steel products. |
| • | Green Infrastructure Business. Our Green Infrastructure Business includes our businesses related to provision of infrastructure and related services. Such segment is divided into three operations as follows: |
| Ø | Trading Segment. The Trading Segment of our Green Infrastructure Business consists primarily of the global trading activities, natural resources development activities and power generation activities of POSCO International. POSCO International exports and imports a wide range of steel products that are both obtained from and supplied to POSCO, as well as steel and other products from and to other suppliers and purchasers in Korea and overseas. On January 1, 2023, POSCO Energy, Korea’s largest domestic private power utility company and a provider of alternative environmentally-friendly energy solutions, merged into POSCO International. |
| Ø | Construction Segment. The Construction Segment of our Green Infrastructure Business consists primarily of POSCO E&C’s planning, designing and construction of industrial plants, civil engineering projects and commercial and residential buildings, both in Korea and overseas. |
| Ø | Logistics and Others Segment. The Logistics and Others Segment of our Green Infrastructure Business consists primarily of the information technology and operational technology services of POSCO DX and the integrated logistics services of POSCO FLOW. |
| • | Green Materials and Energy Segment. Our Green Materials and Energy Segment includes (i) the manufacturing and sale of various energy-related and other industrial materials by POSCO Future M, including anode and cathode materials for rechargeable batteries and (ii) investments made by us in production projects relating to other materials such as lithium. |
| • | Others Segment. Our Others Segment includes POSCO HOLDINGS INC. and all other entities which fall below the reporting thresholds. POSCO HOLDINGS INC. actively explores diversification opportunities in promising business areas. |
The table below sets out our revenue by segment category for the periods indicated.
| For the Year Ended December 31, | ||||||||||||||||||||||||
| 2021 | 2022 | 2023 | ||||||||||||||||||||||
| Segments |
Billions of Won |
% | Billions of Won |
% | Billions of Won |
% | ||||||||||||||||||
| Steel Segment |
￦ | 41,093 | 54.1 | % | ￦ | 44,547 | 52.4 | % | ￦ | 40,393 | 52.4 | % | ||||||||||||
| Green Infrastructure Business: |
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| Trading Segment (1) |
26,909 | 35.4 | 29,518 | 34.7 | 24,034 | 31.2 | ||||||||||||||||||
| Construction Segment |
6,398 | 8.4 | 7,668 | 9.0 | 8,301 | 10.8 | ||||||||||||||||||
| Logistics and Others Segment (2) |
218 | 0.3 | 436 | 0.5 | 471 | 0.6 | ||||||||||||||||||
| Green Materials and Energy Segment |
1,242 | 1.6 | 2,452 | 2.9 | 3,816 | 5.0 | ||||||||||||||||||
| Others Segment |
472 | 0.6 | 129 | 0.2 | 113 | 0.1 | ||||||||||||||||||
| Basis difference adjustments (3) |
(323 | ) | (0.4 | ) | 253 | 0.3 | (71 | ) | (0.1 | ) | ||||||||||||||
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| Total |
￦ | 76,009 | 100.0 | % | ￦ | 85,004 | 100.0 | % | ￦ | 77,057 | 100.0 | % | ||||||||||||
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| (1) | Including POSCO International. POSCO Energy merged into POSCO International on January 1, 2023, and the revenue of the Trading Segment of the Green Infrastructure Business in 2021 and 2022 has been restated to reflect such merger as if it had occurred on January 1, 2021. |
| (2) | Including POSCO DX and POSCO FLOW. |
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| (3) | Basis difference adjustments are related to the difference in recognizing revenue and expenses of the Construction Segment of our Green Infrastructure Business in connection with the development and sale of certain residential real estate between the report reviewed by the chief executive officer and the consolidated financial statements. See Notes 3 and 41 to the Consolidated Financial Statements. |
Environmental, Social and Governance
Our Environmental, Social and Governance (“ESG”) management focuses on eco-friendly leadership, sustainable social communities and governance enhancements that promote tangible value. These principles drive our five comprehensive ESG strategies covering the following key areas.
Green Competency
We strive to respond to global climate change through development of low-carbon processes, energy efficiency and eco-friendly products and services, thereby reducing our environmental impact to create a future in which people and nature co-exist and thrive together. POSCO declared the 2050 Carbon Neutrality Roadmap by setting targets for a 30% carbon emissions reduction by 2035, 50% by 2040, and Net Zero emissions by 2050. Initiatives such as low carbon technology and hydrogen reduction are underway to support these goals.
Responsible Value Chain
We are committed to empowering our business partners to obtain the highest standards in various domains, including low carbon technology, human rights and safety, while promoting sustainability across the value chain.
POSCO procures all tin, tantalum, tungsten and gold minerals from refineries in conflict-affected and high-risk areas that have obtained Responsible Minerals Assurance Process (“RMAP”) certification. POSCO Future M procures tungsten and cobalt for its rechargeable battery business by ensuring sourcing from RMAP-compliant smelters. POSCO Future M plans to assist non-certified smelters within the supply chain in achieving RMAP certification.
Employee Happiness
We prioritize establishing a secure and inclusive work environment that upholds human rights, embraces diversity and empowers creative talents to lead a period of transformation. As United Nations Global Compact members, POSCO HOLDINGS, POSCO, POSCO International and POSCO E&C, advocate for management based on human rights, diversity and inclusion policies. Our human rights policy covers protections for POSCO Group employees and staffs of our suppliers and labor union rights, encompassing human rights, grievance handling and victim relief. Our diversity, equality and inclusion policies prohibit all forms of discrimination, workplace harassment and sexual harassment, with training, reporting, consultation and investigation processes, as well as whistleblower protection measures that are clearly outlined.
Ethics & Integrity
We are committed to making our business decisions based on unwavering ethical principles by upholding the highest standards of ethics and compliance. Our efforts to enhance ethics and compliance levels are complemented by our commitment to promoting fair trade practices. We conduct annual questionnaire surveys targeting employees of our suppliers and our domestic and overseas subsidiaries to assess the risk of unethical behavior, workplace harassment and human rights violations. Additional monitoring and investigation are conducted when risks are identified.
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New Governance for Real Value
We enhance independence, expertise and diversity of the board of directors to promote real value management by safeguarding shareholder rights and ensuring transparent disclosures, with the aim of enhancing the value of the POSCO Group. A group-level ESG risk response system has been established to address internal and external risks effectively, with significant ESG-related decisions made through the board of directors, discussions on key ESG issues by the POSCO Group’s ESG Council led by top management and the ESG Session involving all directors who are our executive officers (“Inside Directors”) and directors who are outside directors (“Outside Directors”).
Steel Segment
POSCO is the largest fully integrated steel producer in Korea, and one of the largest steel producers in the world, based on annual crude steel production. We, through POSCO and our other steel-producing subsidiaries, produced approximately 39.9 million tons of crude steel and stainless steel in 2023, a significant majority of which was produced at Pohang Works and Gwangyang Works. As of December 31, 2023, we had approximately 45.3 million tons of annual crude steel and stainless steel production capacity, including 40.7 million tons of production capacity in Korea. We believe Pohang Works and Gwangyang Works are two of the most technologically-advanced integrated steel facilities in the world. We manufacture and sell a diversified line of steel products, including cold rolled and hot rolled products, stainless steel products, plates, wire rods and silicon steel sheets, and we are able to meet a broad range of customer needs from manufacturing industries that consume steel, including automotive, shipbuilding, home appliance, engineering and machinery industries.
POSCO M-Tech Co., Ltd., which is also included in the Steel Segment, produces aluminum deoxidizers used to remove excess oxygen during the steel manufacturing process to improve durability of steel products, and it also provides integrated steel product packing solutions for steel production facilities.
Korea is our most important market. Domestic sales accounted for 39.6% of the Steel Segment’s total revenue in 2023 and 40.7% in 2022. We believe that POSCO’s steel products constituted approximately 45.5% of the total sales volume of such steel products sold in Korea in 2023 and approximately 48.5% in 2022. The Steel Segment’s export sales and overseas sales to customers abroad accounted for 60.4% of the Steel Segment’s total revenue in 2023 and 59.3% in 2022. The Steel Segment’s major export market is Asia, with Asia other than China and Japan accounting for 24.6%, China accounting for 21.7% and Japan accounting for 10.6% of the Steel Segment’s total steel export revenue in 2023, and China accounting for 24.9%, Asia other than China and Japan accounting for 24.1%, and Japan accounting for 9.9% of the Steel Segment’s total steel export revenue in 2022.
Major Products
We, through POSCO and our other steel-producing subsidiaries, manufacture and sell a broad line of steel products, including the following:
| • | cold rolled products; |
| • | hot rolled products; |
| • | stainless steel products; |
| • | plates; |
| • | wire rods; and |
| • | silicon steel sheets. |
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The table below sets out our revenue of steel products produced by us and directly sold to external customers which are recognized as external revenue of the Steel Segment, by major steel product category for the periods indicated. Such amounts do not include steel products produced by us and sold to our consolidated sales subsidiaries (including POSCO International).
| For the Year Ended December 31, | ||||||||||||||||||||||||
| 2021 | 2022 | 2023 | ||||||||||||||||||||||
| Steel Products |
Billions of Won |
% | Billions of Won |
% | Billions of Won |
% | ||||||||||||||||||
| Cold rolled products |
￦ | 11,607 | 28.2 | % | ￦ | 12,781 | 28.7 | % | ￦ | 11,908 | 29.5 | % | ||||||||||||
| Hot rolled products |
8,452 | 20.6 | 8,948 | 20.1 | 9,149 | 22.6 | ||||||||||||||||||
| Stainless steel products |
8,479 | 20.6 | 9,602 | 21.6 | 7,848 | 19.4 | ||||||||||||||||||
| Plates |
4,751 | 11.6 | 5,479 | 12.3 | 4,930 | 12.2 | ||||||||||||||||||
| Wire rods |
2,132 | 5.2 | 1,785 | 4.0 | 1,804 | 4.5 | ||||||||||||||||||
| Silicon steel sheets |
1,139 | 2.8 | 1,175 | 2.6 | 1,063 | 2.6 | ||||||||||||||||||
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| Sub-total |
36,560 | 89.0 | 39,769 | 89.3 | 36,701 | 90.9 | ||||||||||||||||||
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| Others |
4,533 | 11.0 | 4,778 | 10.7 | 3,692 | 9.1 | ||||||||||||||||||
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| Total |
￦ | 41,093 | 100.0 | % | ￦ | 44,547 | 100.0 | % | ￦ | 40,393 | 100.0 | % | ||||||||||||
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The table below sets out our sales volume of the principal categories of steel products produced by us and directly sold to external customers, which are recognized as external sales volume of the Steel Segment, by major steel product category for the periods indicated. Such amounts do not include steel products produced by us and sold to our sales consolidated subsidiaries (including POSCO International).
| For the Year Ended December 31, | ||||||||||||||||||||||||
| 2021 | 2022 | 2023 | ||||||||||||||||||||||
| Steel Products |
Thousands of Tons |
% | Thousands of Tons |
% | Thousands of Tons |
% | ||||||||||||||||||
| Cold rolled products |
10,373 | 34.8 | % | 10,191 | 36.8 | % | 9,780 | 33.9 | % | |||||||||||||||
| Hot rolled products |
8,862 | 29.7 | 8,461 | 30.5 | 9,784 | 33.9 | ||||||||||||||||||
| Stainless steel products |
2,984 | 10.0 | 2,605 | 9.4 | 2,459 | 8.5 | ||||||||||||||||||
| Plates |
4,823 | 16.2 | 4,477 | 16.2 | 4,667 | 16.2 | ||||||||||||||||||
| Wire rods |
2,063 | 6.9 | 1,408 | 5.1 | 1,623 | 5.6 | ||||||||||||||||||
| Silicon steel sheets |
735 | 2.5 | 560 | 2.0 | 524 | 1.8 | ||||||||||||||||||
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| Total (1) |
29,840 | 100.0 | % | 27,701 | 100.0 | % | 28,837 | 100.0 | % | |||||||||||||||
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| (1) | Not including sales volume of steel products categorized under “others.” |
In addition to steel products produced by us and directly sold to external customers, we engage our consolidated sales subsidiaries (including POSCO International) to sell our steel products produced by us. Our revenue from steel products produced by us and sold to our consolidated sales subsidiaries that in turn sold them to their external customers amounted to Won 7,840 billion in 2021, Won 10,429 billion in 2022 and Won 9,414 billion in 2023. Sales of such steel products by our consolidated sales subsidiaries to external customers are recognized as external revenue of the Trading Segment of our Green Infrastructure Business.
Cold Rolled Products
Cold rolled coils and further refined galvanized cold rolled products are used mainly in the automotive industry to produce car body panels. Other users include the household goods, electrical appliances, engineering and metal goods industries.
Our deliveries of cold rolled products produced by us and directly sold to external customers amounted to 9,780 thousand tons in 2023, representing 33.9% of our total sales volume of principal steel products produced by us and directly sold to external customers.
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Cold rolled products constitute our second largest product category in terms of sales volume and the largest product category in terms of revenue from steel products produced by us and directly sold to external customers.
We believe POSCO had a domestic market share for cold rolled products of approximately 58% in 2023.
Hot Rolled Products
Hot rolled coils and sheets have many different industrial applications. They are used to manufacture structural steel used in the construction of buildings, industrial pipes and tanks, and automobile chassis. Hot rolled coil is also manufactured in a wide range of widths and thicknesses as the feedstock for higher value-added products such as cold rolled products and silicon steel sheets. The largest customers of our hot rolled products are downstream steelmakers in Korea which use the products to manufacture pipes and cold rolled products.
Our deliveries of hot rolled products produced by us and directly sold to external customers amounted to 9,784 thousand tons in 2023, representing 33.9% of our total sales volume of principal steel products produced by us and directly sold to external customers. Hot rolled products constitute our largest product category in terms of sales volume and second largest product category in terms of revenue from steel products produced by us and directly sold to external customers.
We believe POSCO had a domestic market share for hot rolled products of approximately 52% in 2023.
Stainless Steel Products
Stainless steel products are used to manufacture household goods and are also used by the chemical industry, paper mills, the aviation industry, the automotive industry, the construction industry and the food processing industry.
Our deliveries of stainless steel products produced by us and directly sold to external customers amounted to 2,459 thousand tons in 2023, representing 8.5% of our total sales volume of principal steel products produced by us and directly sold to external customers. Stainless steel products constitute our third largest product category in terms of revenue from steel products produced by us and directly sold to external customers. Although sales of stainless steel products accounted for only 8.5% of total sales volume of the principal steel products produced by us and directly sold to external customers in 2023, they represented 19.4% of our total revenue from such steel products in 2023.
We believe POSCO had a domestic market share for stainless steel products of approximately 46% in 2023.
Plates
Plates are used in shipbuilding, structural steelwork, offshore oil and gas production, power generation, mining, and the manufacture of earth-moving and mechanical handling equipment, boiler and pressure vessels and other industrial machinery. The Korean shipbuilding industry, which uses plates to manufacture chemical tankers, rigs, bulk carriers and containers, and the construction industry are our largest customers of plates.
Our deliveries of plates produced by us and directly sold to external customers amounted to 4,667 thousand tons in 2023, representing 16.2% of our total sales volume of principal steel products produced by us and directly sold to external customers.
We believe POSCO had a domestic market share for plates of approximately 41% in 2023.
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Wire Rods
Wire rods are used mainly by manufacturers of wire, fasteners, nails, bolts, nuts and welding rods. Wire rods are also used in the manufacture of coil springs, tension bars and tire cords in the automotive industry. The largest customers for our wire rods are manufacturers of wire ropes and fasteners.
Our deliveries of wire rods produced by us and directly sold to external customers amounted to 1,623 thousand tons in 2023, representing 5.6% of our total sales volume of principal steel products produced by us and directly sold to external customers.
We believe POSCO had a domestic market share for wire rods of approximately 50% in 2023.
Silicon Steel Sheets
Silicon steel sheets are used mainly in the manufacture of power transformers and generators, rotating machines and electric motors.
Our deliveries of silicon steel sheets produced by us and directly sold to external customers amounted to 524 thousand tons in 2023, representing 1.8% of our total sales volume of principal steel products produced by us and directly sold to external customers.
We believe POSCO had a domestic market share for silicon steel sheets of approximately 75% in 2023.
Others
Other products include lower value-added semi-finished products such as pig iron, billets, blooms and slab.
Markets
Korea is our most important market. Domestic sales represented 39.6% of the Steel Segment’s total revenue in 2023. The Steel Segment’s export sales and overseas sales to customers abroad represented 60.4% of the Steel Segment’s total revenue in 2023. Our sales strategy has been to devote our production primarily to satisfy domestic demand, while seeking export sales to utilize capacity to the fullest extent and to expand our international market presence.
Domestic Market
We primarily sell in Korea higher value-added and other finished products to end-users and semi-finished products to other steel manufacturers for further processing. Local distribution companies and sales affiliates sell finished steel products to low-volume customers. We provide service technicians for large customers and distributors in each important product area.
The table below sets out our estimate of the market share of our steel products in Korea for the periods indicated based on sales volume.
| For the Year Ended December 31, | ||||||||||||
| Source |
2021 | 2022 | 2023 | |||||||||
| POSCO’s sales (1) |
52.5 | % | 48.5 | % | 45.5 | % | ||||||
| Other domestic steel companies’ sales |
26.6 | 28.4 | 28.2 | |||||||||
| Imports |
20.9 | 23.0 | 26.3 | |||||||||
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| Total |
100.0 | % | 100.0 | % | 100.0 | % | ||||||
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| (1) | POSCO’s sales volume includes steel products produced by POSCO (but not by our other subsidiaries) and sold through our consolidated sales subsidiaries as well as steel products produced by POSCO (but not by our other subsidiaries) and directly sold to external customers. |
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Exports
The Steel Segment’s export sales and overseas sales to customers abroad represented 60.4% of the Steel Segment’s total revenue in 2023, 56.8% of which was generated from exports sales and overseas sales to customers in Asian countries. The Steel Segment’s export sales and overseas sales to customers abroad in terms of such revenue decreased by 8.6% from Won 34,653 billion in 2022 to Won 31,658 billion in 2023.
The tables below set out our export sales and overseas sales to customers abroad in terms of revenue from steel products produced and sold by us (including our consolidated sales subsidiaries), by geographical market and by major product category for the periods indicated.
| For the Year Ended December 31, | ||||||||||||||||||||||||
| 2021 | 2022 | 2023 | ||||||||||||||||||||||
| Region |
Billions of Won |
% | Billions of Won |
% | Billions of Won |
% | ||||||||||||||||||
| Asia (other than China and Japan) |
￦ | 6,365 | 21.9 | % | ￦ | 8,341 | 24.1 | % | ￦ | 7,787 | 24.6 | % | ||||||||||||
| China |
8,875 | 30.6 | 8,625 | 24.9 | 6,859 | 21.7 | ||||||||||||||||||
| Europe |
3,114 | 10.7 | 4,705 | 13.6 | 4,099 | 12.9 | ||||||||||||||||||
| Japan |
2,906 | 10.0 | 3,431 | 9.9 | 3,345 | 10.6 | ||||||||||||||||||
| North America |
2,173 | 7.5 | 2,667 | 7.7 | 2,673 | 8.4 | ||||||||||||||||||
| Middle East |
31 | 0.1 | 87 | 0.3 | 57 | 0.2 | ||||||||||||||||||
| Others |
5,558 | 19.2 | 6,797 | 19.6 | 6,838 | 21.6 | ||||||||||||||||||
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| Total |
￦ | 29,022 | 100.0 | % | ￦ | 34,653 | 100.0 | % | ￦ | 31,658 | 100.0 | % | ||||||||||||
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| For the Year Ended December 31, | ||||||||||||||||||||||||
| 2021 | 2022 | 2023 | ||||||||||||||||||||||
| Steel Products |
Billions of Won |
% | Billions of Won |
% | Billions of Won |
% | ||||||||||||||||||
| Cold rolled products |
￦ | 10,664 | 36.7 | % | ￦ | 12,771 | 36.9 | % | ￦ | 11,505 | 36.3 | % | ||||||||||||
| Hot rolled products |
4,229 | 14.6 | 5,350 | 15.4 | 6,305 | 19.9 | ||||||||||||||||||
| Stainless steel products |
6,251 | 21.5 | 7,250 | 20.9 | 6,055 | 19.1 | ||||||||||||||||||
| Plates |
2,501 | 8.6 | 3,598 | 10.4 | 3,374 | 10.7 | ||||||||||||||||||
| Silicon steel sheets |
1,186 | 4.1 | 1,262 | 3.6 | 1,066 | 3.4 | ||||||||||||||||||
| Wire rods |
850 | 2.9 | 856 | 2.5 | 879 | 2.8 | ||||||||||||||||||
| Others |
3,341 | 11.5 | 3,567 | 10.3 | 2,475 | 7.8 | ||||||||||||||||||
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| Total |
￦ | 29,022 | 100.0 | % | ￦ | 34,653 | 100.0 | % | ￦ | 31,658 | 100.0 | % | ||||||||||||
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We distribute our export products mostly through Korean trading companies, including POSCO International, and our overseas sales subsidiaries. Our largest export market in 2023 was Asia (other than China and Japan), which accounted for 24.6% of our export revenue from steel products produced and sold by us. The principal products exported to Asia (other than China and Japan) were cold rolled products, including continuous galvanized products. Our exports to Asia (other than China and Japan) decreased by 6.6% from Won 8,341 billion in 2022 to Won 7,787 billion in 2023 primarily reflecting a general decline in demand from the region.
Our second largest export market in 2023 was China, which accounted for 21.7% of our export revenue from steel products produced and sold by us. The principal products exported to China were cold rolled products, including continuous galvanized products. Our exports to China decreased by 20.5% from Won 8,625 billion in 2022 to Won 6,859 billion in 2023 primarily due to a decrease in demand from the Chinese construction industry reflecting a prolonged slowdown in the Chinese real estate market.
Anti-Dumping, Safeguard and Countervailing Duty Proceedings
From time to time, our exporting activities have become subject to anti-dumping, safeguard and countervailing proceedings. As a steel producer with global sales and operations, we are involved in trade remedy proceedings in markets worldwide, including in the United States.
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We actively participate in such proceedings to minimize any adverse effects and associated risks. While there has been an increase in the number of trade cases in recent years, and an increased focus on trade issues by government officials, such cases have been limited in scope relative to our global sales and operations. We continue to carefully monitor developments with respect to trade remedy policy in all markets in which we participate and, where necessary, vigorously defend our rights through litigation before tribunals such as the U.S. Court of International Trade. Our products that are subject to anti-dumping duties, safeguard duties, countervailing duties, quotas or tariffs in the aggregate have not had a material adverse impact on our business and operations in recent years.
Pricing Policy
We determine the pricing of our products based on market conditions, taking into consideration production outlook of the global steel industry and global economic conditions in general. In setting prices, we take into account our costs, including those of raw materials, supply and demand in the Korean market, exchange rates, and conditions in the international steel market. Our prices can fluctuate considerably over time, depending on market conditions and other factors. The prices of our higher value-added steel products in the largest markets are determined considering the prices of similar products charged by our competitors.
Raw Materials
Steel Production
The principal raw materials used in producing steel through the basic oxygen steelmaking method are iron ore and coal. We import all of the coal and virtually all of the iron ore that we use. In 2023, POSCO imported approximately 49 million dry metric tons of iron ore and 25 million wet metric tons of coal. Iron ore is imported primarily from Australia, Brazil and Canada. Coal is imported primarily from Australia, Canada and Mozambique.
We purchase a substantial portion of our iron ore and coal imports pursuant to long-term contracts. Our long-term supply contracts generally have terms of three to ten years and provide for periodic price adjustments to the then-market prices. We typically adjust the prices on a quarterly basis and maintain approximately one month of inventory of raw materials. Such price adjustments are driven by various factors, including the global economic outlook, global market prices of raw materials and steel products, supply and demand outlook of raw materials and production costs of raw materials. For both coal and iron ore, we typically agree on the purchase price with the suppliers primarily based on the spot market price periodically announced by Platts (Premium Low Vol Coking Coal, FOB Australia Index and Iron Ore 62% Fe, CFR China Index). We or the suppliers may cancel the long-term contracts only if performance under the contracts is prevented by causes beyond our or their control and these causes continue for a specified period.
We also engage in exploration and production projects abroad to enhance our ability to meet the requirements for high-quality raw materials, by acquiring mining rights of raw materials or by investing in projects either as part of a consortium or through an acquisition of a minority interest. In 2023, we purchased approximately 37% of our iron ore imports and 21% of our coal imports from foreign mines in which we have made investments. Our major investments to procure supplies of coal, iron ore and nickel are primarily located in Australia, Canada, Brazil and New Caledonia. We will continue to selectively seek opportunities to enter into additional strategic relationships that would enhance our ability to meet the requirements for principal raw materials.
The average market price of coal per wet metric ton (Premium Low Vol Coking Coal, FOB Australia Index announced by Platts) was US$226 in 2021, US$364 in 2022 and US$296 in 2023. The average market price of iron ore per dry metric ton (Iron Ore 62% Fe, CFR China Index announced by Platts) was US$160 in 2021, US$120 in 2022 and US$120 in 2023.
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We currently do not depend on any single country or supplier for our coal or iron ore.
Stainless Steel Production
The principal raw materials for the production of stainless steel are ferronickel, ferrochrome and stainless steel scrap. We purchase a majority of our ferronickel primarily from suppliers in Korea that procure nickel ore from New Caledonia, and the remainder primarily from leading suppliers in Philippines and Guatemala. Our primary suppliers of ferrochrome are located in South Africa, India and Kazakhstan. Our stainless steel scraps are primarily supplied by domestic and overseas suppliers in Japan and Southeast Asia. Revert scraps from the Pohang Steelworks and our overseas subsidiaries are also used for our stainless steel production. The average market price of nickel per ton on the London Metal Exchange was US$18,448 in 2021, US$25,605 in 2022 and US$21,474 in 2023.
Transportation
In order to meet our transportation needs for iron ore and coal, we have entered into long-term contracts with shipping companies. Such contracts are performed by a fleet of dedicated vessels on a consecutive voyage basis with fully loaded cargo for each voyage. These vessels under long-term contracts transported approximately 57% of the total requirements in 2023, and the remaining approximately 43% was transported by vessels sourced through short- to medium-term contracts, depending on market conditions. We plan to continue to optimize the fleet of dedicated vessels that we use in order to cope with changes in the global shipping environment, as well as upgrade some of the existing vessels with energy-saving and eco-friendly technologies.
The Steelmaking Process
POSCO’s major production facilities, Pohang Works and Gwangyang Works, produce steel by the basic oxygen steelmaking method. The stainless steel plant at Pohang Works produces stainless steel by the electric arc furnace method. Continuous casting improves product quality by imparting a homogenous structure to the steel. Pohang Works and Gwangyang Works produce all of their products through the continuous casting.
Steel — Basic Oxygen Steelmaking Method
First, molten pig iron is produced in a blast furnace from iron ore, which is the basic raw material used in steelmaking. Molten pig iron is then refined into molten steel in converters by blowing pure oxygen at high pressure to remove impurities. Different desired steel properties may also be obtained by regulating the chemical contents.
At this point, molten steel is made into semi-finished products such as slabs, blooms or billets at the continuous casting machine. Slabs, blooms and billets are produced at different standardized sizes and shapes. Slabs, blooms and billets are semi-finished lower-margin products that we either use to produce our further processed products or sell to other steelmakers that produce further processed steel products.
Slabs are processed to produce hot rolled coil products at hot strip mills or to produce plates at plate mills. Hot rolled coils are an intermediate-stage product that may either be sold to our customers as various finished products or be further processed by us or our customers into higher value-added products, such as cold rolled sheets and silicon steel sheets. Blooms and billets are processed into wire rods at wire rod mills.
Stainless Steel — Electric Arc Furnace Method
Stainless steel is produced from stainless steel scrap, chrome, nickel and steel scrap using an electric arc furnace. Stainless steel is then processed into higher value-added products by methods similar to those used for steel production.
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Stainless steel slabs are produced at a continuous casting mill. The slabs are processed at hot rolling mills into stainless steel hot coil, which can be further processed at cold strip mills to produce stainless cold rolled steel products.
Steel Making Operations Located Outside Korea
In order to effectively implement our strategic initiatives and to solidify our leadership position in the global steel industry, we have established various subsidiaries and joint ventures in Korea and elsewhere around the world that engage in steel production activities.
China. We entered into an agreement with Sagang Group Co. to establish POSCO (Zhangjiagang) Stainless Steel Co., Ltd. (“POSCO (Zhangjiagang)”), a joint venture company in China for the manufacture and sale of stainless cold rolled steel products. POSCO HOLDINGS INC. has an 82.5% interest in the joint venture (including 23.9% interest held by POSCO China Holding Corporation). POSCO (Zhangjiagang) commenced production of stainless cold rolled steel products in December 1998. In 2023, POSCO (Zhangjiagang) had an annual production capacity of 1,100 thousand tons of stainless steel products. See “Item 4D. Property, Plants and Equipment — Production Facilities Abroad — POSCO (Zhangjiagang).”
Indonesia. We entered into an agreement with PT. Krakatau Steel (Persero) Tbk. to establish PT. Krakatau POSCO Co., Ltd. (“PT. Krakatau POSCO”), a joint venture company in Indonesia for the manufacture and sale of plates and slabs. POSCO holds a 50.0% interest in the joint venture. We completed the construction of a steel manufacturing plant in December 2013. In 2023, PT. Krakatau POSCO had an annual production capacity of 3,000 thousand tons of slabs, plates and hot rolled coils. See “Item 4D. Property, Plants and Equipment — Production Facilities Abroad — PT. Krakatau POSCO.”
Vietnam. We established POSCO YAMATO VINA STEEL JOINT STOCK COMPANY (“POSCO YAMATO VINA” and formerly known as POSCO SS VINA JOINT STOCK COMPANY), a subsidiary engaged in the manufacture and sale of shape steel and steel reinforcement products. POSCO holds a 51.0% interest in POSCO YAMATO VINA, and the plant became operational in June 2015. In 2023, POSCO YAMATO VINA had an annual production capacity of 550 thousand tons of shape steel products. See “Item 4D. Property, Plants and Equipment — Production Facilities Abroad — POSCO YAMATO VINA.”
Competition
Domestic Market
POSCO is the largest fully integrated steel producer in Korea. In hot rolled products, where we believe POSCO had a domestic market share of approximately 52% in 2023, we face competition from Hyundai Steel Co., Ltd. and from various foreign producers, primarily from China and Japan. In cold rolled products and stainless steel products, where we believe POSCO had domestic market shares of approximately 58% and 46%, respectively, in 2023, we compete with Hyundai Steel Co., Ltd., smaller specialized domestic manufacturers and various foreign producers, primarily from China and Japan. For a discussion of domestic market shares, see “— Markets — Domestic Market.”
The Government does not impose quotas on or provide subsidies to local steel producers. As a World Trade Organization signatory, Korea has also removed all steel tariffs.
Export Markets
The competitors in our export markets include all the leading steel manufacturers of the world. In the past decade, there has been a trend toward industry consolidation among our competitors, and smaller competitors in the global steel market today may become larger competitors in the future. In recent years, a slowdown in domestic demand for steel products in China resulting from slowed economic growth, combined with an expansion in steel production capacity, has led to production over-capacity in the Chinese steel industry, which in turn has led the Chinese government to pursue aggressive consolidation in the Chinese steel industry that has resulted in fewer but larger steel manufacturers that are able to compete more effectively in the global steel industry.
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Competition from global steel manufacturers with significant production capacity such as ArcelorMittal S.A. and Nippon Steel & Sumitomo Metal Corporation, as well as competitors from emerging markets, especially from China and India, could result in a significant increase in competition. Major competitive factors include range of products offered, quality, price, delivery performance and customer service. Our larger competitors may use their resources, which may be greater than ours, against us in a variety of ways, including by making additional acquisitions, investing more aggressively in product development and capacity and displacing demand for our export products.
Various export markets currently impose tariffs on different types of steel products. However, we do not believe that tariffs significantly affect our ability to compete in these markets.
Green Infrastructure Business
Trading Segment
Our trading activities consist primarily of trading activities of POSCO International. POSCO International is a global trading company that primarily engages in trading of steel and raw materials, investing in energy and mineral development projects and operating power generation facilities. It also trades textiles, agricultural commodities and other goods. POSCO International’s sales consist of third-country trading sales, export trading sales and domestic trading sales. On January 1, 2023, POSCO Energy, Korea’s largest domestic private power utility company and a provider of alternative environmentally-friendly energy solutions, merged into POSCO International.
The following table sets forth a breakdown of POSCO International’s total consolidated sales by export sales, domestic sales and third-country trades for the periods indicated:
| For the Year Ended December 31, | ||||||||||||||||||||||||
| Sales Category |
2021 | 2022 | 2023(1) | |||||||||||||||||||||
| (in billions of Won, except percentages) | ||||||||||||||||||||||||
| Export trading sales |
￦ | 10,715 | 31.6 | % | ￦ | 14,143 | 37.2 | % | 12,577 | 38.0 | % | |||||||||||||
| Domestic trading sales |
5,546 | 16.3 | 5,632 | 14.8 | 7,287 | 22.0 | ||||||||||||||||||
| Third-country trades |
27,224 | 80.2 | 30,010 | 79.0 | 23,393 | 70.6 | ||||||||||||||||||
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| Total sales prior to consolidation adjustments |
43,484 | 128.1 | 49,784 | 131.1 | 43,256 | 130.6 | ||||||||||||||||||
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| Consolidation adjustments |
(9,543 | ) | (28.1 | ) | (11,806 | ) | (31.1 | ) | (10,136 | ) | (30.6 | ) | ||||||||||||
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| Total sales |
￦ | 33,942 | 100.0 | % | ￦ | 37,979 | 100.0 | % | 33,121 | 100.0 | % | |||||||||||||
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| (1) | Including sales from the power generation business of POSCO Energy, which merged into POSCO International on January 1, 2023. |
Trading Activities. POSCO International’s trading activities consist of exporting and importing a wide variety of products and commodities, including iron and steel, raw materials for steel production, non-ferrous metals, chemicals, automotive parts, machinery and plant equipment, electronics products, agricultural commodities and textiles. POSCO International is also engaged in third-country trade that does not involve exports from or imports to Korea. The products are obtained from and supplied to numerous suppliers and purchasers in Korea and overseas, which are procured through a global trading network comprised of overseas trading subsidiaries, branches and representative offices. Such subsidiaries and offices support POSCO International’s trading activities by locating suitable local suppliers and purchasers on behalf of customers, identifying business opportunities and providing information regarding local market conditions.
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In most cases, POSCO International enters into trading transactions after the underlying sale and purchase contracts have been matched, which mitigates inventory and price risks to POSCO International. POSCO International typically enters into trading transactions as a principal, and in limited cases as an import or export agent. When acting as a principal or an agent, POSCO International derives its gross trading profit from the margin between the selling price of the products and the purchase price it pays for such products. In the case of principal transactions, the selling price is recognized as sales and the purchase price is recognized as cost of sales, while only the margin is recognized as sales in the case of agency transactions in which POSCO International does not assume the risks and rewards of ownership of the goods. In the instances in which it acts as an arranger for a third country transaction, POSCO International derives its gross trading profit from, and recognizes as sales, the commission paid to it by the customer. The sizes of margins and commissions for POSCO International’s trading activities vary depending on a number of factors, including prevailing supply and demand conditions for the product involved, the cost of financing, insurance, storage and transport and the creditworthiness of the customer, and tends to decline as the product or market matures.
In connection with its export and import transactions, POSCO International has accounts receivable and payable in a number of currencies, but principally in U.S. dollars. POSCO International’s exposure to fluctuations in exchange rates, including the Won/U.S. dollar exchange rate, is limited because trading transactions typically involve matched purchase and sale contracts, which result in limited settlement exposure, and because POSCO International’s contracts with domestic suppliers of products for export and with domestic purchasers of imported products are generally denominated in U.S. dollars. Although the impact of exchange rate fluctuations is substantially mitigated by such strategies, POSCO International also periodically enters into derivative contracts, primarily currency forward contracts, to further hedge its foreign exchange risks.
In connection with its trading activities, POSCO International arranges insurance and product transport at the request of customers, the costs of which generally become reflected in the sales price of the relevant products, and also provides financing services to its purchasers and suppliers as necessary. In the case of trading transactions involving large-scale industrial or construction projects, POSCO International also provides necessary project planning and organizing services to its customers.
Natural Resources Development Activities. POSCO International also invests in energy and mineral development projects throughout the world. In particular, POSCO International holds a 51.0% interest in a gas field project in Myanmar, where production of gas commenced in July 2013. POSCO International recognized revenues of approximately Won 449 billion in 2021, Won 634 billion in 2022 and Won 615 billion in 2023 from the Myanmar gas field project. Natural resources development projects, while entailing higher risks than the traditional trading business, offer higher potential returns. POSCO International intends to continue to expand its operations by carefully seeking out promising energy development projects abroad.
Power Generation Activities. POSCO International acquired the power generation business of POSCO Energy through its merger into POSCO International on January 1, 2023. POSCO International operates power generation facilities in Korea and Southeast Asia, including LNG combined cycle power plants. As of December 31, 2023, POSCO International’s total power generation capacity of its LNG combined cycle power plants was approximately 3,414 megawatts. As of such date, POSCO International’s total power generation capacity of its renewable solar energy facilities was approximately 15 megawatts and its onshore wind power energy facilities was approximately 63 megawatts.
POSCO International also operates an LNG receiving terminal with an aggregate capacity to process approximately 6.0 million tons of LNG annually in Gwangyang as of December 31, 2023. In addition, POSCO International participates in LNG trading, LNG tank rental services and LNG ship trial operations in order to achieve maximum operational efficiency of our LNG terminal.
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POSCO International also engages in fuel cell facility installation and operation services, as well as selectively seeks opportunities to expand into solar, wind and other renewable energy businesses in order to become an integrated provider of energy solutions.
Competition
POSCO International competes principally with other Korean general trading companies that are affiliated with major domestic business groups, as well as global trading companies based in other countries. In the domestic market, competition for export transactions on behalf of domestic suppliers and import transactions on behalf of domestic purchasers was limited, as most affiliated general trading companies of large Korean business groups generally relied on affiliate transactions for the bulk of their trading business. However, in recent years, many of these Korean general trading companies have reduced their reliance on their affiliated business group and transactions carried out on behalf of their member companies and instead have generally evolved to focus on segments of the import and export markets in which they have a competitive advantage. As a result, competition among Korean general trading companies in the area of traditional trade has become more intense. POSCO International’s principal competitors in the overseas trading markets include Korean trading companies that operate in various international markets, as well as foreign trading companies, particularly those based in Japan. As POSCO International diversifies into businesses other than traditional trading such as natural resources development, it also increasingly competes with other Korean and international companies involved in these businesses. POSCO International’s power generation business competes principally with private-sector power generation companies in Korea that are affiliated with major domestic business groups, including SK E&S and GS EPS.
Construction Segment
POSCO E&C is one of the leading engineering and construction companies in Korea, primarily engaged in the planning, design and construction of industrial plants and architectural works and civil engineering projects. In particular, POSCO E&C has established itself as one of the premier engineering and construction companies in Korea through:
| • | its strong and stable customer base; and |
| • | its cutting-edge technological expertise obtained from construction of advanced integrated steel plants, as well as participation in numerous modernization and rationalization projects at our Pohang Works and Gwangyang Works. |
Leveraging its technical know-how and track record of building some of the leading industrial complexes in Korea, POSCO E&C has also focused on diversifying its operations into construction of high-end apartment complexes and participating in a wider range of architectural works and civil engineering projects, as well as engaging in urban planning and development projects and expanding its operations abroad. In September 2015, we completed the sale of a 38.0% interest in POSCO E&C to Public Investment Fund, a sovereign wealth fund in Saudi Arabia, for US$1.05 billion. In connection with the sale, POSCO E&C and PIF agreed to jointly explore additional business opportunities in Saudi Arabia, including participating in various infrastructure projects sponsored by the Saudi Arabian government.
POSCO E&C also has substantial experience in the energy field obtained from the construction of various power plants for member companies of the POSCO Group, specializing primarily in engineering and construction of LNG-fired thermal power plants. In response to increasing demand from the energy industry, POSCO E&C plans to continue to target opportunities in power plant construction, especially in Asia and Africa, which it believes offers significant growth potential.
Competition
Competition in the construction industry is based primarily on price, reputation for quality, reliability, punctuality and financial strength of contractors.
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In Korea, POSCO E&C’s main competition in the construction of residential and non-residential buildings, EPC projects, urban planning and development projects and civil works projects consists of approximately ten major domestic construction companies, all of which are member companies of other large business groups in Korea and are capable of undertaking larger-scale, higher-value-added projects that offer greater potential returns. A series of measures introduced by the Government over the past few years to regulate housing prices in Korea, as well as an increasing popularity of low-bid contracts in civil works project mandates, have contributed to increased competition in the Korean construction industry in recent years. In the overseas markets, POSCO E&C faces competition from local construction companies and other major Korean construction companies with overseas operations, as well as international construction companies from other countries.
Logistics and Others Segment
POSCO DX. POSCO DX provides a wide range of information technology and operational technology services. In particular, POSCO DX has expertise in providing services to address the evolving needs of manufacturing companies arising from the convergence of information technology and operational technology.
POSCO DX’s information technology services primarily consist of buildout and management of information technology infrastructure, including manufacturing execution systems, supply chain management systems, and enterprise resource planning systems. POSCO DX also serves as a managed service provider for the operation of cloud data centers on behalf of its clients, and provides other smart technology services including smart CCTV and smart home solutions.
POSCO DX’s operational technology services primarily relate to automation of factory equipment and manufacturing processes and provision of energy efficiency solutions. POSCO DX also provides system engineering services targeting specific areas of operational processes, including automation of logistical operations and buildout and management of pollutant monitoring systems and intelligent transportation systems. In addition, POSCO DX has developed PosFrame, an information technology platform designed to enhance the overall operations of POSCO’s steel works. PosFrame enables POSCO to implement its production quality management and other smart factory solutions for the member companies of the POSCO Group located in Korea and abroad.
POSCO FLOW. POSCO FLOW provides a wide range of integrated logistics services. It engages in the operation of central terminal systems for transportation, storage and processing of coal and other raw materials primarily used by power generation and cement companies in Korea and abroad. POSCO FLOW also offers optimized logistics solutions for a wide range of products including steel products, industrial parts, grains, natural gas and construction equipment and materials.
Competition. POSCO DX competes principally with system integration service providers in Korea that are affiliated with major domestic business groups, including Samsung SDS, LG CNS and SK Inc. C&C. POSCO FLOW competes principally with logistics service providers in Korea that are affiliated with major domestic business groups, including Hyundai Glovis, Samsung SDS and LX Pantos.
Green Materials and Energy Segment
POSCO Future M
POSCO Future M manufactures anode and cathode materials, which are two of the main components of rechargeable batteries. POSCO Future M sells such materials primarily to Korea’s leading electric vehicle battery manufacturers such as LG Energy Solution, Samsung SDI and SK On, as well as to their joint ventures with global automotive manufacturers.
POSCO Future M also manufactures quicklime and refractories used in steel manufacturing processes and other industrial applications as well as a wide range of chemical products such as coal tar and light oil.
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Quicklime is a widely used chemical component in a variety of industries. In the steel industry, a major use of quicklime is to remove impurities in the basic oxygen steelmaking process. Refractories are materials that are resistant to high temperature, used predominantly as furnace linings for elevated temperature materials processing and other applications in which thermomechanical properties are critical.
The following table sets forth a breakdown of POSCO Future M’s total consolidated sales by major product categories for the periods indicated:
| For the Year Ended December 31, | ||||||||||||||||||||||||
| Products |
2021 | 2022 | 2023 | |||||||||||||||||||||
| (in billions of Won, except percentages) | ||||||||||||||||||||||||
| Energy materials (including battery materials) |
￦ | 852 | 42.8 | % | ￦ | 1,938 | 58.7 | % | ￦ | 3,362 | 70.6 | % | ||||||||||||
| Quicklime and other chemical products |
675 | 33.9 | 812 | 24.6 | 857 | 18.0 | ||||||||||||||||||
| Refractories |
463 | 23.3 | 552 | 16.7 | 541 | 11.4 | ||||||||||||||||||
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| Total sales |
￦ | 1,990 | 100.0 | % | ￦ | 3,302 | 100.0 | % | ￦ | 4,760 | 100.0 | % | ||||||||||||
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Competition. In the energy materials market, POSCO Future M competes with other global leading manufacturers of cathode and anode materials, including LG Chemical Co., Ltd. and Ecopro BM Co., Ltd. In its legacy business areas of refractories and lime chemicals, POSCO Future M competes principally with Chosun Refractories ENG Co., Ltd. and Korea Refractories Co, Ltd.
Investments in Lithium Hydroxide and Lithium Carbonate Production Projects
Through investments made by POSCO HOLDINGS INC., we engage in natural resources development and production projects for lithium hydroxide and lithium carbonate, which are key materials for the production of cathode materials.
POSCO Argentina. In 2018, POSCO Argentina SAU (“POSCO Argentina”), a wholly owned subsidiary of POSCO HOLDINGS INC., acquired a salt lake located in Salta and Catamarca provinces of Argentina. In April 2024, POSCO Argentina completed stage one of its construction of a commercialization plant adjacent to the lake for the production of lithium hydroxide.
As of December 31, 2023, the construction schedule and related costs of the project were as follows:
| Project |
Expected Completion Date |
Total Cost of Project |
Estimated Remaining Cost of Completion as of December 31, 2023 |
|||||||
| (In billions of Won) | ||||||||||
| Construction of salt water lithium commercialization plant — stage one |
April 2024 | 1,301 | 219 | |||||||
| Construction of salt water lithium commercialization plant — stage two |
June 2025 | 1,246 | 1,102 | |||||||
Upon completion of both stages, the commercialization plant is expected to have an annual production capacity of 25 thousand tons of lithium hydroxide and 23 thousand tons of lithium carbonate.
POSCO Pilbara Lithium Solution. In 2018, we acquired a 2.74% stake in Pilbara Minerals Limited (“Pilbara Minerals”) and secured off-taking of spodumene mineral from the Pilgangoora Project, which is located 120 kilometers from Port Hedland in Western Australia’s resource-rich Pilbara region. POSCO Pilbara Lithium Solution Co., Ltd., a joint venture with Pilbara Minerals in which POSCO HOLDINGS INC. holds a 82% interest, is currently constructing a commercialization plant in Yulchon industrial complex in Gwangyang for the production of lithium hydroxide.
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As of December 31, 2023, the construction schedule and related costs of the project were as follows:
| Project |
Expected Completion Date |
Total Cost of Project |
Estimated Remaining Cost of Completion as of December 31, 2023 |
|||||||
| (In billions of Won) | ||||||||||
| Construction of lithium ore commercialization plant |
September 2024 | 1,098 | 849 | |||||||
Upon completion, the commercialization plant is expected to have an annual production capacity of 43 thousand tons of lithium hydroxide.
Others Segment
Our Others Segment includes POSCO HOLDINGS INC. and all other entities which fall below the reporting thresholds. POSCO HOLDINGS INC. actively explores diversification opportunities in promising business areas.
Insurance
We maintain property insurance for our property, plant and equipment that we believe to be consistent with market practice in Korea.
Government Regulations
Pursuant to the Monopoly Regulation and Fair Trade Act of Korea, we, as a non-financial holding company, are required to maintain the shareholding ratio of our subsidiaries above a certain threshold (i.e., 20% in case of a public company and 40% in case of a private company) and are also required to maintain our liabilities-to-equity ratio below 200%. In addition, we may not own the shares of any Korean companies that are not our affiliates in excess of 5% of the total outstanding shares of such company (except under certain exempted cases) nor control any Korean financial institutions or insurance companies. We are also required to annually report to the Korea Fair Trade Commission whether we have complied with such restrictive requirements. In the event we breach such obligations, we will be subject to administrative penalty.
Item 4.C. Organizational Structure
The following table sets out the jurisdiction of incorporation and our ownership interests of our significant subsidiaries as of December 31, 2023:
| Name |
Jurisdiction of Incorporation |
Percentage of Ownership |
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| POSCO |
Korea | 100.0 | % | |||
| POSCO International Corporation |
Korea | 70.7 | % | |||
| POSCO Eco & Challenge Co., Ltd |
Korea | 52.8 | % | |||
| POSCO DX Co, Ltd. |
Korea | 65.4 | % | |||
| POSCO Future M Co., Ltd. |
Korea | 59.7 | % | |||
| POSCO (Zhangjiagang) Stainless Steel Co., Ltd. (1) |
China | 82.5 | % | |||
| (1) | POSCO HOLDINGS INC. holds a 58.6% interest and POSCO-China holds a 23.9% interest. |
Item 4.D. Property, Plants and Equipment
Overview
Our consolidated subsidiaries operate various production facilities in Korea and abroad. We may increase our production capacity in the future when we increase our capacity as part of our facilities expansion or as a result of continued modernization and rationalization of our existing facilities.
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For a discussion of major items of our capital expenditures currently in progress, see “Item 5. Operating and Financial Review and Prospects — Item 5.B. Liquidity and Capital Resources — Liquidity — Capital Expenditures and Capital Expansion.”
We are vigorous in our efforts to engage in environmentally responsible management of, and to protect the environment from damage resulting from, our operations. Our levels of pollution control are higher than those mandated by Government standards. We established an online environmental monitoring system with real-time feedback on pollutant levels and a forecast system of pollutant concentration in surrounding areas. We also undergo periodic environmental inspections by both internal and external inspectors in accordance with ISO 14001 standards to monitor execution and maintenance of our environmental management plan. We also operate a certification program targeting our suppliers and outsourcing partners, pursuant to which they are encouraged to establish environmental management systems of their own.
Steel Segment
POSCO’s principal properties are Pohang Works, which is located at Youngil Bay on the southeastern coast of Korea, and Gwangyang Works, which is located in Gwangyang in the southwestern region of Korea. POSCO also maintains and operate production properties abroad, including plants operated by PT. Krakatau POSCO in Indonesia and POSCO YAMATO VINA in Vietnam. POSCO (Zhangjiagang), our consolidated subsidiary, also operates production properties in Zhangjiagang, China for the production of stainless steel products. For a discussion of such operations, see “Item 4. Information on the Company — Item 4.B. Business Overview — Subsidiaries and Joint Ventures.”
Green Infrastructure Business
POSCO International’s principal properties are LNG combined cycle power generation facilities located in Incheon and LNG terminal facilities located in Gwangyang.
Green Materials and Energy Segment
POSCO Future M’s principal properties are (i) plants for the production of cathode materials located in Korea (Gwangyang, Pohang and Gumi), Quebec, Canada and Tongxiang, China, (ii) plants for the production of anode materials located in Sejong and Pohang, (iii) plants for the production of quicklime located in Korea (Gwangyang and Pohang) and Banten, Indonesia, and (iv) plants for the production of refractories located in Pohang, Korea and Jiangsu Province, China.
Steel Production Facilities in Korea
Pohang Works
Construction of Pohang Works began in 1970 and ended in 1983. Pohang Works produces a wide variety of steel products. Products produced at Pohang Works include hot rolled sheets, plates, wire rods and cold rolled sheets, as well as specialty steel products such as stainless steel sheets and silicon steel sheets. These products can also be customized to meet the specifications of our customers.
Situated on a site of 8.9 million square meters at Youngil Bay on the southeastern coast of Korea, Pohang Works consists of iron-making, crude steelmaking and continuous casting and other rolling facilities. Pohang Works also has docking facilities capable of accommodating large ships for unloading raw materials, storage areas for raw materials and separate docking facilities for ships carrying products for export. Pohang Works is equipped with a highly advanced computerized production-management system allowing constant monitoring and control of the production process.
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Gwangyang Works
Construction of Gwangyang Works began in 1985 and ended in 1992. Gwangyang Works specializes in high-volume production of a limited number of steel products. Products manufactured at Gwangyang Works include both hot and cold rolled types.
Situated on a site of 13.7 million square meters reclaimed from the sea in Gwangyang in the southwestern region of Korea, Gwangyang Works is comprised of iron-making plants, steelmaking plants, continuous casting plants, hot strip mills and thin-slab hot rolling plants. The site also features docking and unloading facilities for raw materials capable of accommodating large ships for unloading raw materials, storage areas for raw materials and separate docking facilities for ships carrying products for export.
We believe Gwangyang Works is one of the most technologically-advanced integrated steel facilities in the world. Gwangyang Works has a completely automated, linear production system that enables the whole production process, from iron-making to finished products, to take place without interruption. This advanced system reduces the production time for hot rolled products to only four hours. Like Pohang Works, Gwangyang Works is equipped with a highly advanced computerized production-management system allowing constant monitoring and control of the production process.
Capacity Utilization Rates
The following table sets out the aggregate capacity utilization rates of Pohang Works and Gwangyang Works for the periods indicated.
| As of or for the Year Ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| Crude steel and stainless steel production capacity for the year (million tons per year) |
40.68 | 40.68 | 40.68 | |||||||||
| Actual crude steel and stainless steel output (million tons) |
38.26 | 34.22 | 35.68 | |||||||||
| Capacity utilization rate (%) (1) |
94.1 | % | 84.1 | % | 87.7 | % | ||||||
| (1) | Calculated by dividing actual crude steel and stainless steel output by the actual crude steel and stainless steel production capacity for the relevant period as determined by us. |
Steel Production Facilities Abroad
PT. Krakatau POSCO
The following table sets out PT. Krakatau POSCO’s capacity utilization rates for the periods indicated.
| As of or for the Year Ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| Crude steel production capacity for the year (million tons per year) |
3.00 | 3.00 | 3.00 | |||||||||
| Actual crude steel output (million tons) |
3.14 | 3.03 | 3.01 | |||||||||
| Capacity utilization rate (%) (1) |
104.5 | % | 101.0 | % | 100.2 | % | ||||||
| (1) | Calculated by dividing actual crude steel output by the actual crude steel production capacity for the relevant period as determined by us. |
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POSCO (Zhangjiagang)
The following table sets out POSCO (Zhangjiagang)’s capacity utilization rates for the periods indicated.
| As of or for the Year Ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| Crude steel and stainless steel production capacity for the year (million tons per year) |
1.10 | 1.10 | 1.10 | |||||||||
| Actual crude steel and stainless steel output (million tons) |
0.99 | 0.99 | 0.84 | |||||||||
| Capacity utilization rate (%) (1) |
89.9 | % | 89.9 | % | 76.3 | % | ||||||
| (1) | Calculated by dividing actual crude steel and stainless steel output by the actual crude steel and stainless steel production capacity for the relevant period as determined by us. |
POSCO YAMATO VINA
The following table sets out POSCO YAMATO VINA’s capacity utilization rates for the periods indicated.
| As of or for the Year Ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| Crude steel production capacity for the year (million tons per year) |
0.55 | 0.55 | 0.55 | |||||||||
| Actual crude steel output (million tons) |
0.58 | 0.40 | 0.42 | |||||||||
| Capacity utilization rate (%) (1) |
104.9 | % | 72.2 | % | 75.5 | % | ||||||
| (1) | Calculated by dividing actual crude steel output by the actual crude steel production capacity for the relevant period as determined by us. |
Item 4A. Unresolved Staff Comments
We do not have any unresolved comments from the Securities and Exchange Commission staff regarding our periodic reports under the Exchange Act of 1934.
Item 5. Operating and Financial Review and Prospects
Item 5.A. Operating Results
The following discussion and analysis is based on our consolidated financial statements, which have been prepared in accordance with IFRS, as issued by the IASB. Unless otherwise noted, the amounts included in Item 5.A. are presented on a consolidated basis.
Overview
We are a holding company, and we operate through our consolidated subsidiaries including POSCO, one of the largest steel producers in the world. We also engage in businesses that complement our steel manufacturing operations and also carefully seek out promising investment opportunities to diversify our businesses both vertically and horizontally. One of our principal strategies is to take advantage of our holding company structure to invest in promising businesses. We have made investments in the past decade to secure new growth engines by diversifying into new businesses related to our steel operations that we believe will offer greater potential returns, as well as entering into new businesses not related to our steel operations.
We have six reportable segments as follows:
| • | Steel Segment. Our Steel Segment includes the production and sale of steel products. |
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| • | Green Infrastructure Business. Our Green Infrastructure Business includes our businesses related to provision of infrastructure and related services. Such segment is divided into three operations as follows: |
| Ø | Trading Segment. The Trading Segment of our Green Infrastructure Business consists primarily of the global trading activities, natural resources development activities and power generation activities of POSCO International. POSCO International exports and imports a wide range of steel products that are both obtained from and supplied to POSCO, as well as steel and other products from and to other suppliers and purchasers in Korea and overseas. |
| Ø | Construction Segment. The Construction Segment of our Green Infrastructure Business consists primarily of POSCO E&C’s planning, designing and construction of industrial plants, civil engineering projects and commercial and residential buildings, both in Korea and overseas. |
| Ø | Logistics and Others Segment. The Logistics and Others Segment of our Green Infrastructure Business consists primarily of the information technology and operational technology services of POSCO DX and the integrated logistics services of POSCO FLOW. |
| • | Green Materials and Energy Segment. Our Green Materials and Energy Segment includes (i) the manufacturing and sale of various energy-related and other industrial materials by POSCO Future M, including anode and cathode materials for rechargeable batteries and (ii) investments made by us in production projects relating to other materials such as lithium. |
| • | Others Segment. Our Others Segment includes POSCO HOLDINGS INC. and all other entities which fall below the reporting thresholds. POSCO HOLDINGS INC. actively explores diversification opportunities in promising business areas. |
One of the major factors contributing to our historical performance has been the growth of the Korean economy, and our future performance will depend at least in part on Korea’s general economic growth and prospects. For a description of recent developments that have had and may continue to have an adverse effect on our results of operations and financial condition, see “Item 3. Key Information — Item 3.D. Risk Factors — Korea is our most important market, and our current business and future growth could be materially and adversely affected if economic conditions in Korea deteriorate.” A number of other factors have had or are expected to have a material impact on our results of operations, financial condition and capital expenditures. These factors include:
| • | our sales volume, unit prices and product mix for steel products; |
| • | costs and production efficiency; and |
| • | exchange rate fluctuations. |
As a result of these factors, our financial results in the past may not be indicative of future results or trends in those results.
Sales Volume, Prices and Product Mix for Steel Products
In recent years, our net sales have been affected by the following factors relating to our steel business:
| • | the demand for our products in the Korean market and our capacity to meet that demand; |
| • | our ability to compete for sales in the export market; |
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| • | price levels; and |
| • | our ability to improve our product mix. |
Domestic demand for our products is affected by the condition of major steel-consuming industries, such as construction, shipbuilding, automotive, electrical appliances and downstream steel processors, and the Korean economy in general.
In 2022, the unit sales price in Won for each of our principal product lines of steel products increased compared to 2021, reflecting continuation of strong market conditions in the first half of 2022 in part due to global steel supply chain concerns caused by Russia’s invasion of Ukraine, which market conditions weakened beginning in the second half of 2022 reflecting a decrease in global demand for steel products, as well as depreciation of the Won against the U.S. dollar in 2022 that increased our export prices in Won terms during 2022. However, weaker demand beginning in the second half of 2022 has adversely impacted steel prices. General increases in the prices of key raw materials in recent years have also contributed to increases in the prices of our steel products during 2021 and 2022. The weighted average unit price for our principal product lines of steel products increased by 17.2% from 2021 to 2022, which impact was enhanced by the depreciation in the average value of the Won against the U.S. dollar in 2022 compared to 2021 that increased our export prices in Won terms. The Market Average Exchange Rate depreciated from an average of Won 1,144.4 to US$1.00 in 2021 to an average of Won 1,292.0 to US$1.00 in 2022.
The unit sales price of silicon steel sheets, which accounted for 2.0% of total sales volume of such products, increased by 35.4% in 2022 compared to 2021. The unit sales price of stainless steel products, which accounted for 9.4% of total sales volume of such products, increased by 29.7% in 2022 compared to 2021. The unit sales price of plates, which accounted for 16.2% of total sales volume of such products, increased by 24.2% in 2022 compared to 2021. The unit sales price of wire rods, which accounted for 5.1% of total sales volume of such products, increased by 22.6% in 2022 compared to 2021. The unit sales price of cold rolled products, which accounted for 36.8% of total sales volume of such products, increased by 12.1% in 2022 compared to 2021. The unit sales price of hot rolled products, which accounted for 30.5% of total sales volume of the principal steel products, increased by 10.9% in 2022 compared to 2021.
In 2023, the unit sales price in Won for each of our principal product lines of steel products decreased compared to 2022 primarily due to a general decrease in global demand for steel products reflecting deterioration in global economic conditions. The weighted average unit price for our principal product lines of steel products decreased by 11.3% from 2022 to 2023, the impact of which was offset in part by the depreciation in the average value of the Won against the U.S. dollar in 2023 compared to 2022 that increased our export prices in Won terms. The Market Average Exchange Rate depreciated from an average of Won 1,292.0 to US$1.00 in 2022 to an average of Won ￦1,305.4 to US$1.00 in 2023.
The unit sales price of plates, which accounted for 16.2% of total sales volume of such products, decreased by 13.7% in 2023 compared to 2022. The unit sales price of stainless steel products, which accounted for 8.5% of total sales volume of our principal steel products, decreased by 13.4% in 2023 compared to 2022. The unit sales price of wire rods, which accounted for 5.6% of total sales volume of such products, decreased by 12.3% in 2023 compared to 2022. The unit sales price of hot rolled products, which accounted for 33.9% of total sales volume of such products, decreased by 11.6% in 2023 compared to 2022. The unit sales price of silicon steel sheets, which accounted for 1.8% of total sales volume of such products, decreased by 3.3% in 2023 compared to 2022. The unit sales price of cold rolled products, which accounted for 33.9% of total sales volume of such products, decreased by 2.9% in 2023 compared to 2022.
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The table below sets out the average unit sales prices for our semi-finished and finished steel products produced by us and directly sold to external customers for the periods indicated.
| For the Year Ended December 31, | ||||||||||||
| Products |
2021 | 2022 | 2023 | |||||||||
| (In thousands of Won per ton) | ||||||||||||
| Cold rolled products |
￦ | 1,118 | ￦ | 1,254 | ￦ | 1,218 | ||||||
| Hot rolled products |
954 | 1,058 | 935 | |||||||||
| Stainless steel products |
2,842 | 3,686 | 3,192 | |||||||||
| Plates |
985 | 1,224 | 1,056 | |||||||||
| Wire rods |
1,033 | 1,267 | 1,112 | |||||||||
| Silicon steel sheets |
1,550 | 2,099 | 2,030 | |||||||||
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| Average (1) |
￦ | 1,225 | ￦ | 1,436 | ￦ | 1,273 | ||||||
| (1) | “Average” prices are based on the weighted average, by sales volume, of our sales for the listed principal products produced by us and directly sold to external customers. See “Item 4. Information on the Company — Item 4.B. Business Overview — Major Products.” The average unit sales price calculation does not include sales results of steel products categorized as “others.” |
Costs and Production Efficiency
Our major costs and operating expenses are raw material purchases, depreciation, labor and other purchases. The table below sets out our cost of sales and selling and administrative expenses as a percentage of our revenue as well as gross profit margin and operating profit margin for the periods indicated.
| For the Year Ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| (Percentage of net sales) | ||||||||||||
| Cost of sales |
84.4 | % | 91.0 | % | 91.7 | % | ||||||
| Selling and administrative expenses |
3.5 | 3.3 | 3.7 | |||||||||
| Gross margin |
15.6 | 9.0 | 8.3 | |||||||||
| Operating profit margin |
11.5 | 5.1 | 3.5 | |||||||||
We are closely monitoring changes in market conditions and we implemented the following measures in recent years to improve our profit margins:
| • | pursuing cost reduction through enhancing product designs, improving productivity and reducing fixed costs; |
| • | focusing on marketing activities to increase the sales of higher margin, higher value-added products and to strengthen our domestic market position; |
| • | pursuing synergies among member companies of the POSCO Group through corporate restructurings; and |
| • | establishing a special sales committee to more effectively respond to changes in market trends and preparing responses to various scenarios of future sales. |
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Production capacity represents our maximum production capacity that can be achieved with an optimal level of operations of our facilities. The table below sets out certain information regarding our production capacity and efficiency in the production of steel products for the periods indicated.
| For the Year Ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| Crude steel and stainless steel production capacity (million tons per year) |
45.3 | 45.3 | 45.3 | |||||||||
| POSCO |
40.7 | 40.7 | 40.7 | |||||||||
| PT. Krakatau POSCO |
3.0 | 3.0 | 3.0 | |||||||||
| POSCO (Zhangjiagang). |
1.1 | 1.1 | 1.1 | |||||||||
| POSCO YAMATO VINA |
0.6 | 0.6 | 0.6 | |||||||||
| Actual crude steel and stainless steel output (million tons) |
43.0 | 38.6 | 39.9 | |||||||||
| POSCO |
38.3 | 34.2 | 35.7 | |||||||||
| PT. Krakatau POSCO |
3.1 | 3.0 | 3.0 | |||||||||
| POSCO (Zhangjiagang). |
1.0 | 1.0 | 0.8 | |||||||||
| POSCO YAMATO VINA |
0.6 | 0.4 | 0.4 | |||||||||
| Capacity utilization rate (%) |
94.8 | % | 85.2 | % | 88.1 | % | ||||||
| POSCO |
94.1 | % | 84.1 | % | 87.7 | % | ||||||
| PT. Krakatau POSCO |
104.5 | % | 101.0 | % | 100.2 | % | ||||||
| POSCO (Zhangjiagang). |
89.9 | % | 89.9 | % | 76.3 | % | ||||||
| POSCO YAMATO VINA |
104.9 | % | 72.2 | % | 75.5 | % | ||||||
Exchange Rate Fluctuations
Our consolidated financial statements are prepared from our local currency denominated financial results, assets and liabilities and our subsidiaries around the world, which are then translated into Won. A substantial proportion of our consolidated financial results is accounted for in currencies other than the Won. Accordingly, our consolidated financial results and assets and liabilities may be materially affected by changes in the exchange rates of foreign currencies. In 2023, 60.4% of the Steel Segment’s total revenue was in overseas markets outside of Korea. To the extent that we incur costs in one currency and make sales in another, our profit margins may be affected by changes in the exchange rates between the two currencies. Since the currency in which sales are recognized may not be the same as the currency in which expenses are incurred, foreign exchange rate fluctuations may materially affect our results of operations. Depreciation of the Won may materially affect the results of our operations because, among other things, it causes:
| • | an increase in the amount of Won required for us to make interest and principal payments on our foreign currency-denominated debt; |
| • | an increase in Won terms in the costs of raw materials and equipment that we purchase from overseas sources and a substantial portion of our freight costs, which are denominated primarily in U.S. dollars; and |
| • | foreign exchange translation losses on foreign currency-denominated liabilities, which lower our earnings for accounting purposes. |
Appreciation of the Won against major currencies, on the other hand, causes:
| • | our export products to be less competitive by raising our prices in U.S. dollar, Yen and Yuan terms; and |
| • | a reduction in net sales and accounts receivables in Won from export sales, which are primarily denominated in U.S. dollars and to a lesser extent in Yen and Yuan. |
The overall net impact from fluctuations of the Won against major currencies is difficult to estimate and varies from year to year. We strive to naturally offset our foreign exchange risk by matching foreign currency receivables with our foreign currency payables and our overseas subsidiaries have sought to further mitigate the adverse impact of exchange rate fluctuations by conducting business transactions in the local currency of the respective market in which the transactions occur.
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In particular, POSCO International’s exposure to fluctuations in exchange rates, including the Won/U.S. dollar exchange rate, is limited because trading transactions typically involve matched purchase and sale contracts, which result in limited settlement exposure, and because POSCO International’s contracts with domestic suppliers of products for export and with domestic purchasers of imported products are generally denominated in U.S. dollars. Although the impact of exchange rate fluctuations is partially mitigated by such strategies, we and our subsidiaries, particularly POSCO International and POSCO E&C, also periodically enter into derivative contracts, primarily foreign currency swaps and forward exchange contracts, to further hedge some of our foreign exchange risks. However, our results of operations have historically been affected by exchange rate fluctuations and there can be no assurance that such strategies will be sufficient to reduce or eliminate the adverse impact of such fluctuations in the future.
Recent Accounting Changes
For a discussion of new standards, interpretations and amendments to existing standards that have been published, see Note 2 to the Consolidated Financial Statements.
Explanatory Note Regarding Presentation of Certain Financial Information under K-IFRS
In addition to preparing financial statements in accordance with IFRS as issued by the IASB included in this annual report, we also prepare financial statements in accordance with K-IFRS as adopted by the KASB, which we are required to file with the Financial Services Commission and the Korea Exchange under the FSCMA.
K-IFRS differs in certain respects from IFRS as issued by the IASB in the presentation of operating profit. In addition, under K-IFRS, revenue from the development and sale of real estate is recognized using the percentage of completion method. However, under IFRS as issued by the IASB, revenue from the development and sale of certain real estate is recognized when an individual unit of residential real estate is delivered to the buyer. As a result, our consolidated statements of comprehensive income and our consolidated statements of financial position prepared in accordance with IFRS as issued by the IASB included in this annual report differ from our consolidated statements of comprehensive income and consolidated statements of financial position prepared in accordance with K-IFRS.
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The table below sets forth a reconciliation of our operating profit and net income or loss as presented in our consolidated statements of comprehensive income prepared in accordance with IFRS as issued by the IASB for each of the years ended December 31, 2021, 2022 and 2023 to our operating profit and net income or loss in our consolidated statements of comprehensive income prepared in accordance with K-IFRS, for each of the corresponding years, taking into account such differences:
| For the Year Ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| (In billions of Won) | ||||||||||||
| Operating profit under IFRS as issued by the IASB |
￦ | 8,775 | ￦ | 4,342 | ￦ | 2,738 | ||||||
| Additions: |
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| Loss on disposals of assets held for sale |
— | 4 | 103 | |||||||||
| Loss on disposals of investments in subsidiaries, associates and joint ventures |
13 | 12 | 19 | |||||||||
| Loss on disposals of property, plant and equipment |
96 | 111 | 126 | |||||||||
| Impairment loss on property, plant and equipment |
312 | 213 | 276 | |||||||||
| Impairment loss on intangible assets |
224 | 371 | 130 | |||||||||
| Loss on valuation of firm commitment |
112 | 156 | 47 | |||||||||
| Idle tangible asset expenses |
24 | 18 | 4 | |||||||||
| Increase to provisions |
38 | 89 | 38 | |||||||||
| Donations |
101 | 81 | 67 | |||||||||
| Miscellaneous losses |
70 | 64 | 93 | |||||||||
| Others |
38 | 5 | 1 | |||||||||
|
|
|
|
|
|
|
|||||||
| Subtotal |
1,027 | 1,124 | 904 | |||||||||
|
|
|
|
|
|
|
|||||||
| Other bad debt expenses |
20 | 15 | 291 | |||||||||
| Deductions: |
||||||||||||
| Gain on disposals of assets held for sale |
(60 | ) | (55 | ) | (1 | ) | ||||||
| Gain on disposals of investment in subsidiaries, associates and joint ventures |
(86 | ) | (14 | ) | (197 | ) | ||||||
| Gain on disposals of property, plant and equipment |
(12 | ) | (19 | ) | (9 | ) | ||||||
| Gain on valuation of firm commitment |
(169 | ) | (182 | ) | (11 | ) | ||||||
| Reversal of other provisions |
(34 | ) | (5 | ) | (9 | ) | ||||||
| Premium income |
(38 | ) | (238 | ) | (13 | ) | ||||||
| Gain on bargain purchases |
— | — | (41 | ) | ||||||||
| Gain on disposal of emission rights |
(1 | ) | (5 | ) | (26 | ) | ||||||
| Miscellaneous income |
(158 | ) | (64 | ) | (78 | ) | ||||||
| Others |
(20 | ) | (10 | ) | (8 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Subtotal |
(578 | ) | (592 | ) | (394 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Recovery of allowance for other bad debt accounts |
(33 | ) | (5 | ) | (8 | ) | ||||||
| Revenue recognition related to development and sale of real estate |
323 | (253 | ) | 71 | ||||||||
| Cost of sales recognition related to development and sale of real estate |
(297 | ) | 220 | (71 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Operating profit under K-IFRS |
￦ | 9,238 | ￦ | 4,850 | ￦ | 3,531 | ||||||
|
|
|
|
|
|
|
|||||||
| Net profit under IFRS as issued by the IASB |
￦ | 7,176 | ￦ | 3,586 | ￦ | 1,846 | ||||||
| Adjustments related to development and sale of real estate: |
||||||||||||
| Revenue |
323 | (253 | ) | 71 | ||||||||
| Cost of sales |
(297 | ) | 220 | (71 | ) | |||||||
| Income tax |
(6 | ) | 8 | (0 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Net profit under K-IFRS |
￦ | 7,196 | ￦ | 3,560 | ￦ | 1,846 | ||||||
|
|
|
|
|
|
|
|||||||
50
Operating Results – 2022 Compared to 2023
The following table presents our statement of comprehensive income information and changes therein for 2022 and 2023.
| Changes | ||||||||||||||||
| For the Year Ended December 31, | 2022 versus 2023 | |||||||||||||||
| 2022 | 2023 | Amount | % | |||||||||||||
| (In billions of Won) | ||||||||||||||||
| Revenue |
￦ | 85,004 | ￦ | 77,057 | ￦ | (7,947 | ) | (9.3 | ) | |||||||
| Cost of sales |
77,321 | 70,639 | (6,682 | ) | (8.6 | ) | ||||||||||
|
|
|
|
|
|||||||||||||
| Gross profit |
7,682 | 6,417 | (1,265 | ) | (16.5 | ) | ||||||||||
| Selling and administrative expenses: |
||||||||||||||||
| Impairment loss (reversal of impairment loss) on trade accounts and notes receivable |
25 | (18 | ) | (43 | ) | |
N.A. |
(1) |
||||||||
| Other administrative expenses |
2,480 | 2,670 | 190 | 7.7 | ||||||||||||
| Selling expenses |
294 | 234 | (61 | ) | (20.7 | ) | ||||||||||
| Other operating income and expenses: |
||||||||||||||||
| Impairment loss on other receivables |
10 | 284 | 274 | 2,787.9 | ||||||||||||
| Other operating income |
592 | 394 | (198 | ) | (33.4 | ) | ||||||||||
| Other operating expenses |
1,124 | 904 | (219 | ) | (19.5 | ) | ||||||||||
|
|
|
|
|
|||||||||||||
| Operating profit |
4,342 | 2,738 | (1,604 | ) | (36.9 | ) | ||||||||||
| Share of profit of equity-accounted investees, net |
676 | 270 | (407 | ) | (60.1 | ) | ||||||||||
| Finance income |
4,834 | 3,831 | (1,003 | ) | (20.8 | ) | ||||||||||
| Finance costs |
5,804 | 4,203 | (1,601 | ) | (27.6 | ) | ||||||||||
|
|
|
|
|
|||||||||||||
| Profit before income tax |
4,047 | 2,635 | (1,412 | ) | (34.9 | ) | ||||||||||
| Income tax expense |
462 | 789 | 328 | 71.0 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Profit |
3,586 | 1,846 | (1,740 | ) | (48.5 | ) | ||||||||||
| Profit for the period attributable to owners of the controlling company |
3,158 | 1,698 | (1,459 | ) | (46.2 | ) | ||||||||||
| Profit for the period attributable to non-controlling interests |
428 | 148 | (281 | ) | (65.5 | ) | ||||||||||
| (1) | N.A. means not applicable. |
51
Revenue
The following table presents our revenue by segment and changes therein for 2022 and 2023.
| Changes | ||||||||||||||||
| For the Year Ended December 31, | 2022 versus 2023 | |||||||||||||||
| 2022 | 2023 | Amount | % | |||||||||||||
| (In billions of Won) | ||||||||||||||||
| Steel Segment: |
||||||||||||||||
| External revenue |
￦ | 44,547 | ￦ | 40,393 | ￦ | (4,154 | ) | (9.3 | ) | |||||||
| Internal revenue |
26,103 | 23,145 | (2,957 | ) | (11.3 | ) | ||||||||||
|
|
|
|
|
|||||||||||||
| Sub-total |
70,650 | 63,539 | (7,111 | ) | (10.1 | ) | ||||||||||
|
|
|
|
|
|||||||||||||
| Green Infrastructure Business — Trading Segment |
||||||||||||||||
| External revenue |
29,518 | 24,034 | (5,484 | ) | (18.6 | ) | ||||||||||
| Internal revenue |
23,678 | 18,910 | (4,768 | ) | (20.1 | ) | ||||||||||
|
|
|
|
|
|||||||||||||
| Sub-total |
53,196 | 42,944 | (10,252 | ) | (19.3 | ) | ||||||||||
|
|
|
|
|
|||||||||||||
| Green Infrastructure Business — Construction Segment |
||||||||||||||||
| External revenue |
7,668 | 8,301 | 633 | 8.3 | ||||||||||||
| Internal revenue |
1,218 | 1,966 | 749 | 61.5 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Sub-total |
8,885 | 10,268 | 1,382 | 15.6 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Green Infrastructure Business — Logistics and Others Segment |
||||||||||||||||
| External revenue |
436 | 471 | 35 | 8.0 | ||||||||||||
| Internal revenue |
3,383 | 3,475 | 92 | 2.7 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Sub-total |
3,820 | 3,946 | 126 | 3.3 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Green Materials and Energy Segment |
||||||||||||||||
| External revenue |
2,452 | 3,816 | 1,364 | 55.6 | ||||||||||||
| Internal revenue |
937 | 1,006 | 69 | 7.4 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Sub-total |
3,389 | 4,822 | 1,433 | 42.3 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Others Segment: |
||||||||||||||||
| External revenue |
129 | 113 | (16 | ) | (12.4 | ) | ||||||||||
| Internal revenue |
1,040 | 1,450 | 409 | 39.4 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Sub-total |
1,170 | 1,562 | 393 | 33.6 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Total revenue prior to consolidation adjustments |
141,109 | 127,080 | (14,029 | ) | (9.9 | ) | ||||||||||
|
|
|
|
|
|||||||||||||
| Consolidation adjustments |
(56,358 | ) | (49,953 | ) | 6,406 | (11.4 | ) | |||||||||
| Basis difference adjustments (1) |
253 | (71 | ) | (324 | ) | N.A. | (2) | |||||||||
|
|
|
|
|
|||||||||||||
| Revenue |
￦ | 85,004 | ￦ | 77,057 | (7,947 | ) | (9.3 | ) | ||||||||
|
|
|
|
|
|||||||||||||
| (1) | Basis difference adjustments are related to the difference in recognizing revenue and expenses of the Construction Segment in connection with the development and sale of certain residential real estate between the report reviewed by the chief executive officer and the consolidated financial statements. See Notes 3 and 41 to the Consolidated Financial Statements. |
| (2) | N.A. means not applicable. |
Our revenue decreased by 9.3%, or Won 7,947 billion, from Won 85,004 billion in 2022 to Won 77,057 billion in 2023 primarily due to decreases in external revenues of the Trading Segment of the Green Infrastructure Business and the Steel Segment, the impact of which was offset by increases in external revenue of the Green Materials and Energy Segment, the Construction Segment of the Green Infrastructure Business and the Logistics and Others Segment of the Green Infrastructure Business. Specifically:
Steel Segment. External revenue from the Steel Segment, which does not include internal revenue from inter-company transactions that are eliminated during consolidation, decreased by 9.3%, or Won 4,154 billion, from Won 44,547 billion in 2022 to Won 40,393 billion in 2023 due to a decrease in the average unit sales price per ton of our principal steel products, which was offset in part by an increase in the sales volume of our principal steel products.
52
The weighted average unit sales price per ton of the principal steel products produced by us and directly sold to external customers decreased by 11.3% from Won 1,435,642 per ton in 2022 to Won 1,272,754 per ton in 2023 primarily due to a general decrease in global demand for steel products reflecting deterioration in global economic conditions, which impact was offset in part by depreciation of the Won against the U.S. dollar in 2023 that increased our export prices in Won terms during 2023. On the other hand, the overall sales volume of our principal steel products increased by 4.0%, from 27.7 million tons in 2022 to 28.8 million tons in 2023 following normalization of our production and sales operations in 2023 after recovery from the September 2022 Typhoon Hinnamnor that adversely impacted our sales in the fourth quarter of 2022. Such factors were principally attributable to the following:
| • | The unit sales price in Won of each of our principal product lines decreased from 2022 to 2023. The unit sales prices in Won of plates, stainless steel products, wire rods, hot rolled products, silicon steel sheets and cold rolled products decreased by 13.7%, 13.4%, 12.3%, 11.6%, 3.3% and 2.9%, respectively, from 2022 to 2023. For a discussion of changes in the unit sales prices of each of our principal product lines, see “— Overview — Sales Volume, Prices and Product Mix” above. |
| • | The sales volume of hot rolled products, wire rods and plates increased by 15.6%, 15.2% and 4.2%, respectively, from 2022 to 2023. On the other hand, the sales volume of silicon steel sheets, stainless steel products and cold rolled products decreased by 6.4%, 5.6% and 4.0%, respectively, from 2022 to 2023. For a discussion of changes in the sales volume of each of our principal product lines, see “Item 4.B. Business Overview — Major Products.” |
Total revenue from the Steel Segment, which includes internal revenue from inter-company transactions, decreased by 10.1%, or Won 7,111 billion, from Won 70,650 billion in 2022 to Won 63,539 billion in 2023 as internal revenue from inter-company transactions decreased by 11.3%, or Won 2,957 billion, from Won 26,103 billion in 2022 to Won 23,145 billion in 2023 primarily due to a decrease in the sale prices of steel products sold through trading subsidiaries, particularly POSCO International.
Trading Segment of the Green Infrastructure Business. External revenue from the Trading Segment of the Green Infrastructure Business, which does not include internal revenue from inter-company transactions that are eliminated during consolidation, decreased by 18.6%, or Won 5,484 billion, from Won 29,518 billion in 2022 to Won 24,034 billion in 2023 primarily due to decreases in the prices of steel products traded by POSCO International and the trading volume of non-steel products traded by POSCO International reflecting deterioration in global economic conditions, the aggregate impact of which was offset in part by (i) increase in the sales volume of steel products traded by POSCO International and (ii) depreciation of the Won against the U.S. dollar in 2023 that increased our export prices in Won terms during 2023.
Total revenue from the Trading Segment of the Green Infrastructure Business, which includes internal revenue from inter-company transactions, decreased by 19.3%, or Won 10,252 billion, from Won 53,196 billion in 2022 to Won 42,944 billion in 2023 as internal revenue from inter-company transactions decreased by 20.1%, or Won 4,768 billion, from Won 23,678 billion in 2022 to Won 18,910 billion in 2023 primarily due to decreases in prices of steel products and raw materials traded as inter-company transactions.
Construction Segment of the Green Infrastructure Business. External revenue from the Construction Segment of the Green Infrastructure Business, which does not include internal revenue from inter-company transactions that are eliminated during consolidation and basis difference adjustments, increased by 8.3%, or Won 633 billion, from Won 7,668 billion in 2022 to Won 8,301 billion in 2023 primarily due to increases in external revenues from plant construction projects and architectural works projects.
53
Total revenue from the Construction Segment of the Green Infrastructure Business, which includes internal revenue from inter-company transactions, increased by 15.6%, or Won 1,382 billion, from Won 8,885 billion in 2022 to Won 10,268 billion in 2023 as internal revenue from inter-company transactions increased by 61.5%, or Won 749 billion, from Won 1,218 billion in 2022 to Won 1,966 billion in 2023. Such increase in internal revenue reflected an increase in the construction activities for member companies of the POSCO Group from 2022 to 2023.
Logistics and Others Segment of the Green Infrastructure Business. External revenue from the Logistics and Others Segment of the Green Infrastructure Business, which does not include internal revenue from inter-company transactions that are eliminated during consolidation, increased by 8.0%, or Won 35 billion, from Won 436 billion in 2022 to Won 471 billion in 2023, primarily due to an increase in revenue from logistics services provided by POSCO FLOW to its external customers.
Total revenue from the Logistics and Others Segment of the Green Infrastructure Business, which includes internal revenue from inter-company transactions, increased by 3.3%, or Won 126 billion, from Won 3,820 billion in 2022 to Won 3,946 billion in 2023 as internal revenue from inter-company transactions increased by 2.7%, or Won 92 billion, from Won 3,383 billion in 2022 to Won 3,475 billion in 2023, primarily due to an increase in buildout of information technology infrastructure by POSCO DX for our subsidiaries in the Green Materials and Energy Segment.
Green Materials and Energy Segment. External revenue from the Green Materials and Energy Segment, which does not include internal revenue from inter-company transactions that are eliminated during consolidation, increased by 55.6%, or Won 1,364 billion, from Won 2,452 billion in 2022 to Won 3,816 billion in 2023, primarily due to an increase in sales of anode and cathode materials used, among others, in the production of electric batteries.
Total revenue from the Green Materials and Energy Segment, which includes internal revenue from inter-company transactions, increased by 42.3%, or Won 1,433 billion, from Won 3,389 billion in 2022 to Won 4,822 billion in 2023 as internal revenue from inter-company transactions increased by 7.4%, or Won 69 billion, from Won 937 billion in 2022 to Won 1,006 billion in 2023 primarily due to an increase in POSCO Future M’s revenue from sales of cathode materials to member companies of the POSCO group from 2022 to 2023.
Others Segment. External revenue from the Others Segment, which does not include internal revenue from inter-company transactions that are eliminated during consolidation, decreased by 12.4%, or Won 16 billion, from Won 129 billion in 2022 to Won 113 billion in 2023, primarily due to a decrease in dividend income related to our investments in technology companies.
Total revenue from the Others Segment, which includes internal revenue from inter-company transactions, increased by 33.6%, or Won 393 billion, from Won 1,170 billion in 2022 to Won 1,562 billion in 2023 as internal revenue from inter-company transactions increased by 39.4%, or Won 409 billion, from Won 1,040 billion in 2022 to Won 1,450 billion in 2023 primarily due an increase in dividend payments from our subsidiaries.
Cost of Sales
Our cost of sales decreased by 8.6%, or Won 6,682 billion, from Won 77,321 billion in 2022 to Won 70,639 billion in 2023 primarily due to decreases in the average prices in Won terms of some of our key raw materials for POSCO, the impact of which was partially offset by (i) an increase in the production volume of finished steel products sold by us, (ii) an increase in the cost of sales of POSCO Future M reflecting an increase in the volume of raw materials used for the production and sales of anode and cathode materials, among others, in the production of electric batteries and (iii) depreciation of the Won against the U.S. dollar, which increased the price of our imported raw materials in Won terms. With respect to the principal raw materials for our steel products, the average market price of coal per wet metric ton (Premium Low Vol Coking Coal, FOB Australia Index announced by Platts)
54
decreased from US$364 in 2022 to US$296 in 2023. In addition, the average market price of iron ore per dry metric ton (Iron Ore 62% Fe, CFR China Index announced by Platts) remained the same at US$120 in 2022 and 2023.
Gross Profit
Our gross profit decreased by 16.5%, or Won 1,265 billion, from Won 7,682 billion in 2022 to Won 6,417 billion in 2023 primarily due to (i) a decrease in the average unit sales price in Won terms of the steel products sold by us that outpaced a decrease in the average prices in Won terms of the principal raw materials used to manufacture such products, (ii) a decrease in POSCO E&C’s participation in higher margin plant and architectural works construction projects in 2023, (iii) a decrease in gross profit from POSCO Future M reflecting a slowdown in demand for anode materials and (iv) a decrease in gross profit from POSCO International’s steel products trading activities. Partially offsetting such impact, expenses related to flooding caused by Typhoon Hinnamnor in September 2022 included in cost of sales, which had negatively impacted gross profit in 2022, were not repeated in 2023. Our gross margin, which is gross profit as a percentage of total revenue, decreased from 9.0% in 2022 to 8.3% in 2023.
Selling and Administrative Expenses
The following table presents a breakdown of our selling and administrative expenses and changes therein for 2022 and 2023.
| Changes | ||||||||||||||||
| For the Year Ended December 31, | 2022 versus 2023 | |||||||||||||||
| 2022 | 2023 | Amount | % | |||||||||||||
| (In billions of Won) | ||||||||||||||||
| Impairment loss on (reversal of impairment loss on) trade accounts and notes receivable |
￦ | 25 | ￦ | (18 | ) | ￦ | (43 | ) | N.A. | (1) | ||||||
|
|
|
|
|
|||||||||||||
| Freight and custody expenses |
￦ | 77 | ￦ | 56 | (22 | ) | (28.3 | ) | ||||||||
| Sales commissions |
75 | 68 | (7 | ) | (9.2 | ) | ||||||||||
| Sales promotion |
19 | 10 | (10 | ) | (51.0 | ) | ||||||||||
| Sales insurance premium |
39 | 32 | (7 | ) | (19.0 | ) | ||||||||||
| Contract cost |
58 | 46 | (12 | ) | (20.0 | ) | ||||||||||
| Others |
26 | 23 | (3 | ) | (12.8 | ) | ||||||||||
|
|
|
|
|
|||||||||||||
| Total selling expenses |
￦ | 294 | ￦ | 234 | (61 | ) | (20.7 | ) | ||||||||
|
|
|
|
|
|||||||||||||
| Wages and salaries |
￦ | 1,076 | ￦ | 1,156 | ￦ | 81 | 7.5 | |||||||||
| Expenses related to post-employment benefits |
85 | 93 | 8 | 9.6 | ||||||||||||
| Other employee benefits |
231 | 273 | 43 | 18.4 | ||||||||||||
| Travel |
40 | 48 | 8 | 20.9 | ||||||||||||
| Depreciation |
149 | 160 | 11 | 7.5 | ||||||||||||
| Amortization |
90 | 96 | 6 | 6.6 | ||||||||||||
| Taxes and public dues |
96 | 101 | 5 | 4.9 | ||||||||||||
| Rental |
37 | 48 | 12 | 31.3 | ||||||||||||
| Advertising |
104 | 107 | 4 | 3.5 | ||||||||||||
| Research and development |
180 | 175 | (5 | ) | (2.5 | ) | ||||||||||
| Service fees |
225 | 235 | 10 | 4.3 | ||||||||||||
| Others |
167 | 177 | 10 | 6.0 | ||||||||||||
|
|
|
|
|
|||||||||||||
| Total other administrative expenses |
￦ | 2,480 | ￦ | 2,670 | 190 | 7.7 | ||||||||||
|
|
|
|
|
|||||||||||||
| Total selling and administrative expenses |
￦ | 2,799 | ￦ | 2,885 | 86 | 3.1 | ||||||||||
|
|
|
|
|
|||||||||||||
| (1) | N.A. means not applicable. |
Our selling and administrative expenses increased by 3.1%, or Won 86 billion, from Won 2,799 billion in 2022 to Won 2,885 billion in 2023 primarily due to increases in wages and salaries, other employee benefits, rental expenses and depreciation expenses, the impact of which was partially offset by recognition of reversal of impairment loss on trade accounts and notes receivable as well as decreases in freight and custody expenses.
55
Such factors were principally attributable to the following:
| • | Our wages and salaries increased by 7.5%, or Won 81 billion, from Won 1,076 billion in 2022 to Won 1,156 billion in 2023 primarily due to increases in bonus payments and wage levels. |
| • | Our other employee benefits increased by 18.4%, or Won 43 billion, from Won 231 billion in 2022 to Won 273 billion in 2023 primarily due to an expansion of our employee welfare program. |
| • | Our rental expenses increased by 31.3%, or Won 12 billion, from Won 37 billion in 2022 to Won 48 billion in 2023 primarily due to an increase in our leased properties reflecting growth in our business areas. |
| • | Depreciation expenses increased by 7.5%, or Won 11 billion, from Won 149 billion in 2022 to Won 160 billion in 2023 primarily reflecting an increase in depreciable assets. |
| • | We recognized impairment loss on trade accounts and notes receivable of Won 25 billion in 2022 compared to reversal of impairment loss on trade accounts and notes receivable of Won 18 billion in 2023. In 2022, we recognized such impairment loss primarily related to trading activities of POSCO International. In 2023, we recognized reversal of a substantial portion of such impairment loss. |
| • | Our freight and custody expenses decreased by 28.3%, or Won 22 billion, from Won 77 billion in 2022 to Won 56 billion in 2023 primarily due to a general decrease in freight unit shipping prices. |
Other Operating Income and Expenses
The following table presents our impairment loss on other receivables and changes therein for 2022 and 2023.
| Changes | ||||||||||||||||
| For the Year Ended December 31, | 2022 versus 2023 | |||||||||||||||
| 2022 | 2023 | Amount | % | |||||||||||||
| (In billions of Won) | ||||||||||||||||
| Impairment loss on other receivables |
￦ | 10 | ￦ | 284 | ￦ | 274 | 2,787.9 | |||||||||
Our impairment loss on other receivables increased significantly by Won 274 billion, from Won 10 billion in 2022 to Won 284 billion in 2023. In 2022, our impairment loss on other receivables of Won 10 billion related primarily to projects of POSCO E&C and its subsidiary in Vietnam and POSCO DX. In 2023, our impairment loss on other receivables of Won 284 billion related primarily to projects of FQM Australia Nickel.
56
The following table presents a breakdown of our other operating income and changes therein for 2022 and 2023.
| Changes | ||||||||||||||||
| For the Year Ended December 31, | 2022 versus 2023 | |||||||||||||||
| 2022 | 2023 | Amount | % | |||||||||||||
| (In billions of Won) | ||||||||||||||||
| Gain on disposal of assets held for sale |
￦ | 55 | ￦ | 1 | ￦ | (54 | ) | (97.6 | ) | |||||||
| Gain on disposal of investments in subsidiaries, |
14 | 197 | 183 | 1,317.5 | ||||||||||||
| Gain on disposal of property, plant and equipment |
19 | 9 | (9 | ) | (49.3 | ) | ||||||||||
| Gain on valuation of firm commitment |
182 | 11 | (170 | ) | (93.7 | ) | ||||||||||
| Reversal of other provisions |
5 | 9 | 3 | 63.5 | ||||||||||||
| Premium income |
238 | 13 | (224 | ) | (94.5 | ) | ||||||||||
| Gain on bargain purchases |
— | 41 | 41 | N.A. | (1) | |||||||||||
| Gain on disposal of emission rights |
5 | 26 | 21 | 401.8 | ||||||||||||
| Miscellaneous income |
64 | 78 | 14 | 21.3 | ||||||||||||
| Others |
10 | 8 | (2 | ) | (20.3 | ) | ||||||||||
|
|
|
|
|
|||||||||||||
| Total other operating income |
￦ | 592 | ￦ | 394 | (198 | ) | (33.4 | ) | ||||||||
|
|
|
|
|
|||||||||||||
| (1) | N.A. means not applicable. |
Our other operating income decreased by 33.4%, or Won 198 billion, from Won 592 billion in 2022 to Won 394 billion in 2023 primarily due to decreases in premium income and gain on valuation of firm commitment, the impact of which was partially offset by an increase in gain on disposal of investments in subsidiaries, associates and joint ventures. Such factors were principally attributable to the following:
| • | Our premium income decreased by 94.5%, or Won 224 billion, from Won 238 billion in 2022 to Won 13 billion in 2023 primarily due to significant insurance payments received in relation to damages caused by Typhoon Hinnamnor in September 2022 compared to no such payments in 2023. |
| • | Our gain on valuation of firm commitment decreased by 93.7%, or Won 170 billion, from Won 182 billion in 2022 to Won 11 billion in 2023 primarily due to a decrease in firm commitment contracts entered into by POSCO International. |
| • | Our gain on disposal of investments in subsidiaries, associates and joint ventures increased significantly by Won 183 billion, from Won 14 billion in 2022 to Won 197 billion in 2023. In 2022, such gain related primarily to sales of certain steel-related subsidiaries and associates. In 2023, such gain related primarily to our recognition of Won 185 billion of gain on disposal of investments in associates related to reclassification of QSONE Co., Ltd. as a consolidated subsidiary following our acquisition of the remaining 50% of its shares, which had been previously classified as an investment in associates. |
57
The following table presents a breakdown of our other operating expenses and changes therein for 2022 and 2023.
| Changes | ||||||||||||||||
| For the Year Ended December 31, | 2022 versus 2023 | |||||||||||||||
| 2022 | 2023 | Amount | % | |||||||||||||
| (In billions of Won) | ||||||||||||||||
| Loss on disposal of assets held for sale |
￦ | 4 | ￦ | 103 | ￦ | 99 | 2,507.6 | |||||||||
| Loss on disposals of investments in subsidiaries, associates and joint ventures |
12 | 19 | 6 | 52.0 | ||||||||||||
| Loss on disposals of property, plant and equipment |
111 | 126 | 15 | 13.3 | ||||||||||||
| Impairment loss on property, plant and equipment |
213 | 276 | 63 | 29.4 | ||||||||||||
| Impairment loss on intangible assets |
371 | 130 | (241 | ) | (65.0 | ) | ||||||||||
| Loss on valuation of firm commitment |
156 | 47 | (109 | ) | (69.6 | ) | ||||||||||
| Idle tangible asset expenses |
18 | 4 | (14 | ) | (79.6 | ) | ||||||||||
| Increase to provisions |
89 | 38 | (50 | ) | (56.8 | ) | ||||||||||
| Donations |
81 | 67 | (13 | ) | (16.3 | ) | ||||||||||
| Miscellaneous losses |
64 | 93 | 29 | 45.5 | ||||||||||||
| Others |
5 | 1 | (4 | ) | (84.4 | ) | ||||||||||
|
|
|
|
|
|||||||||||||
| Total other operating expenses |
￦ | 1,124 | ￦ | 904 | (219 | ) | (19.5 | ) | ||||||||
|
|
|
|
|
|||||||||||||
Our other operating expenses decreased by 19.5%, or Won 219 billion, Won 1,124 billion in 2022 to Won 904 billion in 2023, primarily due to decreases in impairment loss on intangible assets and loss on valuation of firm commitment, the impact of which was partially offset by increases in loss on disposal of assets held for sale and impairment loss on property, plant and equipment. Such factors were principally attributable to the following:
| • | Our impairment loss on intangible assets decreased by 65.0%, or Won 241 billion, from Won 371 billion in 2022 to Won 130 billion in 2023. In 2022, we recognized impairment loss on goodwill of Won 369 billion, Won 338 billion of which related to the recoverable amount of POSCO International. In 2023, POSCO Canada Ltd. recognized impairment loss on intellectual property rights of Won 89 billion related to its investment-in-kind of the assets and liabilities of Greenhills Mine Unincorporated Joint Venture to a new partnership established by Teck Coal Partnership. |
| • | Our loss on valuation of firm commitment decreased by 69.6%, or Won 109 billion, from Won 156 billion in 2022 to Won 47 billion in 2023 primarily reflecting relatively more stable market prices of key raw materials under our firm commitment contracts in 2023 compared to 2022. |
| • | Our loss on disposal of assets held for sale increased significantly by Won 99 billion, from Won 4 billion in 2022 to Won 103 billion in 2023 primarily due to our disposal of CSP — Compania Siderurgica do Pecem in 2023. |
| • | Our impairment loss on property, plant and equipment increased by 29.4%, or Won 63 billion, from Won 213 billion in 2022 to Won 276 billion in 2023. In 2022, we recognized impairment loss of Won 207 billion related to assets damaged from flooding caused by Typhoon Hinnamnor in September 2022. In 2023, we recognized impairment loss of Won 276 billion primarily related to termination of operations of certain lithium production facilities located in Gwangyang and Argentina. |
Operating Profit
Due to the factors described above, our operating profit decreased by 36.9%, or Won 1,604 billion, from Won 4,342 billion in 2022 to Won 2,738 billion in 2023. Our operating margin decreased from 5.1% in 2022 to 3.6% in 2023.
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Share of Profit of Equity-Accounted Investees
Our share of profit of equity-accounted investees decreased by 60.1%, or Won 407 billion, from Won 676 billion in 2022 to Won 270 billion in 2023.
In 2022, we recognized a net gain from our proportionate share of equity-accounted investees of Won 676 billion primarily due to our share of gains of Won 273 billion from Roy Hill Holdings Pty Ltd., Won 146 billion from EQP POSCO Global No. 1 Natural Resources Private Equity Fund, Won 50 billion from South-East Asia Gas Pipeline Company Ltd., Won 48 billion from KOBRASCO, Won 45 billion from AES Mong Duong Power Company Limited and Won 42 billion from Nickel Mining Company SAS, the aggregate impact of which was partially offset by our share of loss of Won 90 billion of CSP — Compania Siderurgica do Pecem. See Note 11 to the Consolidated Financial Statements.
In 2023, we recognized a net gain from our proportionate share of equity-accounted investees of Won 270 billion primarily due to our share of gains of Won 292 billion from Roy Hill Holdings Pty Ltd., Won 50 billion from South-East Asia Gas Pipeline Company Ltd., Won 39 billion from AES Mong Duong Power Company Limited and Won 35 billion from POSCO-NPS Niobium LLC, the aggregate impact of which was partially offset by our share of loss of Won 112 billion of FQM Australia Holdings Pty Ltd. and Won 82 billion of SNNC. See Note 11 to the Consolidated Financial Statements.
Finance Income and Finance Costs
The following table presents a breakdown of our finance income and costs and changes therein for 2022 and 2023.
| Changes | ||||||||||||||||
| For the Year Ended December 31, | 2022 versus 2023 | |||||||||||||||
| 2022 | 2023 | Amount | % | |||||||||||||
| (In billions of Won) | ||||||||||||||||
| Interest income |
￦ | 247 | ￦ | 502 | ￦ | 255 | 103.3 | |||||||||
| Dividend income |
39 | 50 | 11 | 28.2 | ||||||||||||
| Gain on foreign currency transactions |
2,284 | 1,661 | (623 | ) | (27.3 | ) | ||||||||||
| Gain on foreign currency translations |
704 | 293 | (411 | ) | (58.4 | ) | ||||||||||
| Gain on derivatives transactions |
840 | 333 | (507 | ) | (60.3 | ) | ||||||||||
| Gain on valuations of derivatives |
263 | 201 | (62 | ) | (23.5 | ) | ||||||||||
| Gain on disposals of financial assets at fair value through profit or loss |
256 | 204 | (52 | ) | (20.3 | ) | ||||||||||
| Gain on valuations of financial assets at fair value through profit or loss |
98 | 572 | 474 | 483.6 | ||||||||||||
| Gain on valuations of financial liabilities at fair value through profit or loss |
86 | — | (86 | ) | (100.0 | ) | ||||||||||
| Others |
17 | 15 | (2 | ) | (11.8 | ) | ||||||||||
|
|
|
|
|
|||||||||||||
| Total finance income |
￦ | 4,834 | ￦ | 3,831 | (1,003 | ) | (20.8 | ) | ||||||||
|
|
|
|
|
|||||||||||||
| Interest expenses |
￦ | 607 | ￦ | 1,001 | 394 | 64.9 | ||||||||||
| Loss on foreign currency transactions |
2,506 | 1,595 | (911 | ) | (36.3 | ) | ||||||||||
| Loss on foreign currency translations |
969 | 706 | (263 | ) | (27.4 | ) | ||||||||||
| Loss on derivatives transactions |
690 | 320 | (370 | ) | (53.6 | ) | ||||||||||
| Loss on valuations of derivatives |
193 | 77 | (116 | ) | (60.1 | ) | ||||||||||
| Loss on disposal of trade accounts and notes receivable |
64 | 85 | 21 | 32.8 | ||||||||||||
| Loss on disposal of financial assets at fair value through profit or loss |
18 | 13 | (5 | ) | (27.8 | ) | ||||||||||
| Loss on valuations of financial assets at fair value through profit or loss |
698 | 51 | (647 | ) | (92.7 | ) | ||||||||||
| Loss on valuations of financial liabilities at fair value through profit or loss |
— | 306 | 306 | |
N.A. |
(1) |
||||||||||
| Others |
58 | 48 | (10 | ) | (17.2 | ) | ||||||||||
|
|
|
|
|
|||||||||||||
| Total finance costs |
￦ | 5,804 | ￦ | 4,203 | (1,601 | ) | (27.6 | ) | ||||||||
|
|
|
|
|
|||||||||||||
| (1) | N.A. means not applicable. |
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We recognized net loss on valuation of financial assets at fair value through profit or loss of Won 600 billion in 2022 compared to net gain on valuation of financial assets at fair value through profit or loss of Won 521 billion in 2023. In 2022, we recognized such net loss primarily due to a temporary increase in volatility of the money markets in Korea in 2022 that resulted in a decrease in the valuation of our short-term financial assets. In 2023, we recognized such net gain as interest rates stabilized.
Our interest income increased by 103.3%, or Won 502 billion, from Won 247 billion in 2022 to Won 502 billion in 2023 primarily due to a general increase in interest rates in Korea and abroad as well as an increase in our average balance of interest-earning financial assets.
Our net loss on foreign currency translation increased by 55.2%, or Won 147 billion, from Won 266 billion in 2022 to Won 413 billion in 2023, as the Won depreciated against the U.S. dollar at year-end in 2022 and further depreciated (to a lesser extent) at year-end in 2023. In terms of the Market Average Exchange Rate, the Won depreciated against the U.S. dollar from Won 1,185.5 to US$1.00 as of December 31, 2021 to Won 1,267.3 to US$1.00 as of December 31, 2022, and further depreciated to Won 1,289.4 to US$1.00 as of December 31, 2023. In addition, we recognized net loss on foreign currency transactions of Won 222 billion in 2022 compared to net gain on foreign currency transactions of Won 66 billion in 2023, as the average value of the Won against the U.S. dollar depreciated in 2022 and further depreciated (to a lesser extent) in 2023. The Market Average Exchange Rate, which was Won 1,144.4 to US$1.00 as of December 31, 2021, depreciated during 2022 to an average of Won 1,292.0 to US$1.00 in 2022 and further depreciated during 2023 to an average of Won 1,305.4 to US$1.00 in 2023. Against such fluctuations, our net gain on valuation of derivatives increased by 77.1%, or Won 54 billion, from Won 70 billion in 2022 to Won 124 billion in 2023, and our net gain on transactions of derivatives decreased by 91.4%, or Won 137 billion, from Won 150 billion in 2022 to Won 13 billion in 2023.
Our interest expenses increased by 64.9%, or Won 394 billion, from Won 607 billion in 2022 to Won 1,001 billion in 2023 primarily due to a general increase in interest rates in Korea and abroad as well as an increase in our average balance of interest-bearing financial liabilities.
We recognized net gain on valuation of financial liabilities at fair value through profit or loss of Won 86 billion in 2022 compared to net loss on valuation of financial liabilities at fair value through profit or loss of Won 306 billion in 2023. In 2022, we recognized such net gain as interest rates in Korea steadily increased throughout the year, which in turn resulted in a gain on valuation of financial liabilities. In 2023, we recognized such net loss as interest rates stabilized.
Profit before Income Taxes
Due to the factors described above, our profit before income taxes decreased by 34.9%, or Won 1,412 billion, from Won 4,047 billion in 2022 to Won 2,635 billion in 2023.
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The following table presents our profit and loss by segment, prior to adjusting for goodwill and corporate fair value adjustments, elimination of inter-segment losses (profits), income tax expense and basis difference, and changes therein for 2022 and 2023.
| Changes | ||||||||||||||||
| For the Year Ended December 31, | 2022 versus 2023 | |||||||||||||||
| 2022 | 2023 | Amount | % | |||||||||||||
| (In billions of Won) | ||||||||||||||||
| Steel Segment |
￦ | 1,712 | ￦ | 1,241 | ￦ | (471 | ) | (27.5 | ) | |||||||
| Green Infrastructure Business — Trading Segment |
716 | 724 | 8 | 1.1 | ||||||||||||
| Green Infrastructure Business — Construction Segment |
138 | 183 | 45 | 33.0 | ||||||||||||
| Green Infrastructure Business — Logistics and Others Segment |
103 | 171 | 68 | 66.0 | ||||||||||||
| Green Materials and Energy Segment |
109 | (236 | ) | (345 | ) | N.A. | (2) | |||||||||
| Others Segment |
(1,087 | ) | 827 | 1,914 | N.A. | (2) | ||||||||||
| Goodwill and corporate fair value adjustments |
(69 | ) | 172 | 241 | N.A. | (2) | ||||||||||
| Elimination of inter-segment losses (profits) |
1,938 | (1,238 | ) | (3,176 | ) | N.A. | (2) | |||||||||
| Income tax expense |
454 | 789 | 335 | 73.9 | ||||||||||||
| Basis difference adjustments (1) |
33 | 0 | (33 | ) | (99.2 | ) | ||||||||||
|
|
|
|
|
|||||||||||||
| Profit before income taxes |
￦ | 4,047 | ￦ | 2,635 | (1,412 | ) | (34.9 | ) | ||||||||
|
|
|
|
|
|||||||||||||
| (1) | Basis difference adjustments are related to the difference in recognizing revenue and expenses of the Construction Segment in connection with the development and sale of certain residential real estate between the report reviewed by the chief executive officer and the consolidated financial statements. See Notes 3 and 41 to the Consolidated Financial Statements. |
| (2) | N.A. means not applicable. |
Income Tax Expense
Our income tax expense increased by 71.0%, or Won 328 billion, from Won 462 billion in 2022 to Won 789 billion in 2023, despite a decrease in profit before income tax. Our effective tax rate increased from 11.4% in 2022 to 30.0% in 2023. See Note 36 to the Consolidated Financial Statements.
In 2022, our effective tax rate of 11.4% was lower than the statutory rate of 26.4% primarily due to: (i) an increase in income tax benefit related to investments in subsidiaries, associates and joint ventures from Won 112 billion in 2021 to Won 413 billion in 2022 (that resulted in a decrease in effective tax rate of 9.0%) in connection with recognition of deferred tax assets that were previously not recognized due to disposal of certain subsidiaries and associates and (ii) the effect of tax rate change of Won 181 billion in 2022 (that resulted in a decrease in effective tax rate of 4.5%) due to a revision of tax law. In 2023, our effective tax rate of 30.0% was higher than the statutory rate of 26.4% primarily due to Won 151 billion of income tax expense resulting from tax audits of us and our subsidiaries.
Profit
Due to the factors described above, our profit decreased by 48.5%, or Won 1,740 billion, from Won 3,586 billion in 2022 to Won 1,846 billion in 2023. Our profit margin decreased from 4.2% in 2022 to 2.4% in 2023.
Operating Results — 2021 Compared to 2022
For a discussion of our operating results of 2021 compared to 2022, please see “Item 5.A. Operating Results — Operating Results — 2021 Compared to 2022” of our Form 20-F for the fiscal year ended December 31, 2022, which we filed with the Securities and Exchange Commission on April 28, 2023.
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| Item 5.B. | Liquidity and Capital Resources |
The following table sets forth the summary of our cash flows for the periods indicated.
| For the Year Ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| (In billions of Won) | ||||||||||||
| Net cash provided by operating activities |
￦ | 6,259 | ￦ | 6,187 | ￦ | 6,168 | ||||||
| Net cash used in investing activities |
(5,584 | ) | (4,220 | ) | (7,388 | ) | ||||||
| Net cash provided by (used in) financing activities |
(769 | ) | 1,319 | (179 | ) | |||||||
| Effect of exchange rate fluctuation on cash held |
113 | (9 | ) | 17 | ||||||||
| Net increase in cash and cash equivalents |
20 | 3,278 | (1,382 | ) | ||||||||
| Cash and cash equivalents at beginning of the period |
4,756 | 4,776 | 8,053 | |||||||||
| Cash and cash equivalents at end of the period |
4,776 | 8,053 | 6,671 | |||||||||
Capital Requirements
Historically, uses of cash consisted principally of purchases of property, plant and equipment and other assets and repayments of outstanding debt and payments of dividends. From time to time, we also use cash for repurchases of our shares as well as investments related to our diversification efforts.
Net cash used in investing activities was Won 5,584 billion in 2021, Won 4,220 billion in 2022 and Won 7,388 billion in 2023. Our cash outflows for acquisition of property, plant and equipment were Won 3,069 billion in 2021, Won 4,928 billion in 2022 and Won 6,733 billion in 2023. We currently expect our cash outflows for acquisition of property, plant and equipment and investments in joint ventures and associates to be approximately Won 10.8 trillion in 2024, which we may adjust on an on-going basis subject to market demand for our products, the production outlook of the global steel industry and global economic conditions in general. We may delay or not implement some of our current capital expenditure plans based on our assessment of such market conditions. We had net acquisitions of short-term financial instruments of Won 1,461 billion in 2021, and we had net proceeds from disposal of short-term financial instruments of Won 2,213 billion in 2022 and Won 344 billion in 2023.
In our financing activities, we used cash of Won 3,720 billion in 2021, Won 4,138 billion in 2022 and Won 4,461 billion in 2023 for repayments of borrowings. We used cash of Won 1,311 billion in 2021, Won 1,218 billion in 2022 and Won 815 billion in 2023 for payments of cash dividends. In 2023, we also used Won 340 billion for repayment of hybrid bonds. In April 2020, we entered into a trust contract to engage in repurchases of our shares until April 2021 for up to Won 1.0 trillion. The trust contract was terminated in April 2021, and we used cash of Won 117 billion in the first quarter of 2021 for acquisition of treasury shares prior to such termination. We did not acquire any treasury shares in 2022 and 2023.
In recent years, we have also selectively considered various opportunities to acquire or invest in companies that may complement our businesses, as well as invest in overseas resources development projects. We may require additional capital for such acquisitions or entering into other strategic relationships. Other than capital required for such activities, we anticipate that capital expenditures, repayments of outstanding debt and payments of cash dividends will represent the most significant uses of funds for the next several years.
Payments of contractual obligations and commitments will also require considerable resources. In our ordinary course of business, we routinely enter into commercial commitments for various aspects of our operations, including raw materials purchase obligations and long-term shipping service contracts, as well as issue guarantees for indebtedness of our related parties and others. For our contingent liabilities on outstanding guarantees provided by us, see Note 39 to the Consolidated Financial Statements. Our purchase obligations include supply contracts to purchase iron ore, coal, nickel, LNG and other raw materials.
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These contracts generally have terms of one to ten years and the long-term contracts provide for periodic price adjustments according to the market prices. As of December 31, 2023, 43 million tons of iron ore and 15 million tons of coal remained to be purchased under long-term contracts.
In addition, POSCO entered into an agreement with Tangguh LNG Consortium in Indonesia to purchase 550 thousand tons of LNG annually for 20 years commencing in August 2005. In order to compensate for a decrease in purchase volume in 2023, POSCO has agreed to purchase 190 thousand tons of LNG after completion of such 20-year term, from September 2025 to December 2026. The purchase price under the agreement with Tangguh LNG Consortium is variable based on the monthly standard oil price (as represented by the Japan Customs cleared Crude Price), subject to a ceiling.
POSCO International Singapore Pte Ltd. (“POSCO International Singapore”) entered into a purchase agreement with Cheniere Marketing, LLC to purchase 370 thousand tons of LNG annually for 15 years commencing in November 2026, with an option to extend the agreement for five years. The purchase price is subject to adjustments based on the U.S. Henry Hub Natural Gas Spot Price. POSCO entered into an agreement to purchase such LNG from POSCO International Singapore.
Capital Resources
We have traditionally met our working capital and other capital requirements principally from cash provided by operations, while raising the remainder of our requirements primarily through long-term debt and short-term borrowings. We expect that these sources will continue to be our principal sources of cash in the future. From time to time, we may also generate cash through issuance of hybrid bonds and sale of treasury shares and our holdings in available-for-sale securities.
Our net cash provided by operating activities decreased by 1.2%, or Won 72 billion, from Won 6,259 billion in 2021 to Won 6,187 billion in 2022. Our profit decreased from Won 7,176 billion in 2021 to Won 3,586 billion in 2022. In addition, our cash used for income tax payments increased from Won 589 billion in 2021 to Won 2,774 billion in 2022. However, our cash outflow related to build up of our inventories decreased from Won 6,347 billion in 2021 to Won 195 billion in 2022, which in turn positively impacted our net cash provided by operating activities and significantly offset the negative impacts on cash flows described above.
Our net cash provided by operating activities decreased by 0.3%, or Won 19 billion, from Won 6,187 billion in 2022 to Won 6,168 billion in 2023. Our profit decreased from Won 3,586 billion in 2022 to Won 1,846 billion in 2023. In addition, we recognized (i) cash inflow related to decrease in trade accounts and notes receivable of Won 532 billion in 2022 compared to cash outflow related to increase in trade accounts and notes receivable of Won 983 billion in 2023 and (ii) cash inflow related to increase in other payables of Won 612 billion in 2022 compared to cash outflow related to decrease in other payables of Won 302 billion in 2023. However, our cash used for income tax payments decreased significantly from Won 2,774 billion in 2022 to Won 727 billion in 2023, and we recognized cash outflow related to build up of our inventories of Won 195 billion in 2022 compared to cash inflow related to reduction of our inventories of Won 1,313 billion in 2023, which in turn positively impacted our net cash provided by operating activities and significantly offset the negative impacts on cash flows described above.
We had net proceeds from borrowings, after adjusting for repayments of borrowings, of Won 639 billion in 2021, Won 416 billion in 2022 and Won 3,356 billion in 2023. We had net repayment of short-term borrowings, after deducting for proceeds of short-term borrowings, of Won 330 billion in 2021, net proceeds from short-term borrowings, after adjusting for repayment of short-term borrowings, of Won 1,765 billion in 2022 and net repayment of short-term borrowings, after adjusting for proceeds of short-term borrowings, of Won 2,524 billion in 2023. Long-term borrowings, excluding current installments, were Won 12,911 billion as of December 31, 2021, Won 12,390 billion as of December 31, 2022 and Won 15,011 billion as of December 31, 2023.
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Total short-term borrowings and current installments of long-term borrowings were Won 8,830 billion as of December 31, 2021, Won 11,916 billion as of December 31, 2022 and Won 10,959 billion as of December 31, 2023.
We periodically increase our short-term borrowings and adjust our long-term borrowings depending on changes in our capital requirements. For the maturity profile of our borrowings, their currency denomination and interest rates, see Notes 17 and 23 to the Consolidated Financial Statements. We continually take into consideration various factors when meeting our financial requirements, including financial market conditions, specific funding needs at a given time, and hedging requirements to address our market risks such as exchange rate risk and interest rate risk. From time to time, we also generate cash from the sale of our treasury shares. Our net borrowings-to-equity ratio, which is calculated by deducting cash and cash equivalents from total borrowings and dividing the net amount by our total equity, was 31.01% as of December 31, 2021, 27.93% as of December 31, 2022 and 32.38% as of December 31, 2023.
We believe that we have sufficient working capital for our current requirements and that we have a variety of alternatives available to us to satisfy our liquidity requirements to the extent that they are not met by funds generated by operations, including the issuance of debt and equity securities and bank borrowings denominated in Won and various foreign currencies. However, our ability to rely on some of these alternatives could be affected by factors such as the liquidity of the Korean and the global financial markets, prevailing interest rates, our credit rating and the Government’s policies regarding Won currency and foreign currency borrowings. For a discussion of our use of financial instruments for hedging purposes, see “Item 11. Quantitative and Qualitative Disclosures about Market Risk.
Liquidity
We had working capital (current assets minus current liabilities) of Won 26,148 billion as of December 31, 2021, Won 24,808 billion as of December 31, 2022 and Won 24,264 billion as of December 31, 2023. Our holdings of cash and cash equivalents (which do not include cash and cash equivalents categorized under “assets held for sale”) were Won 4,775 billion as of December 31, 2021, Won 8,053 billion as of December 31, 2022 and Won 6,671 billion as of December 31, 2023. As of December 31, 2023, we held approximately 60% of such cash and cash equivalents denominated in Won and the remainder denominated in foreign currencies. Our holdings of other receivables and other short-term financial assets were Won 15,552 billion as of December 31, 2021, Won 13,023 billion as of December 31, 2022 and Won 13,351 billion as of December 31, 2023. As of December 31, 2023, approximately 18% of our cash and cash equivalents, other receivables and other short-term financial assets were held outside of Korea, which we expect to use in our operations abroad, including capital expenditure activities. In the event that such assets are needed for our operations in Korea, such amounts are typically not restricted under local laws from being used in Korea. In addition, we believe that there are no material tax implications in the event our foreign subsidiaries elect to grant cash dividends to us. POSCO had total available credit lines of Won 4,000 billion as of December 31, 2023, Won 34 billion of which was used as of such date. We have not had, and do not believe that we will have, difficulty gaining access to short-term financing sufficient to meet our current requirements.
Our liquidity is affected by exchange rate fluctuations. See “— Overview — Exchange Rate Fluctuations.”
Capital Expenditures and Capacity Expansion
Our cash outflows for acquisition of property, plant and equipment were Won 3,069 billion in 2021, Won 4,928 billion in 2022 and Won 6,733 billion in 2023. We currently expect our cash outflows for acquisition of property, plant and equipment and investments in joint ventures and associates to be approximately Won 10.8 trillion in 2024, which we may adjust on an on-going basis subject to market demand for our products, the production outlook of the global steel industry and global economic conditions in general.
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We may delay or not implement some of our current capital expenditure plans based on our assessment of such market conditions.
Our current plan for capital investment in production facilities emphasizes capacity rationalization, increased production of higher value-added products, improvements in the efficiency of older facilities in order to reduce operating costs and construction and expansion of facilities related to our non-steel businesses. The following table sets out the major items of our capital expenditures as of December 31, 2023:
| Project |
Expected Completion Date |
Total Cost of Project |
Estimated Remaining Cost of Completion as of December 31, 2023 |
|||||||
| (In billions of Won) | ||||||||||
| Sealing of raw material yards and other rationalization projects |
August 2027 | ￦ | 3,390 | ￦ | 2,488 | |||||
| Construction of salt water lithium commercialization plant — stages one and two |
June 2025 | 2,547 | 1,321 | |||||||
| Construction of no. 6 coke plant at Pohang Works |
August 2025 | 1,538 | 176 | |||||||
| Construction of lithium ore commercialization plant |
September 2024 | 1,098 | 249 | |||||||
| Construction of cathode material plant in Canada — stage two |
May 2027 | 1,001 | 932 | |||||||
| Construction of cathode material plant in Canada — stage one |
March 2025 | 919 | 432 | |||||||
| Construction of electric steel production facilities at Gwangyang Works |
December 2025 | 909 | 198 | |||||||
| Construction of Gwangyang LNG terminal |
July 2026 | 867 | 753 | |||||||
Item 5.C. Research and Development, Patents and Licenses, Etc.
We maintain research and development programs to carry out basic research and applied technology development activities. As of December 31, 2023, POSCO Technical Research Laboratories, which engages in research and development efforts primarily in the areas of advanced steel manufacturing technologies, employed 881 personnel, including 473 researchers. In 2022, we also launched our New Experience of Technology Hub that focuses on research and development relating to (i) artificial intelligence, (ii) raw materials for rechargeable batteries and (iii) hydrogen and other environmentally-friendly energy solutions. As of December 31, 2023, our New Experience of Technology Hub employed 303 personnel, including 157 researchers.
Our technology development department also works closely with the Pohang University of Science & Technology, Korea’s first research-oriented college founded by us in 1986, and the Research Institute of Industrial Science and Technology, Korea’s first private comprehensive research institute founded by us in 1987. We also established POSCO Research Institute (POSRI) in 1994, which engages in research activities and consulting services.
Our research and development program has filed 47,347 industrial rights applications relating to steel-making technology, 11,394 of which were registered as of December 31, 2023, and has successfully applied many of these to the improvement of our manufacturing process. In addition, our research and development program has filed 2,224 industrial rights applications relating to green materials technology, 1,388 of which were registered as of December 31, 2023.
Item 5.D. Trend Information
These matters are discussed under Item 5.A. and Item 5.B. above where relevant.
Item 5.E. Critical Accounting Estimates
Our financial statements are prepared in accordance with IFRS as issued by IASB. See Note 2 to the Consolidated Financial Statements for a discussion of our critical accounting estimates.
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Item 6. Directors, Senior Management and Employees
Item 6.A. Directors and Senior Management
Board of Directors
Our board of directors has the ultimate responsibility for the management of our business affairs. Our board consists of four Inside Directors and six Outside Directors. Our shareholders elect both the Inside Directors and Outside Directors at a general meeting of shareholders. Candidates for Inside Directors are recommended to shareholders by the board of directors after the board reviews such candidates’ qualifications, and candidates for Outside Directors are recommended to the shareholders by a separate board committee consisting of three Outside Directors and one Inside Director (“Director Candidate Recommendation Committee”) after the committee reviews such candidates’ qualifications. Pursuant to the Korean Commercial Act and our articles of incorporation, any shareholder holding our outstanding shares with voting rights may suggest candidates for Outside Directors to the Director Candidate Recommendation Committee.
Our board of directors maintains the following special committees:
| • | the ESG Committee; |
| • | the CEO Candidate Pool Management Committee; |
| • | the Director Candidate Recommendation Committee; |
| • | the Evaluation and Compensation Committee; |
| • | the Finance Committee; and |
| • | the Audit Committee. |
Our board committees are described in greater detail below under “— Item 6.C. Board Practices.”
Under the Commercial Code and our articles of incorporation, one Chairman should be elected among the Outside Directors and several Representative Directors may be elected among the Inside Directors by our board of directors’ resolution.
Inside Directors
As of March 31, 2024, our Inside Directors are as follows:
| Name |
Position |
Responsibilities and Division |
Years as Director |
Age | Expiration of Term of Office |
|||||||||
| Chang, In-Hwa |
Chief Executive Officer and Representative Director | — | — | 68 | March 2027 | |||||||||
| Jeong, Ki-Seop |
Representative Director and President | Chief Strategy Officer, POSCO HOLDINGS INC. | 1 | 62 | March 2025 | |||||||||
| Kim, Jun-Hyung |
Senior Executive Vice President | Head of Green Materials and Energy Business Office, POSCO HOLDINGS INC. | — | 61 | March 2025 | |||||||||
| Kim, Ki-Soo |
Senior Executive Vice President | Head of POSCO N.EX.T Hub and Chief Technology Officer, POSCO HOLDINGS INC. | — | 58 | March 2025 | |||||||||
All Inside Directors are engaged in our business on a full-time basis.
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Outside Directors
Each of our Outside Directors meets the applicable independence standards set forth under the rules of the FSCMA. As of March 31, 2024, our Outside Directors are as follows:
| Name |
Position |
Principal Occupation |
Years as Director |
Age | Expiration of Term of Office |
|||||||||||
| Yoo, Young-Sook |
Chairperson | Former Minister, Ministry of Environment | 3 | 68 | March 2027 | |||||||||||
| Kwon, Tae-Kyun |
Director | Former Korean Ambassador to the United Arab Emirates | 3 | 68 | March 2027 | |||||||||||
| Yoo, Jin-Nyoung |
Director | Chief Executive Officer, Angel 6+ | 2 | 66 | March 2025 | |||||||||||
| Sohn, Sung-Kyu |
Director | Professor, Yonsei University School of Business | 2 | 64 | March 2025 | |||||||||||
| Kim, Joon-Gi |
Director | Professor, Yonsei University Law School |
1 | 58 | March 2026 | |||||||||||
| Park, Sung-Wook |
Director | Chairman, National Academy of Engineering of Korea | — | 66 | March 2027 | |||||||||||
The term of office of the Director elected in March 2024 is up to three years. Each Director’s term expires at the close of the ordinary general meeting of shareholders convened in respect of the fiscal year that is the last one to end during such Director’s tenure.
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Senior Management
In addition to the Inside Directors who are also our executive officers, we have the following executive officers as of April 3, 2024:
| Name |
Position |
Responsibility and Division |
Age | |||||
| Lee, Ju-Tae |
Executive Officer | Head of Corporate Strategy Team | 60 | |||||
| Yoon, Young-Ju |
Executive Officer | Chief of Battery Materials Business Management Team | 55 | |||||
| Choi, Tae-Hwan |
Executive Officer | Chief of Infrastructure Business Management Team | 53 | |||||
| Chun, Sung-Lae |
Executive Officer | Head of Carbon Neutral Team | 60 | |||||
| Kim, Hee |
Executive Officer | Chief of Carbon Neutral Strategy Team | 56 | |||||
| Lee, Won-Chul |
Executive Officer | Chief of Steel Business Management Team | 57 | |||||
| Kim, Seung-Jun |
Executive Officer | Head of Finance Investor Relations Team | 56 | |||||
| Kim, Young-Kyu |
Executive Officer | Chief of Finance Team | 56 | |||||
| Han, Young-Ah |
Executive Officer | Chief of Investor Relations Team | 52 | |||||
| Lee, Sung-Wook |
Executive Officer | Head of Corporate Compliance and Ethics Team | 59 | |||||
| Shin, Kun-Chul |
Executive Officer | Chief of Corporate Audit Team | 57 | |||||
| Kim, Kyung-Han |
Executive Officer | Head of Communication Team | 58 | |||||
| Han, Mi-Hyang |
Executive Officer | Chief of Public Relations Team | 56 | |||||
| Song, Jong-Chan |
Executive Officer | Chief of Business Cooperation Team | 57 | |||||
| Lee, Jae-Wan |
Executive Officer | Chief of Global Relations Team | 56 | |||||
| Lee, Yu-Kyung |
Executive Officer | Head of Corporate Management Team | 56 | |||||
| Park, Byoung-Jik |
Executive Officer | Chief of Top Talents Management Team | 55 | |||||
| Lee, Sung-Won |
Executive Officer | Head of Lithium Business Team | 57 | |||||
| Lee Jae-Young |
Executive Officer | Head of Ni & Next Generation Business Team | 53 | |||||
| Hwang, Chang-Hwan |
Executive Officer | Head of Investment Planning & Engineering Team | 55 | |||||
| Um, Kyung-Keun |
Executive Officer | Head of POSCO Group Technology Strategy Team | 53 | |||||
| Kim, Keun-Hwan |
Executive Officer | Head of New Technology Business Team | 54 | |||||
| Kim, Yong-Soo |
Executive Officer | Head of AI & Robotics Convergence R&D Laboratories | 54 | |||||
| Hong, Young-Jun |
Executive Officer | Head of LiB Materials R&D Laboratories | 58 | |||||
| Kim, Jung-Young |
Executive Officer | Head of N.EX.T Hub Construction TF Team | 62 | |||||
| Kim, Kyeong-Chan |
Executive Officer | President, POSCO-America | 55 | |||||
| Kim, Kwang-Bok |
Executive Officer | President, POSCO-Argentina | 60 | |||||
| Lee, Sang-Ryong |
Executive Officer | Head of CP1 Construction Office, POSCO-Argentina | 58 | |||||
| Lee, Sang-Min |
Executive Officer | Head of CP2 Project Argentina, POSCO-Argentina | 59 | |||||
| Oh, Jae-Hoon |
Executive Officer | Head of Production & Technology Office, POSCO-Argentina | 57 | |||||
| Kim, Sung-Tae |
Executive Officer | Head of Corporate Planning Office, POSCO-Argentina | 50 | |||||
| Ha, Dae-Ryong |
Executive Officer | President, POSCO-Europe | 60 | |||||
| Na, Seung-Min |
Executive Officer | Dispatch to the World Steel Association, POSCO-Europe | 50 | |||||
| Song, Kyung-Hwa |
Executive Officer | Director, PT. Nicole Metal Industry | 62 | |||||
| Kim, Ji-Yong |
Executive Officer | Senior Corporate Advisor | 62 | |||||
Item 6.B. Compensation
Compensation of Directors and Officers
Salaries and bonuses for Inside Directors and salaries for Outside Directors are paid in accordance with standards decided by the board of directors within the limitation of directors remuneration approved by the annual general meeting of shareholders. In addition, executive officers’ compensation is paid in accordance with standards decided by the board of directors.
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In 2023, the aggregate compensation paid and accrued to our Directors and executive officers was approximately Won 28.0 billion and the aggregate amount set aside or accrued by us to provide pension and retirement benefits to such persons was Won 5.8 billion.
Among those who received total annual compensation exceeding Won 500 million in 2023, the highest-paid five individuals were as follows:
| Name |
Position |
Total Compensation in 2023 |
||||
| (In millions of Won) | ||||||
| Choi, Jeong-Woo |
Former Chief Executive Officer and Representative Director | ￦ | 3,441 | |||
| Chon, Jung-Son |
Former Representative Director and President | 2,413 | ||||
| Chung, Chang-Hwa |
Former Senior Executive Vice President | 2,387 | ||||
| Yoo, Byeong-Og |
Former Senior Executive Vice President; Chief Executive Officer, POSCO Future M | 1,430 | ||||
| Oh, Seok-Keun |
Former Senior Executive Vice President | 1,150 | ||||
Item 6.C. Board Practices
ESG Committee
The ESG Committee is composed of three Outside Directors, Kwon, Tae-Kyun; Yoo, Young-Sook; and Yoo, Jin-Nyoung; and one Inside Director, Kim, Jun-Hyung. The ESG Committee oversees decisions with respect to our ESG policies, including policies related to environment, climate change, low carbon and governance. It also reviews operational matters of our board of directors and special committees, reviews plans related to safety and health, and manages and monitors ESG activities.
CEO Candidate Pool Management Committee
The CEO Candidate Pool Management Committee is composed of all of our six Outside Directors, Yoo, Young-Sook; Kwon, Tae-Kyun; Yoo, Jin-Nyoung; Sohn, Sung-Kyu; Kim Joon-Gi; and Park, Sung-Wook. The CEO Candidate Pool Management Committee reviews qualifications of the CEO candidates recommended by our board of directors and executive search firm, approves candidate pooling outcomes and talent development program for prospective candidates and assesses the results of prospective candidate development program.
Director Candidate Recommendation Committee
The Director Candidate Recommendation Committee is composed of three Outside Directors, Yoo, Jin-Nyoung; Sohn, Sung-Kyu; and Park, Sung-Wook. The Director Candidate Recommendation Committee reviews the qualifications of potential candidates and proposes nominees to serve on our board of directors as an Outside Director. Any shareholder holding our outstanding shares with voting rights may suggest candidates for Outside Directors to the Director Candidate Recommendation Committee.
Evaluation and Compensation Committee
The Evaluation and Compensation Committee is composed of four Outside Directors, Kim Joon-Gi; Yoo, Young-Sook; Kwon, Tae-Kyun; and Sohn, Sung-Kyu. The Evaluation and Compensation Committee’s primary responsibilities include establishing evaluation procedures and compensation plans for executive officers and taking necessary measures to execute such plans.
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Finance Committee
The Finance Committee is composed of three Outside Directors; Kim Joon-Gi; Kwon, Tae-Kyun; Sohn, Sung-Kyu; and one Inside Director, Jeong, Ki-Seop. This committee is an operational committee that oversees decisions with respect to finance and operational matters, including making assessments with respect to potential capital investments and evaluating prospective capital-raising activities.
Audit Committee
Under Korean law and our articles of incorporation, we are required to have an Audit Committee. The Audit Committee may be composed of three or more directors; all members of the Audit Committee must be Outside Directors. Audit Committee members must also meet the applicable independence criteria set forth under the rules and regulations of the Sarbanes-Oxley Act of 2002. Members of the Audit Committee are elected by the shareholders at the ordinary general meeting of shareholders. We currently have an Audit Committee composed of three Outside Directors. Members of our Audit Committee are Sohn, Sung-Kyu; Yoo, Jin-Nyoung; and Park, Sung-Wook.
The duties of the Audit Committee include:
| • | engaging independent auditors; |
| • | approving independent audit fees; |
| • | approving audit and non-audit services; |
| • | reviewing annual financial statements; |
| • | reviewing audit results and reports, including management comments and recommendations; |
| • | reviewing our system of controls and policies, including those covering conflicts of interest and business ethics; and |
| • | examining improprieties or suspected improprieties. |
In addition, in connection with general meetings of stockholders, the committee examines the agenda for, and financial statements and other reports to be submitted by, the board of directors at each general meeting of stockholders. Our internal and external auditors report directly to the Audit Committee. The committee holds regular meetings at least once each quarter, and more frequently as needed.
Item 6.D. Employees
As of December 31, 2023, we had 44,501 employees, including 43,804 persons employed by our subsidiaries, as reported to the Korea Fair Trade Commission pursuant to its guidelines for such year. Of the total number of employees, approximately 75% are technicians and skilled laborers and 25% are administrative staff. We use subcontractors for maintenance, cleaning and transport activities. We had 38,333 employees as of December 31, 2022 and 36,096 employees as of December 31, 2021, as reported to the Korea Fair Trade Commission pursuant to its guidelines for such years.
We consider our relations with our work force to be satisfactory. We have never experienced a work stoppage or strike. Wages of our employees are among the highest of manufacturing companies in Korea. In addition to a base monthly wage, employees receive periodic bonuses and allowances. Base wages are determined annually following negotiations between the management and the majority labor union. A limited number of our employees are members of the Federation of Korean Metal Workers’ Trade Unions or the Korean Metal Workers’ Union. The Federation of Korean Metal Workers’ Trade Unions currently negotiates the terms of employment with the management.
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In accordance with the National Pension Act of Korea, we contribute an amount equal to 4.5% of an employee’s standard monthly wages, and each employee contributes 4.5% of his or her standard monthly wages, into his or her personal pension account. Our employees, including executive officers as well as non-executive employees, are subject to a pension insurance system, under which we make monthly contributions to the pension accounts of the employees, and upon retirement, such employees are paid from their pension accounts. Prior to 2011, our executive and non-executive employees were subject to a lump-sum severance payment system, under which they were entitled to receive a lump-sum severance payment upon termination of their employment, based on their length of service and salary level at the time of termination. Starting in 2011, in accordance with the Korean Employee Retirement Income Security Act, we replaced such lump-sum severance payment system with our current pension insurance system in the form of either a defined benefit plan or a defined contribution plan. Our employees have the option of choosing either the defined benefit plan or the defined contribution plan. See Note 21 to the Consolidated Financial Statements. Lump-sum severance amounts previously accrued prior to our adoption of the current pension insurance system continue to remain payable. We also provide a wide range of fringe benefits to our employees, including housing, housing loans, company-provided hospitals and schools, a company-sponsored pension program, an employee welfare fund, industrial disaster insurance and cultural and athletic facilities.
As of December 31, 2023, our employees owned, through our employee stock ownership association, approximately 1.62% of our common stock in their employee accounts.
Item 6.E. Share Ownership
The persons who are currently our Directors or executive officers held, as a group, 10,840 common shares as of April 10, 2024. The table below shows the ownership of our common shares by our Directors and executive officers.
| Name |
Number of Common Shares |
|||
| Chang, In-Hwa |
630 | |||
| Jeong, Ki-Seop |
410 | |||
| Kim, Jun-Hyung |
149 | |||
| Kim, Ki-Soo |
569 | |||
| Lee, Ju-Tae |
1,527 | |||
| Lee, Sung-Wook |
402 | |||
| Chun, Sung-Lae |
410 | |||
| Ha, Dae-Ryong |
485 | |||
| Kim, Kyung-Han |
169 | |||
| Kim, Kwang-Bok |
155 | |||
| Choi, Tae-Hwan |
28 | |||
| Kim, Hee |
564 | |||
| Lee, Won-Chul |
434 | |||
| Kim, Seung-Jun |
131 | |||
| Han, young-Ah |
587 | |||
| Lee, Jae-Wan |
132 | |||
| Shin, Kun-Chul |
170 | |||
| Lee, Yu-Kyung |
596 | |||
| Lee, Sung-Won |
24 | |||
| Lee Jae-Young |
335 | |||
| Kim, Keun-Hwan |
383 | |||
| Kim, Jung-Young |
169 | |||
| Kim, Kyeong-Chan |
131 | |||
| Lee, Sang-Min |
221 | |||
| Lee, Sang-Ryong |
50 | |||
| Kim, Sung-Tae |
43 | |||
| Na, Seung-Min |
10 | |||
| Song, Kyung-Hwa |
297 | |||
| Kim, Ji-Yong |
1,629 | |||
|
|
|
|||
| Total |
10,840 | |||
|
|
|
|||
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Item 6.F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation
Not applicable
Item 7. Major Shareholders and Related Party Transactions
Item 7.A. Major Shareholders
The following table sets forth certain information relating to the shareholders of our common stock issued as of December 31, 2023.
| Shareholders |
Number of Shares Owned |
Percentage | ||||||
| National Pension Service |
5,393,999 | 6.38 | % | |||||
| BlackRock Fund Advisors (1) (2) (3) |
4,206,522 | 4.97 | ||||||
| Nippon Steel Corporation (1) |
2,894,712 | 3.42 | ||||||
| Pohang University of Science and Technology |
1,981,047 | 2.34 | ||||||
| The Government of Singapore (4) |
1,759,571 | 2.08 | ||||||
| Treasury shares |
8,695,023 | 10.28 | ||||||
| Others |
59,640,356 | 70.53 | ||||||
|
|
|
|
|
|||||
| Total issued shares of common stock |
84,571,230 | 100.00 | % | |||||
|
|
|
|
|
|||||
| (1) | Includes ADRs. |
| (2) | Includes shares held by subsidiaries and others. |
| (3) | The number of shares owned by the shareholder is based on the status report of large-scale shareholders filed with the Korea Exchange. |
| (4) | Includes shares held by GIC Private Limited. |
As of December 31, 2023, there were 5,107,574 shares of common stock outstanding in the form of ADRs, representing 6.04% of the total issued shares of common stock.
Item 7.B. Related Party Transactions
We have issued guarantees in favor of affiliated and related companies, and we have also engaged in various transactions with our subsidiaries and affiliated companies. See Notes 38 and 39 to the Consolidated Financial Statements.
As of December 31, 2021, 2022 and 2023, we had no loans outstanding to our executive officers and Directors.
Item 7.C. Interests of Experts and Counsel
Not applicable
Item 8. Financial Information
Item 8.A. Consolidated Statements and Other Financial Information
See “Item 18. Financial Statements” and pages F 1 through F-141.
Legal Proceedings
Trade Remedy Proceedings
As a steel producer with global sales and operations, we are involved in trade remedy proceedings in markets worldwide, including in the United States. We proactively participate in and plan for such proceedings to minimize any adverse effects and associated risks.
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While there has been an increase in the number of trade cases in recent years, and an increased focus on trade issues by government officials, all such cases have been product and market-specific, and thus have been limited in scope relative to our global sales and operations. We continue to carefully monitor developments with respect to trade remedy policy in all markets in which we participate and, where necessary, vigorously defend our rights through litigation before tribunals such as the U.S. Court of International Trade. Our products that are subject to anti-dumping, safeguard or countervailing duty proceedings in the aggregate currently do not account for a material portion of our total sales, and such proceedings have not had a material adverse impact on our business and operations in recent years. However, there can be no assurance that increases in, or new impositions of, anti-dumping duties, safeguard duties, countervailing duties, quotas or tariffs on our exports of products abroad may not have a material adverse impact on our exports in the future. See “Item 4. Information on the Company — Item 4.B. Business Overview — Markets — Exports.”
Loans to Daewoo Motors India Guaranteed by Predecessor of POSCO International
In May 2002, Industrial Development Bank of India brought a suit against Daewoo International Corporation (currently, POSCO International), Daewoo Motors India Ltd., Daewoo Corporation and Daewoo Construction & Engineering Co., Ltd. in the India Delhi Mumbai Court, regarding its loans to Daewoo Motors India Ltd. guaranteed by Daewoo Co., Ltd. (predecessor of POSCO International). The total claim amount is 4.46 billion Indian Rupees, and POSCO International recognized provision of Won 4.2 billion relating to its portion of the guarantee alleged by Industrial Development Bank of India. Daewoo International Corporation challenged the jurisdiction of the court in 2003. The outcome of such lawsuits remains uncertain and POSCO International’s provision is classified as a non-current liability as of December 31, 2023.
Legal Proceedings Related to the Songdo Project
In March 2019, affiliates of Gale Investments Company, LLC, a former joint venture partner of POSCO E&C in the urban planning and development project in Songdo International City in Incheon (the “Songdo Project”), filed a claim in the United States District Court for the Southern District of New York and filed a request for arbitration pursuant to the rules of the International Court of Arbitration of the International Chamber of Commerce (“ICA”) against POSCO E&C, claiming POSCO E&C wrongfully seized and sold certain properties of the claimants. In December 2013, POSCO E&C and one of the claimants entered into a series of loan facility agreements with several lenders to finance the Songdo Project, with their respective stakes in the joint venture pledged as collateral. The loan facility agreements entitled POSCO E&C to certain subrogation rights related to guaranteeing the obligations of the claimant to repay the principal amounts of the loans. In 2017, upon default of certain series of the loans, POSCO E&C exercised such subrogation rights, claimed the pledged assets of the claimant and sold such assets. The claimants claimed damages of approximately US$2.3 billion allegedly resulting from POSCO E&C’s purported wrongful seizure and sale of such properties as well as alleged overcharges made by POSCO E&C while serving as the construction contractor for the Songdo Project. The claim in the United States District Court for the Southern District of New York was dismissed in November 2020, and the ICA dismissed all claims against POSCO E&C in October 2022.
In September 2023, however, one of the claimants filed a claim against POSCO E&C in the Seoul Central District Court, claiming that it is entitled to damages of Won 20 billion. The basis of the claim is substantially similar to those made in the ICA arbitration proceeding described above. POSCO E&C intends to vigorously defend against such lawsuit.
Legal Proceedings Related to Contract-based Workers Dispatched by Third-party Contractors
For a description of our legal proceedings related to contract-based workers dispatched by third-party contractors, see “Item 3.D. Risk Factors — Labor laws and a recent Supreme Court decision on contract-based workers dispatched by third-party contractors could restrict flexibility in our labor management and result in an increase in our labor-related costs.”
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Dividends
The amount of dividends paid on our common stock is subject to approval at the annual general meeting of shareholders, which is typically held in February or March of the following year. In addition to our annual dividends, our board of directors is authorized to declare and distribute quarterly dividends under our articles of incorporation. If we decide to pay quarterly dividends, our articles of incorporation authorize us to pay them in cash to the shareholders of record as of the end of March, June and September of the relevant fiscal year. We may pay cash dividends out of retained earnings that have not been appropriated to statutory reserves.
The table below sets out the annual dividends declared on the outstanding common stock to shareholders of record on December 31 of the years indicated and the interim dividends (including quarterly dividends), declared on the outstanding common stock to applicable shareholders of record of the years indicated. A total of 84,571,230 shares of common stock were issued as of December 31, 2023. Of these shares and as of such date, 75,876,207 shares were outstanding and 8,695,023 shares were held by us in treasury. The annual dividends set out for each of the years below were paid in the immediately following year.
| Year |
Annual Dividend per Common Stock to Public |
Interim Dividend per Common Stock |
Average Total Dividend per Common Stock |
|||||||||
| (In Won) | ||||||||||||
| 2019 |
4,000 | 6,000 | 10,000 | |||||||||
| 2020 |
4,500 | 3,500 | 8,000 | |||||||||
| 2021 |
5,000 | 12,000 | 17,000 | |||||||||
| 2022 |
2,000 | 10,000 | 12,000 | |||||||||
| 2023 |
2,500 | 7,500 | 10,000 | |||||||||
Owners of the ADSs are entitled to receive any dividends payable in respect of the underlying shares of common stock.
Historically, we have paid to holders of record of our common stock an annual dividend. However, we can give no assurance that we will continue to declare and pay any dividends in the future.
Item 8.B. Significant Changes
Except as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our Consolidated Financial Statements included in this annual report.
Item 9. The Offer and Listing
Item 9.A. Offer and Listing Details
Notes
Not applicable
Common Stock
The principal trading market for our common stock is the KRX KOSPI Market. Our common stock, which is in registered form and has a par value of Won 5,000 per share, has been listed on the KRX KOSPI Market since June 1988 under the identifying code 005490.
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ADSs
Our common stock is also listed on the New York Stock Exchange in the form of ADSs. The ADSs have been issued by Citibank, N.A. as ADR depositary and are listed on the New York Stock Exchange under the symbol “PKX.” One ADS represents one-fourth of one share of common stock. As of December 31, 2023, there were 5,107,574 shares of common stock outstanding in the form of ADSs, representing 6.04% of the total issued shares of common stock.
Item 9.B. Plan of Distribution
Not applicable
Item 9.C. Markets
See “Item 9.A. Offering and Listing Details.”
Item 9.D. Selling Shareholders
Not applicable
Item 9.E. Dilution
Not applicable
Item 9.F. Expenses of the Issuer
Not applicable
Item 10. Additional Information
Item 10.A. Share Capital
Currently, our authorized share capital is 200,000,000 shares, which consists of shares of common stock, par value Won 5,000 per share (“Common Shares”) and shares of non-voting stock, par value Won 5,000 per share (“Non-Voting Preferred Shares”). Our Non-Voting Preferred Shares have a preferential right to dividend payments. Common Shares and Non-Voting Preferred Shares together are referred to as “Shares.” Under our articles of incorporation, we are authorized to issue Non-Voting Preferred Shares up to the limit prescribed by applicable law, the aggregate of which currently is one-quarter of our total issued and outstanding capital stock. As of December 31, 2023, 84,571,230 Common Shares were issued, of which 8,695,023 shares were held by us in treasury. We have never issued any Non-Voting Preferred Shares. All of the issued and outstanding Common Shares are fully-paid and non-assessable and are in registered form. We issue share certificates in denominations of 1, 5, 10, 50, 100, 500, 1,000 and 10,000 shares.
Item 10.B. Memorandum and Articles of Association
Under Article 2 of our articles of incorporation, the primary purpose of POSCO HOLDINGS INC. is to engage in, among others: controlling the businesses of, and guiding, organizing and improving the management of, subsidiaries by acquiring and owning the shares or ownership interests in subsidiaries (including sub-subsidiaries and companies controlled by such sub-subsidiaries, collectively “subsidiaries”); the management and licensing of intellectual property rights including brands and trademarks; investments related to start-up assistance and new technology; market research, management advisory and consulting services; technology research and commissioned services; matters entrusted by subsidiaries to assist the subsidiaries’ businesses; the supply of gas such as hydrogen and resources development business; the leasing of real estate and distribution businesses; and any other activities that are related, directly or indirectly, to the attainment and continuation of the foregoing purposes.
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The following provides information relating to our capital stock, including brief summaries of material provisions of our articles of incorporation, the FSCMA, the Commercial Code and related laws, all as currently in effect. The following summaries are subject to, and are qualified in their entirety by reference to, our articles of incorporation and the applicable provisions of the FSCMA and the Commercial Code. We have filed copies of our articles of incorporation and these laws (except for the newly enacted the FSCMA) as exhibits to registration statements under the Securities Act or the Securities Exchange Act previously filed by us.
Board of Directors
Under our articles of incorporation and the Commercial Code, any director who has a special interest in a proposal or a resolution is prohibited from voting on such proposal or resolution at the meeting of the board of directors. Any resolution of the board of directors must be approved by an affirmative majority vote of the directors present at the meeting of the board of directors. The compensation for directors, including severance benefits, is paid within the limitation approved by the annual general meeting of shareholders.
Dividends
We distribute dividends to our shareholders in proportion to the number of shares owned by each shareholder. The Common Shares represented by the ADSs have the same dividend rights as other outstanding Common Shares.
Holders of Non-Voting Preferred Shares are entitled to receive dividends in priority to the holders of Common Shares in an amount not less than 9% of the par value of the Non-Voting Preferred Shares as determined by the board of directors at the time of their issuance. If the amount available for dividends is less than the aggregate amount of such minimum dividend, we do not have to declare dividends on the Non-Voting Preferred Shares.
We may declare dividends annually at the annual general meeting of shareholders which is held within three months after the end of the fiscal year. We pay the annual dividend shortly after the annual general meeting to the shareholders of record as of the record date as determined by a board resolution. In addition, we may declare quarterly dividends pursuant to a board resolution each fiscal year to the eligible shareholders recorded as of the end of March, June and September of the relevant fiscal year. We may distribute the annual dividend in cash, Shares or other form of property. However, we may distribute the quarterly dividend only in cash. A dividend of Shares must be distributed at par value and may not exceed 100% of the dividends declared each fiscal year in the aggregate; provided, however, that such dividend is required to be limited to half of the aggregate dividend amount if the market price of the Common Shares is lower than the par value of the Common Share. We have no obligation to pay any dividend unclaimed for five years from the payment date.
Under the Commercial Code, we may pay dividends only to the extent the net asset amount in our balance sheets exceeds the sum of the following: (i) our stated capital, (ii) the total amount of our capital surplus reserve and earned surplus reserve accumulated up to the end of the relevant dividend period, (iii) the legal reserve to be set aside for dividends, and (iv) unrealized profits determined in the Presidential Decree to the Commercial Code. We may not pay dividends unless we have set aside as earned surplus reserve an amount equal to at least 10% of the cash portion of dividends ; provided, however, that we may pay dividends if the total amount of the earned surplus reserve is accumulated up to one-half of our stated capital. We may not use legal reserve to pay cash dividends but may transfer amounts from legal reserve to capital stock or use legal reserve to reduce an accumulated deficit.
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Distribution of Free Shares
In addition to paying dividends in Shares out of our retained or current earnings, we may also distribute to our shareholders an amount transferred from our capital surplus or legal reserve to our stated capital in the form of free shares. We must distribute such free shares to all our shareholders in proportion to their existing shareholdings.
Preemptive Rights and Issuance of Additional Shares
We may issue authorized but unissued shares at times and, unless otherwise provided in the Commercial Code or our articles of incorporation, on the terms our board of directors may determine. All our shareholders are generally entitled to subscribe for any newly issued Shares in proportion to their existing shareholdings. We must offer new Shares on uniform terms to all shareholders who have preemptive rights and are listed on our shareholders’ register as of the relevant record date. Under the Commercial Code, we may vary, without shareholders’ approval, the terms of these preemptive rights for different classes of shares. We must give public notice of the preemptive rights regarding new Shares and their transferability at least two weeks before the relevant record date. If certain shareholders do not exercise their preemptive rights, we are required to cancel the proposed issuances of such unsubscribed portion of new Shares, unless otherwise permitted by the FSCMA.
Under our articles of incorporation, we may issue new Shares pursuant to a board resolution to persons other than existing shareholders, who in these circumstances will not have preemptive rights, if the new Shares are:
| • | offered publicly or to underwriters for underwriting pursuant to the FSCMA and other applicable regulations; |
| • | issued to members of our employee stock ownership association pursuant to the FSCMA and other applicable regulations; |
| • | represented by depositary receipts pursuant to the FSCMA and other applicable regulations; |
| • | issued in a general public offering pursuant to a board resolution in accordance with the FSCMA and other applicable regulations, the amount of which is no more than 10% of the outstanding Shares; |
| • | issued to our creditors pursuant to a debt-equity swap; |
| • | issued to domestic or foreign entities pursuant to a joint venture agreement, strategic coalition or technology license or transfer agreement when deemed necessary for management purposes; or |
| • | issued to domestic or foreign financial institutions when necessary for raising funds in emergency cases. |
In addition, we may issue convertible bonds or bonds with warrants, each up to an aggregate principal amount of Won 2 trillion, to persons other than existing shareholders.
Members of our employee stock ownership association, whether or not they are our shareholders, generally have a preemptive right to subscribe for up to 20% of the Shares publicly offered pursuant to the FSCMA. This right is exercisable only to the extent that the total number of Shares so acquired and held by members of our employee stock ownership association does not exceed 20% of the total number of Shares then issued. As of December 31, 2023, our employees owned, through our employee stock ownership association, approximately 1.62% of our common stock in their employee accounts.
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General Meeting of Shareholders
We hold the annual general meeting of shareholders within three months after the end of each fiscal year. The record date of the register of shareholders is December 31 of each year, and such shareholders listed on the register of shareholder as of the record date are entitled to exercise their right at the general meeting of shareholders. Subject to a board resolution, court approval or other applicable laws and regulations, we may hold an extraordinary general meeting of shareholders:
| • | as necessary; |
| • | at the request of holders of an aggregate of 3% or more of our outstanding Shares; |
| • | at the request of shareholders holding an aggregate of 1.5% or more of our outstanding Shares for at least six months; or |
| • | at the request of our Audit Committee. |
Holders of Non-Voting Preferred Shares may request a general meeting of shareholders only after the Non-Voting Preferred Shares become entitled to vote or “enfranchised,” as described under “— Voting Rights” below.
We must give shareholders written notice or electronic document setting out the date, place and agenda of the meeting at least two weeks before the date of the general meeting of shareholders. However, for holders of 1% or less of the total number of issued and outstanding voting Shares, we may give notice by placing at least two public notices in at least two daily newspapers or by notices to be posted on the electronic disclosure database system maintained by the Financial Supervisory Service or the Korea Exchange at least two weeks in advance of the meeting. Currently, we use The Seoul Shinmun published in Seoul, The Maeil Shinmun published in Taegu and The Kwangju Ilbo published in Kwangju for this purpose. Shareholders not on the shareholders’ register as of the record date are not entitled to receive notice of the general meeting of shareholders or attend or vote at the meeting. Holders of Non-Voting Preferred Shares, unless enfranchised, are not entitled to receive notice of general meetings of shareholders, but may attend such meetings. Our general meetings of shareholders are held either in Seoul, Pohang, where our registered main office is located, or at a near-by place if necessary.
Voting Rights
Holders of our Common Shares are entitled to one vote for each Common Share, except that voting rights of Common Shares held by us, or by a corporate shareholder that is 10% (or more) owned by us either directly or indirectly, may not be exercised. The Commercial Code permitted cumulative voting, under which voting method each shareholder would have multiple voting rights corresponding to the number of directors to be appointed in the voting and may exercise all voting rights cumulatively to elect one director.
Our shareholders may adopt resolutions at a general meeting by an affirmative majority vote of the voting Shares present or represented at the meeting, where the affirmative votes also represent at least one-fourth of our total voting Shares then issued and outstanding. However, under the Commercial Code and our articles of incorporation, the following matters, among others, require approval by the holders of at least two-thirds of the voting Shares present or represented at a meeting, where the affirmative votes also represent at least one-third of our total voting Shares then issued and outstanding:
| • | amending our articles of incorporation; |
| • | removing a director; |
| • | effecting any dissolution, merger or consolidation of us; |
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| • | transferring the whole or any significant part of our business; |
| • | acquisition of all or a part of the business of any other company that may have a material impact on our business; |
| • | issuing any new Shares at a price lower than their par value; or |
| • | approving matters required to be approved at a general meeting of shareholders, which have material effects on our assets, as determined by the board of directors. |
In general, holders of Non-Voting Preferred Shares are not entitled to vote on any resolution or receive notice of any general meeting of shareholders. However, in the case of amendments to our articles of incorporation, or any merger or consolidation of us, or in some other cases that affect the rights or interests of the Non-Voting Preferred Shares, approval of the holders of Non-Voting Preferred Shares is required. We may obtain the approval by a resolution of holders of at least two-thirds of the Non-Voting Preferred Shares present or represented at a class meeting of the holders of Non-Voting Preferred Shares, where the affirmative votes also represent at least one-third of our total issued and outstanding Non-Voting Preferred Shares.
Shareholders may exercise their voting rights by proxy. When a shareholder is a corporate entity, such shareholder may give proxies to its officers or directors.
Holders of ADRs exercise their voting rights through the ADR depositary, an agent of which is the record holder of the underlying Common Shares. Subject to the provisions of the deposit agreement, ADR holders are entitled to instruct the ADR depositary how to vote the Common Shares underlying their ADSs.
Rights of Dissenting Shareholders
In some limited circumstances, including the transfer of the whole or any significant part of our business and our merger or consolidation with another company, dissenting shareholders have the right to require us to purchase their Shares. Only the shareholders who have executed a share purchase agreement evidencing their acquisition of the relevant Shares on or prior to the day immediately following the public disclosure of the board resolutions approving any of the aforementioned transactions have the rights to require us to purchase their Shares. To exercise this right, shareholders, including holders of Non-Voting Preferred Shares, must submit to us a written notice of their intention to dissent before the general meeting of shareholders. Within 20 days after the relevant resolution is passed at a meeting, the dissenting shareholders must request us in writing to purchase their Shares. We are obligated to purchase the Shares of dissenting shareholders within one month after the expiration of the 20-day period. The purchase price for the Shares is required to be determined through negotiation between the dissenting shareholders and us. If we cannot agree on a price through negotiation, the purchase price will be the average of (1) the weighted average of the daily Share prices on the Korea Exchange for the two-month period before the date of the adoption of the relevant board resolution, (2) the weighted average of the daily Share price on the Korea Exchange for the one month period before the date of the adoption of the relevant resolution and (3) the weighted average of the daily Share price on the Korea Exchange for the one week period before such date of the adoption of the relevant resolution. However, the court may determine this price if we or dissenting shareholders do not accept the purchase price. Holders of ADSs will not be able to exercise dissenter’s rights unless they have withdrawn the underlying common stock and become our direct shareholders.
Register of Shareholders and Record Dates
We maintain the register of our shareholders electronically through Kookmin Bank, our transfer agent. Kookmin Bank performs electronic registration of our Shares, manages the electronic register of our shareholders and oversees other matters related to our Shares.
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The record date for annual dividends is determined by a board resolution. For the purpose of determining the shareholders entitled to annual dividends, the register of shareholders may be closed for the period from January 1 to January 15 of each year. Further, for the purpose of determining the shareholders entitled to some other rights pertaining to the Shares, we may, on at least two weeks’ public notice, set a record date and/or close the register of shareholders for not more than three months. The trading of Shares may continue while the register of shareholders is closed. However, pursuant to the Act on Electronic Registration of Stocks, Bonds, etc., which became effective on September 16, 2019, the closure of the register of shareholders is not required in order to determine the shareholders entitled to certain shareholder rights. Instead, we may set the record date by a board resolution and determine the shareholders of record as of such record date without closing the register of shareholders.
Annual Report
At least one week before the annual general meeting of shareholders, we must make our annual report and audited financial statements available for inspection at our principal office and at all of our branch offices. In addition, copies of annual reports, the audited financial statements and any resolutions adopted at the general meeting of shareholders will be available to our shareholders.
Under the FSCMA, we must file with the Financial Services Commission and the Korea Exchange (1) an annual business report within 90 days after the end of our fiscal year, (2) a half-year report within 45 days after the end of the first six months of our fiscal year, and (3) quarterly reports within 45 days after the end of the third month and the ninth month of our fiscal year. Copies of these reports are or will be available for public inspection at the electronic disclosure database system maintained by the Financial Supervisory Service and the Korea Exchange.
Transfer of Shares
Under the Commercial Code, the transfer of Shares is effected by electronic registration of such transfer. Once the transfer of Shares is electronically registered, the transferee is entitled to the shareholders’ rights.
Under current Korean regulations, the Korea Securities Depository, foreign exchange banks (including domestic branches of foreign banks), financial investment companies with a brokerage, dealing or collective investment license and internationally recognized custodians may act as agents and provide related services for foreign shareholders. Certain foreign exchange controls and securities regulations apply to the transfer of Shares by non-residents or non-Koreans. See “Item 10. Additional Information — Item 10.D. Exchange Controls.”
Our transfer agent is Kookmin Bank, located at 26, Gukjegeumyung-ro 8-gil, Yeongdeungpo-gu, Seoul, Korea.
Acquisition of Shares by Us
We may acquire our own Shares, subject to the approval by the general meeting of shareholders. In addition, we may acquire Shares through purchases on the Korea Exchange or through a tender offer or by acquiring the interests in a trust account holding our own Shares through agreements with trust companies and asset management companies. The aggregate purchase price for the Shares may not exceed the total amount available for distribution of dividends available at the end of the preceding fiscal year less the amount of dividends and mandatory reserves required to be set aside for that fiscal year, subject to certain procedural requirements.
In accordance with the Commercial Code, we may resell or transfer any Shares acquired by us to a third party, subject to the approval by the board of directors. In general, corporate entities in which we own more than 50% equity interest may not acquire our Shares, unless otherwise permitted by the Korean Commercial Code.
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Under the FSCMA, we are subject to certain selling restrictions for the Shares acquired by us.
Liquidation Rights
In the event of our liquidation, after payment of all debts, liquidation expenses and taxes, our remaining assets will be distributed among shareholders in proportion to their shareholdings. Holders of Non-Voting Preferred Shares have no preference in liquidation.
| Item 10.C. | Material Contracts |
None.
| Item 10.D. | Exchange Controls |
Shares and ADSs
The Foreign Exchange Transaction Act and the Presidential Decree and regulations under that Act and Decree (collectively, “Foreign Exchange Transaction Laws”) and the Foreign Investment Promotion Law regulate investment in Korean securities by non-residents and issuance of securities outside Korea by Korean companies. Under the Foreign Exchange Transaction Laws, non-residents may invest in Korean securities subject to procedural requirements in accordance with these laws. The Financial Services Commission has also adopted, pursuant to its authority under the FSCMA, regulations that restrict investment by foreigners in Korean securities.
Subject to certain limitations, the Ministry of Economy and Finance has the authority to take the following actions under the Foreign Exchange Transaction Laws:
| • | if the Government deems it necessary on account of war, armed conflict, natural disaster or grave and sudden and significant changes in domestic or foreign economic circumstances or similar events or circumstances, the Ministry of Economy and Finance may (i) temporarily suspend performance under any or all foreign exchange transactions, in whole or in part, to which the Foreign Exchange Transaction Laws apply (including suspension of payment and receipt of foreign exchange), (ii) impose an obligation to deposit, safe-keep or sell precious metal or any other means of payment to The Bank of Korea, a foreign exchange stabilization fund or certain other governmental agencies or financial companies or (iii) require Korean creditors to collect debts owned by non-Korean debtors and deposit them in their bank accounts in Korea; and |
| • | if the Government concludes that the international balance of payments and international financial markets are experiencing or are likely to experience significant disruption or that the movement of capital between Korea and other countries is likely to adversely affect its currency policies, exchange rate policies or other macroeconomic policies, the Ministry of Economy and Finance may take action to require any person who intends to effect a capital transaction to obtain permission or to require any person who effects a capital transaction to deposit a portion of the means of payment acquired in such transactions with The Bank of Korea, a foreign exchange stabilization fund or certain other governmental agencies or financial companies. |
Government Review of Issuance of ADSs
In order for us to issue shares represented by ADSs, we are required to file a prior report of the issuance with our designated foreign exchange bank or the Ministry of Economy and Finance, depending on the issuance amount. No further Korean governmental approval is necessary for the initial offering and issuance of the ADSs.
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Under current Korean laws and regulations, the depositary bank is required to obtain our prior consent for the number of shares to be deposited in any given proposed deposit which exceeds the difference between (1) the aggregate number of shares deposited by us for the issuance of ADSs (including deposits in connection with the initial and all subsequent offerings of ADSs and stock dividends or other distributions related to these ADSs) and (2) the number of shares on deposit with the depositary bank at the time of such proposed deposit. We can give no assurance that we would grant our consent, if our consent is required.
Reporting Requirements for Holders of Substantial Interests
Under the FSCMA, any person whose direct or beneficial ownership of a listed company’s shares with voting rights, whether in the form of shares or ADSs, certificates representing the rights to subscribe for Shares and equity-related debt securities including convertible bonds and bonds with warrants (collectively, “Equity Securities”) together with the Equity Securities beneficially owned by certain related persons or by any person acting in concert with the person accounts for 5% or more of the total outstanding Equity Securities of such listed company is required to report the status and the purpose (whether or not to exert an influence on management control over the issuer) of the holdings to the Financial Services Commission and the Korea Exchange within five business days after reaching the 5% ownership interest. In addition, any change in the purpose of holding such ownership interest or a change in the ownership interest subsequent to the report which equals or exceeds 1% of the total outstanding Equity Securities is required to be reported to the Financial Services Commission and the Korea Exchange within five business days from the date of the change. However, the reporting deadline of such reporting requirement is extended (1) for certain professional investors, as specified by the Presidential Decrees under the FSCMA, (i) to the tenth day of the month immediately following the month of such change in their shareholding if the shares are held with the intention of actively exercising shareholder rights as provided by the applicable laws, but without the intention of exercising management control or (ii) to the tenth day of the month immediately following the quarter of such change in their shareholding if the shares are held for portfolio investment purposes; and (2) for persons other than such professional investors, (i) to the tenth business day of the date of such change in their shareholding if the shares are held with the intention of exercising the statutory rights of shareholders as provided by the applicable laws, but without the intention of exercising management control or (ii) to the tenth day of the month immediately following the month of such change in their shareholding if the shares are held for portfolio investment purposes. Those who report the purpose of shareholding as management control of the issuer are prohibited from exercising their voting rights and acquiring additional shares for five days subsequent to their report under the FSCMA.
Violation of these reporting requirements may subject a person to criminal sanctions such as fines or imprisonment and may result in a loss of voting rights with respect to the ownership of Equity Securities exceeding 5%. Furthermore, the Financial Services Commission may issue an order to dispose of Equity Securities for which the reporting requirements were violated.
In addition to the reporting requirements described above, any person whose direct or beneficial ownership of a listed company’s voting stock accounts for 10% or more of the total issued and outstanding voting stock (a “major stockholder”) must report the status of his or her shareholding to the Securities and Futures Commission and the Korea Exchange within five business days after he or she becomes a major stockholder. In addition, any change in his or her ownership interest subsequent to the report must be reported to the Securities and Futures Commission and the Korea Exchange within five business days. However, the reporting deadline of such reporting requirement is extended (i) to the tenth day of the month immediately following the month of such change in their shareholding for certain professional investors, as specified by the Presidential Decree under the FSCMA, who hold shares with the intention of actively exercising shareholder rights as provided by the applicable laws, but without the intention of exercising management control or (ii) to the tenth day of the month immediately following the quarter of such change in their shareholding if the shares are held for portfolio investment purposes.
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Violation of these reporting requirements may subject a person to criminal sanctions such as fines or imprisonment.
Under the KRX regulations, if a company listed on the KRX KOSPI Market has submitted public disclosure of material matters to a foreign financial investment supervisory authority pursuant to the laws of the foreign jurisdiction, then it must submit a copy of the public disclosure and a Korean translation thereof to the Korea Exchange. In addition, if a company listed on the KRX KOSPI Market is approved for listing on a foreign stock exchange or determined to be de-listed from the foreign stock exchange or actually lists on, or de-lists from, a foreign stock exchange, then it must submit to the Korea Exchange a copy, together with a Korean translation thereof, of all documents submitted to, or received from, the relevant foreign government, supervisory authority or stock exchange.
Restrictions Applicable to ADSs
No Korean governmental approval is necessary for the sale and purchase of ADSs in the secondary market outside Korea or for the withdrawal of shares underlying ADSs and the delivery inside Korea of shares in connection with the withdrawal. The acquisition of the shares by a foreigner must be immediately reported by the foreigner or his standing proxy in Korea to the Governor of the Financial Supervisory Service (“Governor”).
Persons who have acquired shares as a result of the withdrawal of shares underlying the ADSs may exercise their preemptive rights for new shares, participate in free distributions and receive dividends on shares without any further governmental approval.
In addition, under the Financial Services Commission regulations, effective as of November 30, 2006, we are required to file a securities registration statement with the Financial Services Commission and such securities registration statement has to become effective pursuant to the FSCMA in order for us to issue shares represented by ADSs, except in certain limited circumstances.
Restrictions Applicable to Shares
Under the Foreign Exchange Transaction Laws and the Financial Services Commission regulations (together, the “Investment Rules”), foreigners may invest, with limited exceptions and subject to procedural requirements, in all shares of Korean companies, whether listed on the KRX KOSPI Market or the KRX KOSDAQ Market, unless prohibited by specific laws. Foreign investors may trade shares listed on the KRX KOSPI Market or the KRX KOSDAQ Market only through the KRX KOSPI Market or the KRX KOSDAQ Market, except in limited circumstances, including, among others:
| • | odd-lot trading of shares; |
| • | acquisition of shares (“Converted Shares”) by exercise of warrant, conversion right under convertible bonds, exchange right under exchangeable bonds or withdrawal right under depositary receipts issued outside of Korea by a Korean company; |
| • | acquisition of shares as a result of inheritance, donation, bequest or exercise of shareholders’ rights, including preemptive rights or rights to participate in free distributions and receive dividends; |
| • | over-the-counter transactions between foreigners of shares of a public service corporation for which the ceiling on aggregate acquisition by foreigners, as explained below, has been reached or exceeded with certain exceptions; |
| • | acquisition of shares by direct investment as defined in the Foreign Investment Promotion Law or disposal of such shares; |
| • | disposal of shares pursuant to the exercise of appraisal rights of dissenting shareholders; |
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| • | acquisition or disposal of shares in connection with a tender offer; |
| • | acquisition of underlying shares by a foreign depositary in connection with the issuance of depositary receipts; |
| • | acquisition and disposal of shares through overseas stock exchange market if such shares are simultaneously listed on the KRX KOSPI Market or the KRX KOSDAQ Market and such overseas stock exchange; and |
| • | arm’s length transactions between foreigners, if all of such foreigners belong to an investment group managed by the same person. |
For over-the-counter transactions between foreign investors outside the KRX KOSPI Market or the KRX KOSDAQ Market involving shares of a public service corporation for which the limit on aggregate foreign ownership has been reached or exceeded, an investment broker licensed in Korea must act as an intermediary. Odd-lot trading of shares outside the KRX KOSPI Market or the KRX KOSDAQ Market must involve an investment dealer licensed in Korea. Foreign investors are prohibited from engaging in margin trading by borrowing shares from investment brokers or investment dealers with respect to shares that are subject to foreign ownership limitation.
Acquisition or sale of shares outside the Korea Exchange by a foreign investor must be reported by the foreign investor or his standing proxy to the Governor at the time of each such acquisition or sale; provided, however, that a foreign investor must ensure that any acquisition or sale by it of shares outside the Korea Exchange in the case of trades in connection with a tender offer, odd-lot trading of shares or trades of shares of certain public service corporations for which the aggregate foreign ownership limit has been reached or exceeded, is reported to the Governor by the Korea Securities Depository, financial investment companies with a dealing or brokerage license or securities finance companies engaged to facilitate such transaction. A foreign investor must appoint one or more standing proxies from among the Korea Securities Depository, foreign exchange banks (including domestic branches of foreign banks), financial investment companies with a dealing, brokerage or collective investment license (including domestic branches of foreign financial investment companies) and internationally recognized custodians which will act as a standing proxy to exercise shareholders’ rights or perform any matters related to the foregoing activities if the foreign investor does not perform these activities himself. However, a foreign investor may be exempted from complying with these standing proxy rules with the approval of the Governor in cases deemed inevitable by reason of conflict between laws of Korea and those of the home country of the foreign investor.
Certificates evidencing shares of Korean companies owned by a foreign investor must be kept in custody with an eligible custodian in Korea. Only foreign exchange banks (including domestic branches of foreign banks), financial investment companies with a dealing, brokerage or collective investment license (including domestic branches of foreign financial investment companies), the Korea Securities Depository and internationally recognized custodians are eligible to act as a custodian of shares for a non-resident or foreign investor. A foreign investor must ensure that his custodian deposits its shares with the Korea Securities Depository. However, a foreign investor may be exempted from complying with this deposit requirement with the approval of the Governor in circumstances where compliance with that requirement is made impracticable, including cases where compliance would contravene the laws of the home country of such foreign investor.
Under the Investment Rules, with certain exceptions, foreign investors may acquire shares of a Korean company without being subject to any foreign investment ceiling. As one such exception, designated public service corporations are subject to a 40% ceiling on the acquisition of shares by foreigners in the aggregate. Designated public service corporations may set a ceiling on the acquisition of shares by a single foreign investor according to its articles of incorporation. Furthermore, an investment by a foreign investor of not less than 10% of the outstanding shares with voting rights and in the amount of not less than Won 10 million of a Korean company is defined as a foreign direct investment under the Foreign Investment Promotion Law, which is, in general, subject to report to, and acceptance by, the Ministry of Trade, Industry & Energy.
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The acquisition of shares of a Korean company by a foreign investor may also be subject to certain foreign shareholding restrictions in the event that the restrictions are prescribed in each specific law which regulates the business of the Korean company. Changes in ownership of a Korean company by a foreign direct investor, as well as changes in certain aspects of the foreign direct investment (including changes in the foreign direct investor’s name, address or business), are also subject to reporting requirements.
Under the Foreign Exchange Transaction Laws, a foreign investor who intends to acquire shares must designate a foreign exchange bank at which he must open a foreign currency account and a Won account exclusively for stock investments. No approval is required for remittance into Korea and deposit of foreign currency funds in the foreign currency account. Foreign currency funds may be transferred from the foreign currency account at the time required to place a deposit for, or settle the purchase price of, a stock purchase transaction to a Won account opened in the name of a financial investment company with a dealing, brokerage or collective investment license. Funds in the foreign currency account may be remitted abroad without any governmental approval.
Dividends on Shares are paid in Won. No governmental approval is required for foreign investors to receive dividends on, or the Won proceeds of the sale of, any shares to be paid, received and retained in Korea. Dividends paid on, and the Won proceeds of the sale of, any shares held by a non-resident of Korea must be deposited either in a Won account with the investor’s financial investment company with a dealing, brokerage or collective investment license or his Won Account. Funds in the investor’s Won Account may be transferred to his foreign currency account or withdrawn for local living expenses up to certain limitations. Funds in the Won Account may also be used for future investment in shares or for payment of the subscription price of new shares obtained through the exercise of preemptive rights.
Financial investment companies with a dealing, brokerage or collective investment license are allowed to open foreign currency accounts with foreign exchange banks exclusively for accommodating foreign investors’ stock investments in Korea. Through these accounts, these financial investment companies may enter into foreign exchange transactions on a limited basis, such as conversion of foreign currency funds and Won funds, either as counterparty to or on behalf of foreign investors, without the investors having to open their own accounts with foreign exchange banks.
| Item 10.E. | Taxation |
The following summary is based upon tax laws of the United States and Korea as in effect on the date of this annual report on Form 20-F, and is subject to any change in United States or Korean law that may come into effect after such date. Investors in the shares of common stock or ADSs are advised to consult their own tax advisers as to the United States, Korean or other tax consequences of the purchase, ownership and disposition of such securities, including the effect of any foreign, state or local tax laws.
Korean Taxation
The following is a summary of the principal Korean tax consequences to owners of the common shares or ADSs, as the case may be, who are non-resident individuals or non-Korean corporations without a permanent establishment in Korea to which the relevant income is attributable or with which the relevant income is effectively connected (“Non-resident Holders”). The statements regarding Korean tax laws set forth below are based on the laws in force and as interpreted by the Korean taxation authorities as of the date hereof. This summary is not exhaustive of all possible tax considerations which may apply to a particular investor and potential investors are advised to satisfy themselves as to the overall tax consequences of the acquisition, ownership and disposition of the common shares or ADSs, including specifically the tax consequences under Korean law, the laws of the jurisdiction of which they are resident, and any tax treaty between Korea and their country of residence, by consulting their own tax advisers.
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Tax on Dividends
Dividends on the common shares or ADSs paid (whether in cash or in shares) to a Non-resident Holder will be subject to Korean withholding taxes at the rate of 22% (including local income tax) or such lower rate as is applicable under a treaty between Korea and such Non-resident Holder’s country of tax residence. Free distributions of shares representing a capitalization of certain capital surplus reserves may be subject to Korean withholding taxes.
The tax is withheld by the payer of the dividend. While it is the payer which is required to withhold the tax, Korean law generally entitles the person who was subject to the withholding of Korean tax to recover from the Government any part of the Korean tax withheld, upon providing evidence that it was entitled to have tax withheld at a lower rate, if certain conditions are met.
Tax on Capital Gains
As a general rule, capital gains earned by Non-resident Holders upon transfer of the common shares or ADSs are subject to Korean withholding tax at the lower of (i) 11% (including local income tax) of the gross proceeds realized or (ii) 22% (including local income tax) of the net realized gains (subject to the production of satisfactory evidence of the acquisition costs and certain direct transaction costs), unless exempt from Korean income taxation under the effective Korean tax treaty with the Non-resident Holder’s country of tax residence or Korean tax law.
However, a Non-resident Holder will not be subject to Korean income taxation on capital gains realized upon the sale of the common shares through the KRX KOSPI Market if the Non-resident Holder (i) has no permanent establishment in Korea and (ii) did not or has not owned (together with any shares owned by any entity with a specified special relationship with such Non-resident Holder) 25% or more of the total issued and outstanding shares of us at any time during the calendar year in which the sale occurs and during the five calendar years prior to the calendar year in which the sale occurs.
It should be noted that capital gains earned by you (regardless of whether you have a permanent establishment in Korea) from a transfer of ADSs outside Korea will generally be exempt from Korean income taxation, provided that the ADSs are deemed to have been issued overseas. If and when an owner of the underlying common shares transfers the ADSs following the conversion of the underlying shares for ADSs, such person will not be exempt from Korean income taxation.
Inheritance Tax and Gift Tax
Korean inheritance tax is imposed upon (1) all assets (wherever located) of the deceased if at the time of his death he was a tax resident of Korea and (2) all property located in Korea which passes on death (irrespective of the domicile of the deceased). Gift tax is imposed in similar circumstances to the above. The taxes are imposed if the value of the relevant property is above a certain limit and the rate varies from 10% to 50% depending on the value of the property.
Under Korean inheritance and gift tax laws, securities issued by a Korean corporation are deemed to be located in Korea irrespective of where they are physically located or by whom they are owned and consequently, the Korea inheritance and gift taxes will be imposed on transfers of the securities by inheritance or gift.
Securities Transaction Tax
Securities transaction tax is imposed on the transfer of shares issued by a Korean corporation or the right to subscribe for such shares generally at the rate of 0.35% of the sales price.
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In the case of the transfer of shares listed on the KRX KOSPI Market (such as the common shares), the securities transaction tax is imposed generally at the rate of (i) 0.18% of the sales price of such shares (including agricultural and fishery special surtax thereon) if traded on the KRX KOSPI Market or (ii) subject to certain exceptions, 0.35% of the sales price of such shares if traded outside the KRX KOSPI Market.
Securities transaction tax or the agricultural and fishery special surtax is not applicable if (i) the shares or rights to subscribe for shares are listed on a designated foreign stock exchange and (ii) the sale of the shares takes place on such exchange.
Securities transaction tax, if applicable, must be paid by the transferor of the shares or rights, in principle. When the transfer is effected through a securities settlement company, such settlement company is generally required to withhold and pay (to the tax authority) the tax, and when such transfer is made through a financial investment company with a brokerage license only, such company is required to withhold and pay the tax. Where the transfer is effected by a Non-resident Holder without a permanent establishment in Korea, other than through a securities settlement company or a financial investment company with a brokerage license, the transferee is required to withhold the securities transaction tax. Failure to do so will result in the imposition of penalties equal to the sum of (i) between 10% to 40% of the tax amount due, depending on the nature of the improper reporting, and (ii) 8.03% per annum on the tax amount due for the default period.
Tax Treaties
Currently, Korea has income tax treaties with a number of countries, including, inter alia, Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Italy, Japan, Luxembourg, Ireland, the Netherlands, New Zealand, Norway, Singapore, Sweden, Switzerland, the United Kingdom and the United States of America, under which the rate of withholding tax on dividend and interest is reduced, generally to between 5% and 16.5% (including local income tax), and the tax on capital gains derived by a non-resident from the transfer of securities issued by a Korean company is often eliminated.
Each Non-resident Holder of common shares should inquire for itself whether it is entitled to the benefits of a tax treaty with Korea. It is the responsibility of the party claiming the benefits of a tax treaty in respect of interest, dividend, capital gains or “other income” to submit to us (or our agent), the purchaser or the financial investment company with a brokerage license, as the case may be, prior to or at the time of payment, such evidence of tax residence of the party claiming the treaty benefit as the Korean tax authorities may require in support of its claim for treaty protection. In the absence of sufficient proof, we (or our agent), the purchaser or the financial investment company with a brokerage license, as the case may be, must withhold tax at the normal rates.
In order for a Non-resident Holder to obtain the benefit of a tax exemption on certain Korean source income (e.g., interest and capital gains) under an applicable tax treaty, Korean tax law requires such Non-resident Holder (or its agent) to submit to the payer of such Korean source income an application for tax exemption under a tax treaty along with a certificate of tax residency of such Non-resident Holder issued by a competent authority of the non-resident’s country of tax residence, subject to certain exceptions. The payer of such Korean source income, in turn, is required to submit such application to the relevant district tax office by the ninth day of the month following the date of the first payment of such income. However, this requirement does not apply to exemptions under Korean tax law.
For a non-resident of Korea to obtain the benefits of treaty-reduced tax rates on certain Korean source income (e.g., capital gains and interest) under an applicable tax treaty, Korean tax law requires such non-resident (or its agents) to submit to the payer of such Korean source income an application for treaty-reduced tax rates prior to receipt of such Korean source income; provided, however, that an owner of ADSs who is a non-resident of Korea is not required to submit such application, if the Korean source income on the ADSs is paid through an account opened at the Korea Securities Depository by a foreign depository.
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The payer of such Korean source income, in turn, is required to submit such application to the relevant district tax office by the ninth day of the month following the date of the first payment of such income.
If Korean source income is paid to a non-resident through an overseas investment vehicle, such investment vehicle must obtain an application for tax exemption or reduced tax rates from each non-resident, who is the beneficial owner of such investment vehicle and submit to the payer of such Korean source incomes an overseas investment vehicle report, together with the applications for tax exemptions or reduced tax rates prepared by the non-resident beneficial owner. An overseas investment vehicle means an organization established outside of Korea that manages funds collected through investment solicitation by way of acquiring, disposing, or otherwise investing in investment targets and then distributes the outcome of such management to investors. An application for tax exemption or reduced tax rates submitted by the non-resident remains effective for three years from submission, and if any material changes occur with respect to information provided in the application, an application reflecting such change must be newly submitted.
At present, Korea has not entered into any tax treaty relating to inheritance or gift tax.
United States Taxation
This summary describes the material U.S. federal income tax consequences for a U.S. holder (as defined below) of owning our shares of common stock or ADSs. This summary applies to you only if you hold shares of common stock or ADSs as capital assets for tax purposes. This summary does not apply to you if you are a member of a class of holders subject to special rules, such as:
| • | a dealer in securities or currencies; |
| • | a trader in securities that elects to use a mark-to-market method of accounting for your securities holdings; |
| • | a bank; |
| • | a life insurance company; |
| • | a tax-exempt organization; |
| • | a person that holds shares of common stock or ADSs that are a hedge or that are hedged against interest rate or currency risks; |
| • | a person that holds shares of common stock or ADSs as part of a straddle or conversion transaction for tax purposes; |
| • | a person whose functional currency for tax purposes is not the U.S. dollar; |
| • | a person that owns or is deemed to own 10% or more of any class of our stock or 10% or more of the combined voting power or value of all of our classes of stock; or |
| • | an entity treated as a partnership for U.S. federal income tax purposes that holds shares of common stock or ADSs, or an investor therein. |
This summary is based on laws, treaties and regulatory interpretations in effect on the date hereof, all of which are subject to change, possibly on a retroactive basis.
Please consult your own tax advisers concerning the U.S. federal, state, local and other foreign tax consequences of purchasing, owning and disposing of shares of common stock or ADSs in your particular circumstances.
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For purposes of this summary, a “U.S. holder” is a beneficial owner of a share of common stock or ADS that is:
| • | a citizen or resident of the United States; |
| • | a U.S. domestic corporation; or |
| • | otherwise subject to U.S. federal income tax on a net income basis with respect to income from the shares of common stock or ADS. |
Shares of Common Stock and ADSs
In general, if you are the beneficial owner of ADSs, you will be treated as the beneficial owner of the shares of common stock represented by those ADSs for U.S. federal income tax purposes, and no gain or loss will be recognized if you exchange an ADS for the shares of common stock represented by that ADS.
Passive Foreign Investment Company Rules
Special U.S. tax rules apply to companies that are considered to be PFICs. We will be classified as a PFIC in a particular taxable year if either
| • | 75 percent or more of our gross income for the taxable year is passive income; or |
| • | at least 50 percent of the value of our assets (generally determined on the basis of a quarterly average) is attributable to assets that produce or are held for the production of passive income. |
For this purpose, passive income generally includes dividends, interest, gains from certain commodities transactions, rents, royalties and the excess of gains over losses from the disposition of assets that produce passive income.
Based on our financial statements and relevant market and shareholder data, we believe that we were not treated as a PFIC for U.S. federal income tax purposes with respect to our 2022 or 2023 taxable years. In addition, based on our current expectations regarding the value and nature of our assets, the sources and nature of our income, and relevant market and shareholder data, we do not expect to be a PFIC for our 2024 taxable year or in the foreseeable future. However, the determination of whether we are a PFIC must be made annually based on the facts and circumstances at that time, some of which may be beyond our control, including the valuation of our assets as implied by the market price for our common stock or ADSs. Accordingly, we could be classified as a PFIC in the current or a future taxable year, and that possibility may be increased significantly by market volatility or a decline in the price of our common stock or ADSs.
If we are classified as a PFIC in any taxable year during which you hold our common stock or ADSs, you could be subject to a special tax at ordinary income rates on “excess distributions,” including certain distributions by us and gain that you recognize on the sale of your common stock or ADSs. The amount of income tax on any excess distributions will be increased by an interest charge to compensate for tax deferral, calculated as if the excess distributions were earned ratably over the period you held the common stock or ADSs. Classification as a PFIC may also have other adverse consequences, including, in the case of individuals, the denial of a step-up in the basis of your common stock or ADSs at death. Except where otherwise noted, the remainder of this summary assumes that we were not a PFIC for our 2023 taxable year and that we will not become a PFIC in the current or any future year.
You should consult your own tax advisers as to our status as a PFIC and the tax consequences to you of such status.
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Dividends
The gross amount of cash dividends that you receive (prior to deduction of Korean taxes) generally will be subject to U.S. federal income taxation as foreign source dividend income. Dividends paid in Won will be included in your income in a U.S. dollar amount calculated by reference to the exchange rate in effect on the date of your (or, in the case of ADSs, the depositary’s) receipt of the dividend, regardless of whether the payment is in fact converted into U.S. dollars. If such a dividend is converted into U.S. dollars on the date of receipt, you generally should not be required to recognize foreign currency gain or loss in respect of the dividend income. U.S. holders should consult their own tax advisers regarding the treatment of any foreign currency gain or loss on any Won received by U.S. holders that are converted into U.S. dollars on a date subsequent to receipt.
The U.S. dollar amount of dividends received by an individual U.S. holder with respect to the ADSs and common stock will be subject to taxation at a preferential rate applicable to long-term capital gains if the dividends are “qualified dividends.” Subject to certain exceptions for short-term and hedged positions, dividends paid on the ADSs and common stock will be treated as qualified dividends if (i) we are eligible for the benefits of a comprehensive income tax treaty with the United States that the Internal Revenue Service has approved for the purposes of the qualified dividend rules and (ii) we were not, in the year prior to the year in which the dividend is paid, and are not, in the year in which the dividend is paid, a passive foreign investment company (“PFIC”). The income tax treaty between Korea and the United States (“Treaty”) has been approved for the purposes of the qualified dividend rules, and we believe we are eligible for benefits under the Treaty. Based on our audited financial statements and relevant market and shareholder data, we believe that we were not treated as a PFIC for U.S. federal income tax purposes with respect to our 2022 or 2023 taxable years. In addition, based on our current expectations regarding the value and nature of our assets, the sources and nature of our income, and relevant market and shareholder data, we do not expect to be a PFIC for our 2024 taxable year. You should consult your own tax advisers regarding the availability of the reduced dividend tax rate in the light of your own particular circumstances.
Distributions of additional shares in respect of shares of common stock or ADSs that are made as part of a pro-rata distribution to all of our shareholders generally will not be subject to U.S. federal income tax.
Sales and Other Dispositions
For U.S. federal income tax purposes, you will recognize taxable gain or loss on any sale, exchange or other taxable disposition of common stock or ADSs equal to the difference, if any, between the amount realized on the sale or exchange and your adjusted tax basis in the common stock or ADSs. Any gain realized by a U.S. holder on the sale or other disposition of common stock or ADSs generally will be treated as U.S. source income for U.S. foreign tax credit purposes. Subject to the discussion above under “Passive Foreign Investment Company Rules,” this gain or loss will be capital gain or loss, and will be long-term capital gain or loss to the extent that the shares of common stock or ADSs sold or disposed of were held for more than one year. Your ability to offset capital losses against ordinary income is limited. Long-term capital gain recognized by an individual U.S. holder generally is subject to taxation at a reduced rate.
Foreign Tax Credit Considerations
Subject to generally applicable limitations and conditions, Korean dividend or capital gains withholding tax paid at the appropriate rate applicable to you may be eligible for a credit against your U.S. federal income tax liability. These generally applicable limitations and conditions include new requirements recently adopted by the U.S. Internal Revenue Service (“IRS”) in regulations promulgated in December 2021 and any Korean tax will need to satisfy these requirements in order to be eligible to be a creditable tax for a U.S. holder. In the case of a U.S.
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holder that consistently elects to apply a modified version of these rules under recently issued temporary guidance and complies with specific requirements set forth in such guidance, the Korean tax on dividends or gains will be treated as meeting the new requirements and therefore as a creditable tax. In the case of all other U.S. holders, the application of these requirements to the Korean tax on dividends or gains is uncertain and we have not determined whether these requirements are met, including requirements applicable to the Treaty. If the Korean dividend or capital gains tax is not a creditable tax for a U.S. holder or you do not elect to claim a foreign tax credit for any foreign income taxes paid or accrued in the same taxable year, you may be able to deduct the Korean tax in computing your taxable income for U.S. federal income tax purposes.
Dividends will constitute income from sources without the United States and, if the withholding tax is a creditable tax for a U.S. holder that elects to claim foreign tax credits, generally will constitute “passive category income” for foreign tax credit purposes. Capital gain or loss recognized by a U.S. holder on the sale or other disposition of the shares of common stock or ADSs generally will be U.S. source gain or loss for U.S. foreign tax credit purposes. Consequently, even if any withholding tax on gains qualifies as a creditable tax, you may not be able to credit the tax against your U.S. federal income tax liability unless such credit can be applied (subject to generally applicable conditions and limitations) against tax due on other income treated as derived from foreign sources. If the Korean tax is not a creditable tax, the tax would reduce the amount realized on the sale or other disposition of the shares of common stock or ADSs even if you have elected to claim a foreign tax credit for other taxes in the same year.
Any Korean securities transaction tax or agriculture and fishery special tax that you pay will not be creditable for foreign tax credit purposes.
The availability and calculation of foreign tax credits and deductions for foreign taxes depend upon a U.S. holder’s particular circumstances and involve the application of complex rules to those circumstances. The temporary guidance discussed above also indicates that the Treasury and the IRS are considering proposing amendments to the December 2021 regulations and that the temporary guidance can be relied upon until additional guidance is issued that withdraws the temporary guidance. You should consult your own tax advisors regarding the application of these rules to your particular situation.
Specified Foreign Financial Assets
Certain U.S. holders that own “specified foreign financial assets” with an aggregate value in excess of US$50,000 on the last day of the taxable year or US$75,000 at any time during the taxable year are generally required to file an information statement along with their tax returns, currently on Form 8938, with respect to such assets. “Specified foreign financial assets” include any financial accounts held at a non-U.S. financial institution, as well as securities issued by a non-U.S. issuer (which would include the common stock or ADSs) that are not held in accounts maintained by financial institutions. Higher reporting thresholds apply to certain individuals living abroad and to certain married individuals. Regulations extend this reporting requirement to certain entities that are treated as formed or availed of to hold direct or indirect interests in specified foreign financial assets based on certain objective criteria. U.S. holders who fail to report the required information could be subject to substantial penalties. In addition, the statute of limitations for assessment of tax would be suspended, in whole or part. Prospective investors should consult their own tax advisors concerning the application of these rules to their investment in the common stock or ADSs, including the application of the rules to their particular circumstances.
U.S. Information Reporting and Backup Withholding Rules
Payments in respect of shares of common stock or ADSs that are made within the United States or through certain U.S.-related financial intermediaries are subject to information reporting and may be subject to backup withholding unless you provide an accurate taxpayer identification number and make any other required certification or otherwise establish an exemption.
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Holders that are not “United States persons” (as defined in the Internal Revenue Code of 1986, as amended) generally are not subject to information reporting or backup withholding. However, such a holder may be required to provide a certification of its non-U.S. status in connection with payments received within the United States or through a U.S.-related financial intermediary.
Item 10.F. Dividends and Paying Agents
See “Item 8.A. Consolidated Statements and Other Financial Information — Dividends” above for information concerning our dividend policies and our payment of dividends. See “Item 10.B. Memorandum and Articles of Association — Dividends” for a discussion of the process by which dividends are paid on shares of our common stock. The paying agent for payment of our dividends on ADSs in the United States is the Citibank, N.A.
Item 10.G. Statements by Experts
Not applicable
Item 10.H. Documents on Display
We file reports, including annual reports on Form 20-F, and other information with the SEC pursuant to the rules and regulations of the SEC that apply to foreign private issuers. You may read and copy any materials filed with the SEC at the Public Reference Rooms in Washington, D.C. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Any filings we make electronically will be available to the public over the Internet at the SEC’s website at http://www.sec.gov.
Item 10.I. Subsidiary Information
Not applicable
Item 10.J. Annual Report to Security Holders
Not applicable
Item 11. Quantitative and Qualitative Disclosures about Market Risk
We are exposed to foreign exchange rate and interest rate risk primarily associated with underlying liabilities, and to changes in the commodity prices of principal raw materials. Following evaluation of these positions, we selectively enter into derivative financial instruments to manage the related risk exposures, primarily with respect to foreign exchange rate and interest rate risks, which are entered into with major financial institutions in order to minimize the risk of credit loss. Our market risk management policy determines the market risk tolerance level, measuring period, controlling responsibilities, management procedures, hedging period and hedging ratio very specifically. We also prohibit all speculative hedging transactions and evaluate and manage foreign exchange exposures to receivables and payables.
None of our loss exposures related to derivative contracts are unlimited, and we do not believe that our net derivative positions could result in a material loss to our profit before income tax or total equity due to significant fluctuations of major currencies against the Korean Won. Due to the nature of our derivative contracts primarily as hedging instruments that manage foreign exchange risks, net gain or net loss on derivatives transactions and valuation of derivatives are typically offset by net loss or net gain on foreign currency transaction and translation.
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We recognized net gain on valuation of derivatives of Won 270 billion and net loss on derivatives transactions of Won 95 billion in 2021, net gain on derivatives transactions of Won 150 billion and net gain on valuation of derivatives of Won 70 billion in 2022, and net gain on valuation of derivatives of Won 124 billion and net gain on derivatives transactions of Won 13 billion in 2023.
Exchange Rate Risk
Korea is our most important market and, therefore, a substantial portion of our cash flow is denominated in Won. Most of our exports are denominated in U.S. dollars. Japan is also an important market for us, and we derive significant cash flow denominated in Yen. We are exposed to foreign exchange risk related to foreign currency-denominated liabilities and anticipated foreign exchange payments. Anticipated foreign exchange payments, which represent a substantial sum and are mostly denominated in U.S. dollars, relate primarily to imported raw material costs and freight costs. Foreign currency-denominated liabilities relate primarily to foreign currency-denominated debt.
We strive to naturally offset our foreign exchange risk by matching foreign currency receivables with our foreign currency payables and our overseas subsidiaries have sought to further mitigate the adverse impact of exchange rate fluctuations by conducting business transactions in the local currency of the respective market in which the transactions occur. In particular, POSCO International’s exposure to fluctuations in exchange rates, including the Won/U.S. dollar exchange rate, is limited because trading transactions typically involve matched purchase and sale contracts, which result in limited settlement exposure, and because POSCO International’s contracts with domestic suppliers of products for export and with domestic purchasers of imported products are generally denominated in U.S. dollars. Although the impact of exchange rate fluctuations is partially mitigated by such strategies, we and our subsidiaries, particularly POSCO International and POSCO E&C, also periodically enter into derivative contracts, primarily foreign currency swaps and forward exchange contracts, to further hedge some of our foreign exchange risks.
Our foreign currency exposure and changes in gain or loss resulting from a 10% foreign exchange rate change against the Korean Won are as follows:
| For the Years Ended December 31, | ||||||||||||||||||||||||
| 2021 | 2022 | 2023 | ||||||||||||||||||||||
| Increase | Decrease | Increase | Decrease | Increase | Decrease | |||||||||||||||||||
| (In billions of Won) | ||||||||||||||||||||||||
| U.S. dollars |
￦ | (264 | ) | ￦ | 264 | ￦ | (344 | ) | ￦ | 344 | ￦ | (617 | ) | ￦ | 617 | |||||||||
| Euro |
(200 | ) | 200 | (186 | ) | 186 | (234 | ) | 234 | |||||||||||||||
| Japanese Yen |
(39 | ) | 39 | 14 | (14 | ) | 8 | (8 | ) | |||||||||||||||
See Note 23 to the Consolidated Financial Statements.
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Interest Rate Risk
We are also subject to market risk exposure arising from changing interest rates. In particular, we are exposed to interest rate risk on our existing floating rate borrowings and on additional debt financings that we may periodically undertake for various reasons, including capital expenditures and refinancing of our existing borrowings. A rise in interest rates will increase the cost of our existing variable rate borrowings. If interest rates on borrowings with floating rates had been 1% higher or lower with all other variables held constant, the impact on the gain or loss of the applicable period would be as follows:
| For the Years Ended December 31, | ||||||||||||||||||||||||
| 2021 | 2022 | 2023 | ||||||||||||||||||||||
| Increase | Decrease | Increase | Decrease | Increase | Decrease | |||||||||||||||||||
| (In billions of Won) | ||||||||||||||||||||||||
| Increase or decrease in annual profit and net equity |
￦ | (64) | ￦ | 64 | ￦ | (82) | ￦ | 82 | ￦ | (77) | ￦ | 77 | ||||||||||||
See Note 23 to the Consolidated Financial Statements.
A reduction of interest rates also increases the fair value of our debt portfolio, which is primarily of a fixed interest nature. From time to time, we use, to a limited extent, interest rate swaps to reduce interest rate volatility on some of our debt and manage our interest expense by achieving a balanced mixture of floating and fixed rate debt.
The following table summarizes the carrying amounts, fair values, principal cash flows by maturity date and weighted average interest rates of our short-term and long-term liabilities as of December 31, 2023 which are sensitive to exchange rates and/or interest rates. The information is presented in Won, which is our reporting currency.
| Maturities | ||||||||||||||||||||||||||||||||
| December 31, 2023 |
||||||||||||||||||||||||||||||||
| 2024 | 2025 | 2026 | 2027 | 2028 | Thereafter | Total | Fair Value |
|||||||||||||||||||||||||
| (In billions of Won except rates) | ||||||||||||||||||||||||||||||||
| Local currency: |
||||||||||||||||||||||||||||||||
| Fixed rate |
￦ | 2,359 | ￦ | 1,761 | ￦ | 2,066 | ￦ | 379 | ￦ | 825 | ￦ | 869 | ￦ | 8,259 | ￦ | 8,246 | ||||||||||||||||
| Average weighted rate (1) . |
2.25 | % | 3.71 | % | 3.46 | % | 3.41 | % | 4.08 | % | 3.28 | % | 3.26 | % | ||||||||||||||||||
| Variable rate |
1,021 | 70 | 38 | 82 | — | 271 | 1,482 | 1,482 | ||||||||||||||||||||||||
| Average weighted rate (1) |
5.33 | % | 5.57 | % | 5.39 | % | 3.86 | % | — | 5.32 | % | 5.26 | % | |||||||||||||||||||
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|
|||||||||||||||||
| Sub-total |
3,380 | 1,831 | 2,104 | 461 | 825 | 1,140 | 9,741 | 9,728 | ||||||||||||||||||||||||
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| Foreign currency, principally U.S. dollars and Yen: |
||||||||||||||||||||||||||||||||
| Fixed rate |
￦ | 3,360 | ￦ | 1,976 | ￦ | 2,691 | ￦ | 561 | ￦ | 1,121 | ￦ | 385 | ￦ | 10,094 | ￦ | 10,028 | ||||||||||||||||
| Average weighted rate (1) |
1.65 | % | 3.89 | % | 1.97 | % | 3.72 | % | 5.81 | % | 5.91 | % | 3.03 | % | ||||||||||||||||||
| Variable rate |
2,585 | 2,147 | 641 | 123 | — | 657 | 6,153 | 6,151 | ||||||||||||||||||||||||
| Average weighted rate (1) |
6.93 | % | 2.46 | % | 0.20 | % | 0.03 | % | — | 0.36 | % | 3.83 | % | |||||||||||||||||||
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| Sub-total |
5,945 | 4,123 | 3,332 | 684 | 1,121 | 1,042 | 16,247 | 16,179 | ||||||||||||||||||||||||
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| Total |
￦ | 9,325 | ￦ | 5,954 | ￦ | 5,436 | ￦ | 1,145 | ￦ | 1,946 | ￦ | 2,182 | ￦ | 25,988 | ￦ | 25,907 | ||||||||||||||||
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| (1) | Weighted average rates of the portfolio at the period end. |
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Item 12. Description of Securities Other than Equity Securities
Not applicable
Item 12.A. Debt Securities
Not applicable
Item 12.B. Warrants and Rights
Not applicable
Item 12.C. Other Securities
Not applicable
Item 12.D. American Depositary Shares
Fees and Charges
We switched our depositary from The Bank of New York Mellon to Citibank, N.A. in July 2013. Holders of our ADSs are required to pay the following service fees to the depositary:
| Services |
Fees |
|
| Issuance of ADSs upon deposit of shares |
Up to $5.00 per 100 ADSs issued | |
| Delivery of deposited shares against surrender of ADSs |
Up to $5.00 per 100 ADSs surrendered | |
| Distributions of cash dividends or other cash distributions |
Up to $5.00 per 100 ADSs held | |
| Distribution of ADSs pursuant to (i) stock dividends or other free stock distributions, or (ii) exercise of rights to purchase additional ADSs |
Up to $5.00 per 100 ADSs held | |
| Distribution of securities other than ADSs or rights to purchase additional ADSs |
Up to $5.00 per 100 ADSs held | |
| General depositary services |
Up to $5.00 per 100 ADSs held |
Holders of our ADSs are also responsible for paying certain fees and expenses incurred by the depositary such as:
| • | fees for the transfer and registration of shares charged by the registrar and transfer agent for the shares in Korea (i.e., upon deposit and withdrawal of shares); |
| • | expenses incurred for converting foreign currency into U.S. dollars; |
| • | expenses for cable, telex and fax transmissions and for delivery of securities; |
| • | taxes (including applicable interest and penalties) and other governmental charges; |
| • | fees and expenses incurred in connection with compliance with exchange control regulations and other regulatory requirements; and |
| • | fees and expenses incurred in connection with the delivery or servicing of shares on deposit. |
Depositary fees payable upon the issuance and surrender of ADSs are typically paid to the depositary by the brokers (on behalf of their clients) receiving the newly issued ADSs from the depositary and by the brokers (on behalf of their clients) delivering the ADSs to the depositary for surrender. The brokers in turn charge these fees to their clients. Depositary fees payable in connection with distributions of cash or securities to ADS holders and the depositary services fee are charged by the depositary to the holders of record of ADSs as of the applicable ADS record date.
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The depositary fees payable for cash distributions are generally deducted from the cash being distributed. In the case of distributions other than cash (i.e., stock dividend, rights), the depositary charges the applicable fee to the ADS record date holders concurrent with the distribution. In the case of ADSs registered in the name of the investor (whether certificated or uncertificated in direct registration), the depositary sends invoices to the applicable record date ADS holders. In the case of ADSs held in brokerage and custodian accounts (via the Korea Securities Depositary, or KSD), the depositary generally collects its fees through the systems provided by KSD (whose nominee is the registered holder of the ADSs held in KSD) from the brokers and custodians holding ADSs in their KSD accounts. The brokers and custodians who hold their clients’ ADSs in KSD accounts in turn charge their clients’ accounts the amount of the fees paid to the depositary.
In the event of refusal to pay the depositary fees, the depositary may, under the terms of the deposit agreement, refuse the requested service until payment is received or may set off the amount of the depositary fees from any distribution to be made to such holder of ADSs.
The fees and charges that holders of our ADSs may be required to pay may vary over time and may be changed by us and by the depositary. Holders of our ADSs will receive prior notice of such changes.
Fees and Payments from the Depositary to Us
In 2023, we received approximately $2.0 million from the depositary for reimbursement of various costs, including preparation of SEC filing and submission, listing fees, proxy process expenses (printing, postage and distribution), legal fees and contributions for our investor relations activities.
In addition, as part of its service to us, the depositary waives its fees for the standard costs associated with the administration of the ADS facility, associated operating expenses, investor relations advice and access to an internet-based tool used in our investor relations activities.
PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies
Not applicable
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
Not applicable
Item 15. Controls and Procedures
a. Disclosure Controls and Procedures
Our management has evaluated, with the participation of our chief executive officer and chief financial officer, the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of December 31, 2023. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon our evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report. Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and that it is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
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b. Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed by, and under the supervision of, our principal executive, principal operating and principal financial officers, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Our internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management has completed an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2023 based on criteria in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concluded that our internal control over financial reporting was effective as of December 31, 2023.
c. Report of the Independent Registered Public Accounting Firm
The report of our independent registered public accounting firm, KPMG Samjong Accounting Corp., on the effectiveness of our internal control over financial reporting as of December 31, 2023 is included in Item 18 of this Form 20-F.
d. Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting that occurred during the year covered by this annual report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Our adoption of Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission did not have, and is not reasonably likely to have, any material effect on our internal control over financial reporting.
Item 16. [Reserved]
Item 16.A. Audit Committee Financial Expert
The board of directors has determined that Sohn, Sung-Kyu is an audit committee financial expert and is independent within the meaning of applicable SEC rules.
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Item 16.B. Code of Ethics
We have adopted a code of business conduct and ethics, as defined in Item 16B. of Form 20-F under the Securities Exchange Act of 1934, as amended. Our code of business conduct and ethics, called Code of Ethics, applies to our chief executive officer and chief financial officer, as well as to our directors, other officers and employees. Our Code of Ethics is available on our website at http://www.posco-inc.com. If we amend the provisions of our Code of Ethics that apply to our chief executive officer or chief financial officer and persons performing similar functions, or if we grant any waiver of such provisions, we will disclose such amendment or waiver on our website at the same address.
Item 16.C. Principal Accountant Fees and Services
Our independent registered public accounting firm is KPMG Samjong Accounting Corp. The auditor location is Seoul, Republic of Korea, and the auditor firm ID is 1357.
Audit and Non-Audit Fees
The following table sets forth the fees billed to us by our independent registered public accounting firm, KPMG Samjong Accounting Corp., a member firm of KPMG International, and their respective affiliates, which we collectively refer to as KPMG, during the fiscal years ended December 31, 2022 and 2023:
| For the Year Ended December 31, |
||||||||
| 2022 | 2023 | |||||||
| (In millions of Won) | ||||||||
| Audit fees |
￦ | 8,916 | ￦ | 12,221 | ||||
| Audit-related fees |
1,358 | 341 | ||||||
| Tax fees |
1,408 | 1,684 | ||||||
| Other fees |
2,079 | 3,149 | ||||||
|
|
|
|
|
|||||
| Total fees |
￦ | 13,761 | ￦ | 17,395 | ||||
|
|
|
|
|
|||||
Audit fees in 2022 and 2023 as set forth in the above table are the aggregate fees billed by KPMG in connection with the audit of our annual financial statements and the annual financial statements of other related companies and review of interim financial statements.
Audit-related fees in 2022 and 2023 as set forth in the above table are fees billed by KPMG for audits and reviews of carveout and combined financial statements, issuing comfort letters in connection with our securities offering and agreed-upon procedures related to the vertical spin-off of POSCO.
Tax fees in 2022 and 2023 as set forth in the above table are fees billed by KPMG for our tax compliance and tax planning, as well as compliance related to transfer pricing.
Other fees in 2022 and 2023 as set forth in the above table are fees billed by KPMG in connection with statutory audits unrelated to the audit of our annual financial statements.
Audit Committee Pre-Approval Policies and Procedures
Under our Audit Committee’s pre-approval policies and procedures, all audit and non-audit services to be provided to us by an independent registered public accounting firm must be pre-approved by our Audit Committee. Our Audit Committee does not pre-approve any audit and non-audit services that are prohibited from being provided to us by an independent registered public accounting firm under the rules of SEC and applicable law.
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Item 16.D. Exemptions from the Listing Standards for Audit Committees
Not applicable
Item 16.E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The following table sets forth the repurchases of common shares by us or any affiliated purchasers during 2023:
| Period |
Total Number of Shares Purchased |
Average Price Paid Per Share (In Won) |
Total Number of Shares Purchased as Part of Publicly Announced Plans |
Maximum Number of Shares that May Yet Be Purchased Under the Plans |
||||||||||||
| January 1 to January 31 |
— | — | — | — | ||||||||||||
| February 1 to February 29 |
— | — | — | — | ||||||||||||
| March 1 to March 31 |
— | — | — | — | ||||||||||||
| April 1 to April 30 |
— | — | — | — | ||||||||||||
| May 1 to May 31 |
— | — | — | — | ||||||||||||
| June 1 to June 30 |
— | — | — | — | ||||||||||||
| July 1 to July 31 |
— | — | — | — | ||||||||||||
| August 1 to August 31 |
— | — | — | — | ||||||||||||
| September 1 to September 30 |
— | — | — | — | ||||||||||||
| October 1 to October 31 |
— | — | — | — | ||||||||||||
| November 1 to November 30 |
— | — | — | — | ||||||||||||
| December 1 to December 31 |
— | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
— | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Item 16.F. | Change in Registrant’s Certifying Accountant |
On December 19, 2023, our Audit Committee approved the appointment of Ernst & Young Han Young as our principal accountant to audit our consolidated financial statements prepared in accordance with IFRS as issued by the IASB for the fiscal years ending December 31, 2024, 2025 and 2026, subject to the completion of the consolidated financial statements for the fiscal year ending December 31, 2023, and, in effect, dismissed KPMG Samjong Accounting Corp., our former principal accountant (including for the fiscal years ended December 31, 2021, 2022 and 2023). Pursuant to such approval, Ernst & Young Han Young was engaged on January 11, 2024 as our principal accountant to audit our consolidated financial statements prepared in accordance with IFRS as issued by the IASB. KPMG Samjong Accounting Corp. will be dismissed effective upon completion of its audit of our financial statements as of and for the year ended December 31, 2023 and the issuance of its report thereon.
The decision of our Audit Committee to dismiss KPMG Samjong Accounting Corp., and to appoint Ernst & Young Han Young, as our principal accountant to audit our financial statements prepared in accordance with IFRS, as issued by the IASB, was largely driven by the Securities and Futures Commission’s designation of Ernst & Young Han Young as our external auditor in November 2023 pursuant to the requirement of the amended Act on External Audit of Stock Companies, which became effective in November 2018. The Act on External Audit of Stock Companies, as amended, requires that a publicly listed Korean company that has been audited by an external auditor of its choice for six consecutive years change its external auditor to one designated by the Securities and Futures Commission for a period of three consecutive years.
KPMG Samjong Accounting Corp.’s reports on our consolidated financial statements for each of the two most recent fiscal years ended December 31, 2023 and 2022 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles.
99
During the two most recent fiscal years ended December 31, 2023 and 2022 and the subsequent interim period through April 29, 2024, there were: (i) no disagreements between us and KPMG Samjong Accounting Corp. on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of KPMG Samjong Accounting Corp., would have caused KPMG Samjong Accounting Corp. to make reference to the subject matter of the disagreements in its reports on our consolidated financial statements; and (ii) no “reportable events” as defined in Item 16F(a)(1)(v) of Form 20-F.
During the two most recent fiscal years ended December 31, 2023 and 2022 and the subsequent interim period through April 29, 2024, neither we nor anyone on our behalf consulted Ernst & Young Han Young regarding either (i) the application of IFRS as issued by the IASB to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our consolidated financial statements (and neither a written report nor oral advice was provided to us that Ernst & Young Han Young concluded was an important factor considered by us in reaching a decision as to any accounting, auditing or financial reporting issue under IFRS, as issued by the IASB) or (ii) any matter that was either the subject of a “disagreement” (as defined in Item 16F(a)(1)(iv) of Form 20-F and the related instructions to Item 16F) or a “reportable event” (as described in Item 16F(a)(1)(v) of Form 20-F).
We provided a copy of the disclosure in this Item 16F to KPMG Samjong Accounting Corp. and requested that KPMG Samjong Accounting Corp. furnish us with a letter addressed to the Securities and Exchange Commission stating whether it agrees with such disclosure, and if it does not agree, stating the respects in which it does not agree. A copy of KPMG Samjong Accounting Corp.’s letter dated April 29, 2024 is filed as Exhibit 15.1 to this annual report for the fiscal year ended December 31, 2023.
| Item 16.G. | Corporate Governance |
Pursuant to the rules of the New York Stock Exchange applicable to foreign private issuers like us that are listed on the New York Stock Exchange, we are required to disclose significant differences between the New York Stock Exchange’s corporate governance standards and those that we follow under Korean law and in accordance with our own internal procedures. The following is a summary of such significant differences.
| NYSE Corporate Governance Standards |
POSCO HOLDINGS INC.’s Corporate Governance |
|
| Director Independence | ||
| Listed companies must have a majority of independent directors | Our articles of incorporation provide that our board of directors must comprise no less than a majority of Outside Directors. Our Outside Directors must meet the criteria for outside directorship set forth under the Korean Securities and Exchange Act.
The majority of our board of directors is independent (as defined in accordance with the New York Stock Exchange’s standards), and six out of 10 directors are Outside Directors. Under our articles of incorporation, we may have up to five Inside Directors and eight Outside Directors. |
|
| Nomination/Corporate Governance Committee | ||
| A nomination/corporate governance committee of independent directors is required. The committee must have a charter that addresses the purpose, responsibilities (including development of corporate governance guidelines) and annual performance evaluation of the committee. | We have not established a separate nomination corporate governance committee. However, we maintain (i) a CEO Candidate Pool Management Committee composed of all of our six Outside Directors and (ii) a Director Candidate Recommendation Committee composed of three Outside Directors. | |
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| NYSE Corporate Governance Standards |
POSCO HOLDINGS INC.’s Corporate Governance |
|
| Compensation Committee | ||
| A compensation committee of independent directors is required. The committee must have a charter that addresses the purpose, responsibilities and annual performance evaluation of the committee. The charter must be made available on the company’s website. In addition, in accordance with the U.S. Securities and Exchange Commission rules adopted pursuant to Section 952 of the Dodd-Frank Act, the New York Stock Exchange listing standards were amended to expand the factors relevant in determining whether a committee member has a relationship with the company that will materially affect that member’s duties to the compensation committee.
Additionally, the committee may obtain or retain the advice of a compensation adviser only after taking into consideration all factors relevant to determining that adviser’s independence from management. |
We maintain an Evaluation and Compensation Committee composed of four Outside Directors. | |
| Executive Session |
||
| Non-management directors must meet in regularly scheduled executive sessions without management. Independent directors should meet alone in an executive session at least once a year. | Our Outside Directors hold meetings solely attended by Outside Directors in accordance with operation guidelines of our board of directors. | |
| Audit Committee |
||
| Listed companies must have an audit committee that satisfies the independence and other requirements of Rule 10A-3 under the Exchange Act. All members must be independent. The committee must have a charter addressing the committee’s purpose, an annual performance evaluation of the committee, and the duties and responsibilities of the committee. The charter must be made available on the company’s website. | We maintain an Audit Committee comprised of three Outside Directors who meet the applicable independence criteria set forth under Rule 10A-3 under the Exchange Act. | |
| Audit Committee Additional Requirements |
||
| Listed companies must have an audit committee that is composed of at least three directors. | Our Audit Committee has three members, as described above. | |
| Shareholder Approval of Equity Compensation Plan |
||
| Listed companies must allow their shareholders to exercise their voting rights with respect to any material revision to the company’s equity compensation plan. | We currently have an Employee Stock Ownership Program. Matters related to the Employee Stock Ownership Program are not subject to shareholders’ approval under Korean law. | |
| Shareholder Approval of Equity Offerings |
||
| Listed companies must allow its shareholders to exercise their voting rights with respect to equity offerings that do not qualify as public offerings for cash, and offerings of equity of related parties. | Our board of directors is generally authorized to issue new shares, subject to certain limitations as provided by our articles of incorporation. | |
| Corporate Governance Guidelines | ||
| Listed companies must adopt and disclose corporate governance guidelines. | We have adopted a Corporate Governance Charter setting forth our practices with respect to relevant corporate governance matters. Our Corporate Governance Charter is in compliance with Korean law but does not meet all requirements established by the New York Stock Exchange for U.S. companies listed on the exchange. A copy of our Corporate Governance Charter is available on our website at http://www.posco-inc.com. | |
| Code of Business Conduct and Ethics | ||
| Listed companies must adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers. | We have adopted a Code of Ethics for all directors, officers and employees. A copy of our Code of Ethics is available on our website at http://www.posco-inc.com. | |
101
Item 16.H. Mine Safety Disclosure
Not applicable
Item 16.I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable
Item 16.J. Insider Trading Policies
Not applicable
Item 16.K. Cybersecurity
Risk Management and Strategy
We maintain a comprehensive process for assessing, identifying and managing material risks from cybersecurity threats as part of our overall enterprise risk management system and processes. Our enterprise risk management program considers cybersecurity risks alongside other company risks, and our enterprise risk professionals consult with company subject matter experts to gather information necessary to identify cybersecurity risks, and evaluate their nature and severity, as well as identify mitigations and assess the impact of those mitigations on residual risk. Our cybersecurity risk management practices include development, implementation, and improvement of policies and procedures to safeguard information and ensure availability of critical data and systems.
We understand the importance of preserving trust and protecting personal information. To assist us, we have a cybersecurity governance framework in place, which is designed to protect information and information systems from unauthorized access, use, disclosure, disruption, modification or destruction. The program is built upon a foundation of advanced security technology and overseen by an experienced and trained team of experts with substantial knowledge of cybersecurity best practices. Our cybersecurity program consists of controls designed to identify, protect against, detect, respond to and recover from information and cybersecurity incidents. Our framework leverages International Organization for Standardizations (ISO) 27001 standards for general information technology controls. Key components of our cybersecurity risk management processes include the following:
| • | Asset analysis: Identify information assets, including information and information systems related to our business, and evaluate their value by considering the impact that loss of confidentiality, integrity and availability of the assets may have on the company. |
| • | Threat analysis: Identify threats to assets and measure the likelihood of occurrence through interviews and due diligence. |
| • | Vulnerability analysis: Analyze the extent to which assets are vulnerable to identified threats through interviews or due diligence. |
| • | Risk assessment: Assess the risk level based on identified assets, threats and vulnerabilities and identify existing protection measures. Evaluate risk by categorizing threats, vulnerabilities and risk levels for each identified asset. |
| • | Risk treatment: Based on the risk assessment results, implement measures to mitigate risks to an acceptable level. |
We maintain an in-house IT service management system, and we conduct technical security review during the designing stage of our system development. We utilize policies, software, training programs and hardware solutions to protect and monitor our environment, including multifactor authentication on all critical systems, firewalls, intrusion detection and prevention systems, vulnerability and penetration testing and identity management systems.
102
Our platform includes a host of encryption, antivirus, multi-factor authentication, firewall and patch-management technologies designed to protect and maintain the systems and computers across our business.
Our cybersecurity team regularly tests our controls through penetration testing, vulnerability scanning and attack simulation. We conduct risk assessments periodically to identify threats and vulnerabilities, and then determine the likelihood and impact for each risk using a qualitative risk assessment methodology. Risks are identified from various sources, including vulnerability scans, penetration tests, vendors risk assessments, product and services audits, internal compliance assessments and threat-hunting operations. We monitor our infrastructure and applications to identify evolving cyber threats, scan for vulnerabilities and mitigate risks. We also operate an integrated security control room through a third-party company, through which we detect and defend against hacking attacks from outside in real time.
We also maintain a robust cybersecurity incident response plan, which provides a framework for handling cybersecurity incidents based on the severity of the incident and facilitates cross-functional coordination across the company. Our incident response plan coordinates the activities we take to prepare for, detect, respond to and recover from cybersecurity incidents, which include processes to triage, assess severity for, escalate, contain, investigate and remediate the incident, as well as to comply with potentially applicable legal obligations and mitigate brand and reputational damage.
We value collaboration with external evaluators, consultants, auditors and other third parties to strengthen and continually improve our cybersecurity risk management processes. In connection with our cybersecurity risk management processes, we engage:
| • | External evaluators and consultants: We engage external consultants from security companies to assist in the design and implementation of our cybersecurity risk assessment and management processes. In particular, they provide the expertise necessary to (i) identify and analyze new cybersecurity threats, (ii) identify and improve vulnerabilities through mock hacking and (iii) analyze and respond to new threats in real time through integrated security control. |
| • | Auditors: Our program includes review and assessment by external, independent third-parties, who assess and report on our internal incident response preparedness and help identify areas for continued focus and improvement. We engage in regular external audits to maintain our ISO 27001 certification, which are performed by certified auditors. |
| • | Third-party organizations: We collaborate with the Korea Internet & Security Agency, the National Intelligence Service and the Korea Industrial Technology Security Association, which develop and maintain cybersecurity-related standards in Korea. Guidelines and best practices from such organizations assist us in improving our cybersecurity strategies and processes. |
Our cybersecurity risk management processes extend to the oversight and identification of threats associated with our use of third-party service providers. We have a third-party risk management program that assesses risks from service providers. Our cybersecurity risk management program includes due diligence of service providers’ information security programs. We review our service providers’ cybersecurity practices before we enter into business transactions with them, and we seek to contractually obligate them to operate their environments in accordance with strict cybersecurity standards. We also develop contingency plans for business continuity in case our service providers are subject to a cyberattack that impacts our use of their systems.
Our business strategy, results of operations and financial condition have not been materially affected by risks from cybersecurity threats, including as a result of previous cybersecurity incidents, but we cannot provide assurance that they will not be materially affected in the future by such risks and any future material incidents. See “Item 3.D.
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Risk Factors — Significant breaches of information security could lead to legal and financial exposure, damage to our reputation and a loss of confidence by our customers” for more information on risks from cybersecurity threats that are reasonably likely to materially affect our business strategy, results of operations and financial condition.
Governance
Management
The cybersecurity risk management processes described above are managed by the Head of Technology, who is the Chief Technology Officer of the POSCO Group and reports to our Chief Executive Officer. The Head of Technology works with our Chief Information Security Officer and chairs the Information Security Committee, which discusses the latest trends in cybersecurity, changes in expectations of our stakeholders, risks identified, security measures implemented, and effectiveness of security protocols. The Information Security Committee annually reviews and approves our cybersecurity risk management processes, including updates to our internal regulations and guidelines. Our Chief Information Security Officer is supported by the company at the highest levels and regularly engages with cross-functional teams, including Communications, Digital Technology, Human Resources and Strategic Technology.
Board of Directors
Our board of directors is committed to mitigating data privacy and cybersecurity risks and recognizes the importance of these issues as part of our risk management framework. While the board of directors maintains ultimate responsibility for the oversight of our data privacy and cybersecurity program and risks, it has delegated certain responsibilities to the ESG Committee of the board of directors. This committee-level focus on data privacy and cybersecurity allows the board to further enhance its understanding of these issues. The ESG Committee assists the board of directors in its oversight of our data privacy and cybersecurity needs by staying apprised of our data privacy and information security programs, strategy, policies, standards, architecture, processes and material risks, and overseeing responses to security and data incidents.
Our board of directors and the ESG Committee’s principal role is one of oversight, recognizing that management is responsible for the design, implementation and maintenance of an effective program for protecting against and mitigating data privacy and cybersecurity risks. The Head of Technology, as the chair of the Information Security Committee, provides updates to the ESG Committee on an annual basis and, as necessary, to the board of directors. These regular reports include detailed updates on our performance preparing for, preventing, detecting, responding to and recovering from cyber incidents. The Head of Technology also promptly informs and updates the ESG Committee about any information security incidents that may pose significant risk to the POSCO Group. Members of the board of directors stay apprised of the rapidly evolving cyber threat landscape and provide guidance to management as appropriate in order to address the effectiveness of our overall data privacy and cybersecurity program.
PART III
Item 17. Financial Statements
Not applicable
104
Item 18. Financial Statements
Item 19. Exhibits
| 1.1 | — | Articles of Incorporation of POSCO HOLDINGS INC. (English translation) | ||||
| 2.1 | — | Form of Common Stock Certificate (including English translation) (incorporated by reference to Exhibit 4.3 to the Registrant’s Registration Statement No. 33-81554)* (P) | ||||
| 2.2 | — | Form of Deposit Agreement (including Form of American Depositary Receipts) (incorporated by reference to the Registrant’s Registration Statement (File No. 333-189473) on Form F-6)* | ||||
| 2.3 | — | Description of common stock (see Item 10.B. Memorandum and Articles of Association) | ||||
| 2.4 | — | Description of American Depositary Shares (incorporated by reference to Exhibit 2.4 to the Registrant’s Annual Report on Form 20-F filed on April 28, 2022)* | ||||
| 8.1 | — | List of consolidated subsidiaries | ||||
| 12.1 | — | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||||
| 12.2 | — | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||||
| 13.1 | — | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||||
| 15.1 | — | Letter of KPMG Samjong Accounting Corp. dated April 29, 2024 | ||||
| 97.1 | — | Policy for the Recovery of Erroneously Awarded Compensation | ||||
| 101.INS | — | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | ||||
| 101.SCH | — | Inline XBRL Taxonomy Extension Schema Document | ||||
| 101.CAL | — | Inline XBRL Taxonomy Extension Calculation Linkbase Document | ||||
| 101.DEF | — | Inline XBRL Taxonomy Extension Definition Linkbase Document | ||||
| 101.LAB | — | Inline XBRL Taxonomy Extension Label Linkbase Document | ||||
| 101.PRE | — | Inline XBRL Taxonomy Extension Presentation Linkbase Document | ||||
| 104 | — | The cover page for the Company’s Annual Report on Form 20-F for the year ended December 31, 2023, has been formatted in Inline XBRL |
| * | Filed previously |
| (P) | Paper filing |
105
Page |
||||
| F-2 | ||||
F-4 |
||||
Consolidated Financial Statements |
||||
| F-6 | ||||
| F-8 | ||||
| F-9 | ||||
| F-12 | ||||
| F-14 | ||||
| - | inspecting the supporting documentation prepared by the person in charge of construction field regarding rationale and reliability of the estimated total contract costs at completion including estimated material costs, labor costs and outsourcing costs for a selection of projects; |
| - | questioning the person in charge of construction field, and inspecting supporting documentation to test estimated material costs, labor costs and outsourcing costs for a selection of projects commenced in 2023; |
| - | questioning the Company’s finance manager and the person in charge of construction field, and inspecting documents as to the cause of any changes in estimated total contract costs at completion made during 2023 for a selection of projects; and |
| - | assessing the Company’s ability to accurately forecast estimated total contract costs at completion by comparing the actual total contract costs for a selection of construction contracts completed during 2023 against the estimated total contract costs at completion in prior year. |
(in millions of Won) |
Notes |
December 31, 2022 |
December 31, 2023 |
|||||||||
| Assets |
||||||||||||
| Cash and cash equivalents |
4,5,23 | ￦ |
8,053,108 | 6,670,879 | ||||||||
| Trade accounts and notes receivable, net |
6,17,23,29,30,38 | 9,702,142 | 10,802,989 | |||||||||
| Other receivables, net |
7,23,38 | 2,112,697 | 1,947,529 | |||||||||
| Other short-term financial assets |
8, 17, 23 |
10,909,920 | 11,403,166 | |||||||||
| Inventories |
9 | 16,133,403 | 14,557,419 | |||||||||
| Current income tax assets |
36 | 243,829 | 101,979 | |||||||||
| Assets held for sale |
10 | 12,003 | 406,945 | |||||||||
| Other current assets |
16 | 1,075,939 | 840,984 | |||||||||
| |
|
|
|
|||||||||
| Total current assets |
48,243,041 | 46,731,890 | ||||||||||
| |
|
|
|
|||||||||
| Long-term trade accounts and notes receivable, net |
6,23 | 24,033 | 42,516 | |||||||||
| Other receivables, net |
7,23,38 | 1,520,331 | 1,452,445 | |||||||||
| Other long-term financial assets |
8, 17, 23 |
2,332,538 | 2,708,325 | |||||||||
| Investments in associates and joint ventures |
11 | 4,996,551 | 5,020,264 | |||||||||
| Investment property, net |
13 ,17
|
1,074,031 | 1,616,294 | |||||||||
| Property, plant and equipment, net |
14 ,17
|
31,781,196 | 35,206,248 | |||||||||
| Intangible assets, net |
15 | 4,838,451 | 4,714,784 | |||||||||
| Defined benefit assets, net |
21 | 520,659 | 464,758 | |||||||||
| Deferred tax assets |
36 | 3,523,546 | 3,355,597 | |||||||||
| Other non-current assets |
16 | 167,373 | 173,195 | |||||||||
| |
|
|
|
|||||||||
| Total non-current assets |
50,778,709 | 54,754,426 | ||||||||||
| |
|
|
|
|||||||||
| Total assets |
￦ |
99,021,750 | 101,486,316 | |||||||||
| |
|
|
|
|||||||||
(in millions of Won) |
Notes |
December 31, 2022 |
December 31, 2023 |
|||||||||
| Liabilities |
||||||||||||
| Trade accounts and notes payable |
23,38 | ￦ |
5,520,807 | 5,782,825 | ||||||||
| Short-term borrowings and current installments of long-term borrowings |
4,17,23 | 11,915,994 | 10,959,217 | |||||||||
| Other payables |
18,23,38 | 2,865,868 | 2,737,478 | |||||||||
| Other short-term financial liabilities |
19,23 | 106,527 | 163,626 | |||||||||
| Current income tax liabilities |
36 | 502,685 | 319,096 | |||||||||
| Liabilities directly associated with the assets held for sale |
10 | 5 | 141,890 | |||||||||
| Provisions |
20 | 515,988 | 419,744 | |||||||||
| Other current liabilities |
22,29 ,30
|
2,006,831 | 1,943,860 | |||||||||
| |
|
|
|
|||||||||
| Total current liabilities |
23,434,705 | 22,467,736 | ||||||||||
| |
|
|
|
|||||||||
| Long-term trade accounts and notes payable |
23,38 | 15 | — | |||||||||
| Long-term borrowings, excluding current installments |
4,17,23 | 12,389,668 | 15,011,162 | |||||||||
| Other payables |
18,23 | 790,402 | 873,565 | |||||||||
| Other long-term financial liabilities |
19,23 | 87,052 | 153,782 | |||||||||
| Defined benefit liabilities, net |
21 | 37,707 | 38,754 | |||||||||
| Deferred tax liabilities |
36 | 2,924,552 | 2,760,234 | |||||||||
| Long-term provisions |
20 | 579,918 | 468,009 | |||||||||
| Other non-current liabilities |
22 | 585,834 | 114,474 | |||||||||
| |
|
|
|
|||||||||
| Total non-current liabilities |
17,395,148 | 19,419,980 | ||||||||||
| |
|
|
|
|||||||||
| Total liabilities |
40,829,853 | 41,887,716 | ||||||||||
| |
|
|
|
|||||||||
| Equity |
||||||||||||
| Share capital |
24 | 482,403 | 482,403 | |||||||||
| Capital surplus |
24,28 | 1,410,288 | 1,672,790 | |||||||||
| Reserves |
26 | (443,990 | ) | 67,256 | ||||||||
| Treasury shares |
27 | (1,892,308 | ) | (1,889,658 | ) | |||||||
| Retained earnings |
52,921,137 | 53,813,583 | ||||||||||
| |
|
|
|
|||||||||
| Equity attributable to owners of the controlling company |
52,477,530 | 54,146,374 | ||||||||||
| Non-controlling interests |
25 | 5,714,367 | 5,452,226 | |||||||||
| |
|
|
|
|||||||||
| Total equity |
58,191,897 | 59,598,600 | ||||||||||
| |
|
|
|
|||||||||
| Total liabilities and equity |
￦ |
99,021,750 | 101,486,316 | |||||||||
| |
|
|
|
|||||||||
(in millions of Won, except per share information) |
Notes |
2021 |
2022 |
2023 |
||||||||||||
Revenue |
29,30,38 | ￦ |
76,009,201 | 85,003,616 | 77,056,549 | |||||||||||
Cost of sales |
30,32,35,38 | (64,154,339 | ) | (77,321,199 | ) | (70,639,373 | ) | |||||||||
Gross profit |
11,854,862 | 7,682,417 | 6,417,176 | |||||||||||||
Selling and administrative expenses |
31,35 | |||||||||||||||
Reversal of (Impairment loss) on trade accounts and notes receivable |
23 | (40,153 | ) | (24,791 | ) | 17,785 | ||||||||||
Other administrative expenses |
28,32 | (2,209,809 | ) | (2,479,966 | ) | (2,669,687 | ) | |||||||||
Selling expenses |
(393,075 | ) | (294,482 | ) | (233,579 | ) | ||||||||||
Other operating income and expenses |
34 | |||||||||||||||
Reversal of (Impairment loss) on other receivables |
23 | 12,975 | (9,824 | ) | (283,699 | ) | ||||||||||
Other operating income |
577,997 | 592,017 | 394,345 | |||||||||||||
Other operating expenses |
35 | (1,027,492 | ) | (1,123,685 | ) | (904,343 | ) | |||||||||
Operating profit |
8,775,305 | 4,341,686 | 2,737,998 | |||||||||||||
Share of profit of equity-accounted investees, net |
11 | 649,569 | 676,260 | 269,678 | ||||||||||||
Finance income and costs |
23,33 | |||||||||||||||
Finance income |
2,730,110 | 4,834,011 | 3,830,746 | |||||||||||||
Finance costs |
(2,765,175 | ) | (5,804,466 | ) | (4,202,996 | ) |
||||||||||
Profit before income taxes |
9,389,809 | 4,047,491 | 2,635,426 | |||||||||||||
Income tax expense |
36 | (2,213,827 | ) | (461,534 | ) | (789,367 | ) | |||||||||
Profit |
7,175,982 | 3,585,957 | 1,846,059 | |||||||||||||
Other comprehensive income (loss) |
||||||||||||||||
Items that will not be reclassified subsequently to profit or loss : |
||||||||||||||||
Capital adjustment arising from investments in equity-accounted investees |
(17,886 | ) | 946 | 28,745 | ||||||||||||
Foreign currency translation differences |
38,672 | (48,701 | ) | 76,433 | ||||||||||||
Remeasurements of defined benefit plans |
21 | 51,155 | 105,769 | (118,548 | ) | |||||||||||
Net changes in fair value of equity investments at fair value through other comprehensive income |
23 | 214,888 | (10,076 | ) | 257,725 | |||||||||||
Items that are or may be reclassified subsequently to profit or loss : |
||||||||||||||||
Capital adjustment arising from investments in equity-accounted investees |
182,992 | 132,188 | 207,860 | |||||||||||||
Foreign currency translation differences |
347,469 | 52,725 | 34,118 | |||||||||||||
Gain or losses on valuation of derivatives |
23 | 309 | 1,023 | (1,292 | ) | |||||||||||
Other comprehensive income, net of tax |
817,599 | 233,874 | 485,041 | |||||||||||||
Total comprehensive income |
￦ |
7,993,581 | 3,819,831 | 2,331,100 | ||||||||||||
Profit attributable to : |
||||||||||||||||
Owners of the controlling company |
￦ |
6,606,728 | 3,157,536 | 1,698,202 | ||||||||||||
Non-controlling interests |
569,254 | 428,421 | 147,857 | |||||||||||||
Profit |
￦ |
7,175,982 | 3,585,957 | 1,846,059 | ||||||||||||
Total comprehensive income attributable to : |
||||||||||||||||
Owners of the controlling company |
￦ |
7,374,060 | 3,394,098 | 2,131,847 | ||||||||||||
Non-controlling interests |
619,521 | 425,733 | 199,253 | |||||||||||||
Total comprehensive income |
￦ |
7,993,581 | 3,819,831 | 2,331,100 | ||||||||||||
Earnings per share (in Won) |
||||||||||||||||
Basic earnings per share (in Won) |
37 | 87,191 | 41,634 | 22,383 | ||||||||||||
Diluted earnings per share (in Won) |
￦ |
85,240 | 39,296 | 22,383 | ||||||||||||
Attributable to owners of the controlling company |
Non- controlling interests |
Total |
||||||||||||||||||||||||||||||||||
(in millions of Won) |
Share capital |
Capital surplus |
Hybrid bonds |
Reserves |
Treasury shares |
Retained earnings |
Subtotal |
|||||||||||||||||||||||||||||
| Balance as of January 1, 2021 |
￦ |
482,403 | 1,320,003 | 199,384 | (1,380,918 | ) | (2,391,523 | ) | 46,064,477 | 44,293,826 | 3,309,697 | 47,603,523 | ||||||||||||||||||||||||
| Comprehensive income: |
||||||||||||||||||||||||||||||||||||
| Profit |
— | — | — | — | — | 6,606,728 | 6,606,728 | 569,254 | 7,175,982 | |||||||||||||||||||||||||||
| Other comprehensive income (loss) |
||||||||||||||||||||||||||||||||||||
| Remeasurements of defined benefit plans, net of tax |
— | — | — | — | — | 44,405 | 44,405 | 6,750 | 51,155 | |||||||||||||||||||||||||||
| Capital adjustment arising from investments in equity-accounted investees, net of tax |
— | — | — | 160,343 | — | — | 160,343 | 4,763 | 165,106 | |||||||||||||||||||||||||||
| Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax |
— | — | — | 205,924 | — | 8,948 | 214,872 | 16 | 214,888 | |||||||||||||||||||||||||||
| Foreign currency translation differences, net of tax |
— | — | — | 347,469 | — | — | 347,469 | 38,672 | 386,141 | |||||||||||||||||||||||||||
| Gain or losses on valuation of derivatives, net of tax |
— | — | — | 243 | — | — | 243 | 66 | 309 | |||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Total comprehensive income |
— | — | — | 713,979 | — | 6,660,081 | 7,374,060 | 619,521 | 7,993,581 | |||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Transactions with owners of the controlling company, recognized directly in equity: |
||||||||||||||||||||||||||||||||||||
| Year-end dividends |
— | — | — | — | — | (342,565 | ) | (342,565 | ) | (62,230 | ) | (404,795 | ) | |||||||||||||||||||||||
| Interim dividends |
— | — | — | — | — | (907,507 | ) | (907,507 | ) | — | (907,507 | ) | ||||||||||||||||||||||||
| Changes in subsidiaries |
— | — | — | — | — | — | — | 15,034 | 15,034 | |||||||||||||||||||||||||||
| Changes in ownership interests in subsidiaries |
— | 83,547 | — | — | — | — | 83,547 | 459,917 | 543,464 | |||||||||||||||||||||||||||
| Interest of hybrid bonds |
— | — | — | — | — | (9,200 | ) | (9,200 | ) | (7,254 | ) | (16,454 | ) | |||||||||||||||||||||||
| Acquisition of treasury shares |
— | — | — | — | (116,771 | ) | — | (116,771 | ) | — | (116,771 | ) | ||||||||||||||||||||||||
| Others |
— | (6,134 | ) | — | (46 | ) | — | 10,110 | 3,930 | (39 | ) | 3,891 | ||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Total transactions with owners of the controlling company |
— | 77,413 | — | (46 | ) | (116,771 | ) | (1,249,162 | ) | (1,288,566 | ) | 405,428 | (883,138 | ) | ||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Balance as of December 31, 2021 |
￦ |
482,403 | 1,397,416 | 199,384 | (666,985 | ) | (2,508,294 | ) | 51,475,396 | 50,379,320 | 4,334,646 | 54,713,966 | ||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Attributable to owners of the controlling company |
Non- controlling interests |
Total |
||||||||||||||||||||||||||||||||||
(in millions of Won) |
Share capital |
Capital surplus |
Hybrid bonds |
Reserves |
Treasury shares |
Retained earnings |
Subtotal |
|||||||||||||||||||||||||||||
| Balance as of January 1, 2022 |
￦ |
482,403 | 1,397,416 | 199,384 | (666,985 | ) | (2,508,294 | ) | 51,475,396 | 50,379,320 | 4,334,646 | 54,713,966 | ||||||||||||||||||||||||
| Comprehensive income: |
||||||||||||||||||||||||||||||||||||
| Profit |
— | — | — | — | — | 3,157,536 | 3,157,536 | 428,421 | 3,585,957 | |||||||||||||||||||||||||||
| Other comprehensive income (loss) |
||||||||||||||||||||||||||||||||||||
| Remeasurements of defined benefit plans, net of tax |
— | — | — | — | — | 67,167 | 67,167 | 38,602 | 105,769 | |||||||||||||||||||||||||||
| Capital adjustment arising from investments in equity-accounted investees, net of tax |
— | — | — | 126,278 | — | — | 126,278 | 6,856 | 133,134 | |||||||||||||||||||||||||||
| Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax |
— | — | — | 49,516 | — | (59,576 | ) | (10,060 | ) | (16 | ) | (10,076 | ) | |||||||||||||||||||||||
| Foreign currency translation differences, net of tax |
— | — | — | 52,725 | — | — | 52,725 | (48,701 | ) | 4,024 | ||||||||||||||||||||||||||
| Gain or losses on valuation of derivatives, net of tax |
— | — | — | 452 | — | — | 452 | 571 | 1,023 | |||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Total comprehensive income |
— | — | — | 228,971 | — | 3,165,127 | 3,394,098 | 425,733 | 3,819,831 | |||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Transactions with owners of the controlling company, recognized directly in equity: |
||||||||||||||||||||||||||||||||||||
| Year-end dividends |
— | — | — | — | — | (378,128 | ) | (378,128 | ) | (82,110 | ) | (460,238 | ) | |||||||||||||||||||||||
| Interim dividends |
— | — | — | — | — | (758,492 | ) | (758,492 | ) | — | (758,492 | ) | ||||||||||||||||||||||||
| Changes in subsidiaries |
— | — | — | — | — | — | — | 422,424 | 422,424 | |||||||||||||||||||||||||||
| Changes in ownership interests in subsidiaries |
— | (7,827 | ) | — | — | — | — | (7,827 | ) | 425,871 | 418,044 | |||||||||||||||||||||||||
| Interest of hybrid bonds |
— | — | — | — | — | (1,487 | ) | (1,487 | ) | (15,007 | ) | (16,494 | ) | |||||||||||||||||||||||
| Variation due to split |
— | — | (199,384 | ) | — | — | — | (199,384 | ) | 199,384 | — | |||||||||||||||||||||||||
| Disposal of treasury shares |
— | 9,491 | — | — | 48,512 | — | 58,003 | — | 58,003 | |||||||||||||||||||||||||||
| Retirement of treasury stock |
— | — | — | — | 567,474 | (583,485 | ) | (16,011 | ) | — | (16,011 | ) | ||||||||||||||||||||||||
| Share-based payment |
— | 12,115 | — | — | — | — | 12,115 | — | 12,115 | |||||||||||||||||||||||||||
| Others |
— | (907 | ) | — | (5,976 | ) | — | 2,206 | (4,677 | ) | 3,426 | (1,251 | ) | |||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Total transactions with owners of the controlling company |
— | 12,872 | (199,384 | ) | (5,976 | ) | 615,986 | (1,719,386 | ) | (1,295,888 | ) | 953,988 | (341,900 | ) | ||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Balance as of December 31, 2022 |
￦ |
482,403 | 1,410,288 | — | (443,990 | ) | (1,892,308 | ) | 52,921,137 | 52,477,530 | 5,714,367 | 58,191,897 | ||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Attributable to owners of the controlling company |
Non- controlling interests |
Total |
||||||||||||||||||||||||||||||||||
(in millions of Won) |
Share capital |
Capital surplus |
Hybrid bonds |
Reserves |
Treasury shares |
Retained earnings |
Subtotal |
|||||||||||||||||||||||||||||
| Balance as of January 1, 2023 |
￦ |
482,403 | 1,410,288 | — | (443,990 | ) | (1,892,308 | ) | 52,921,137 | 52,477,530 | 5,714,367 | 58,191,897 | ||||||||||||||||||||||||
| Comprehensive income: |
||||||||||||||||||||||||||||||||||||
| Profit |
— | — | — | — | — | 1,698,202 | 1,698,202 | 147,857 | 1,846,059 | |||||||||||||||||||||||||||
| Other comprehensive income (loss) |
||||||||||||||||||||||||||||||||||||
| Remeasurements of defined benefit plans, net of tax |
— | — | — | — | — | (83,148 | ) | (83,148 | ) | (35,400 | ) | (118,548 | ) | |||||||||||||||||||||||
| Capital adjustment arising from investments in equity-accounted investees, net of tax |
— | — | — | 225,591 | — | — | 225,591 | 11,014 | 236,605 | |||||||||||||||||||||||||||
| Net changes in fair value of equity investments at fair value through other comprehensive income, net of tax |
— | — | — | 257,122 | — | 603 | 257,725 | — | 257,725 | |||||||||||||||||||||||||||
| Foreign currency translation differences, net of tax |
— | — | — | 34,118 | — | — | 34,118 | 76,433 | 110,551 | |||||||||||||||||||||||||||
| Gain or losses on valuation of derivatives, net of tax |
— | — | — | (641 | ) | — | — | (641 | ) | (651 | ) | (1,292 | ) | |||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Total comprehensive income |
— | — | — | 516,190 | — | 1,615,657 | 2,131,847 | 199,253 | 2,331,100 | |||||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Transactions with owners of the controlling company, recognized directly in equity: |
||||||||||||||||||||||||||||||||||||
| Year-end dividends |
— | — | — | — | — | (151,698 | ) | (151,698 | ) | (94,690 | ) | (246,388 | ) | |||||||||||||||||||||||
| Interim dividends |
— | — | — | — | — | (569,072 | ) | (569,072 | ) | — | (569,072 | ) | ||||||||||||||||||||||||
| Changes in subsidiaries |
— | — | — | — | — | — | — | 5,805 | 5,805 | |||||||||||||||||||||||||||
| Changes in ownership interests in subsidiaries |
— | 250,363 | — | — | — | — | 250,363 | 12,383 | 262,746 | |||||||||||||||||||||||||||
| Interest of hybrid bonds |
— | — | — | — | — | — | — | (8,925 | ) | (8,925 | ) | |||||||||||||||||||||||||
| Repayment of hybrid bonds |
— | — | — | — | — | — | — | (339,837 | ) | (339,837 | ) | |||||||||||||||||||||||||
| Disposal of treasury shares |
— | 2,880 | — | — | 2,650 | — | 5,530 | — | 5,530 | |||||||||||||||||||||||||||
| Share-based payment |
— | 6,783 | — | — | — | — | 6,783 | 17,324 | 24,107 | |||||||||||||||||||||||||||
| Others |
— | 2,476 | — | (4,944 | ) | — | (2,441 | ) | (4,909 | ) | (53,454 | ) | (58,363 | ) | ||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Total transactions with owners of the controlling company |
— | 262,502 | — | (4,944 | ) | 2,650 | (723,211 | ) | (463,003 | ) | (461,394 | ) | (924,397 | ) | ||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Balance as of December 31, 2023 |
￦ |
482,403 | 1,672,790 | — | 67,256 | (1,889,658 | ) | 53,813,583 | 54,146,374 | 5,452,226 | 59,598,600 | |||||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
(in millions of Won) |
Notes |
2021 |
2022 |
2023 |
||||||||||||
| Cash flows from operating activities |
||||||||||||||||
| Profit |
￦ |
7,175,982 | 3,585,957 | 1,846,059 | ||||||||||||
| Adjustments for: |
||||||||||||||||
| Depreciation |
3,135,345 | 3,204,744 | 3,346,461 | |||||||||||||
| Amortization |
444,100 | 488,835 | 498,193 | |||||||||||||
| Finance income |
(1,270,044 | ) | (1,943,661 | ) | (1,850,756 | ) | ||||||||||
| Finance costs |
1,257,112 | 2,532,735 | 2,179,233 | |||||||||||||
| Income tax expense |
2,213,827 | 461,534 | 789,367 | |||||||||||||
| Gain on disposal of property, plant and equipment |
(12,016 | ) | (18,502 | ) | (9,387 | ) | ||||||||||
| Loss on disposal of property, plant and equipment |
95,720 | 111,082 | 125,823 | |||||||||||||
| Impairment losses on property, plant and equipment |
311,520 | 213,183 | 275,846 | |||||||||||||
| Gain on disposal of intangible assets |
(273 | ) | (291 | ) | (401 | ) | ||||||||||
| Gain on disposal of investments in subsidiaries, associates and joint ventures |
(85,981 | ) | (13,904 | ) | (197,088 | ) | ||||||||||
| Loss on disposal of investments in subsidiaries, associates and joint ventures |
12,882 | 12,400 | 18,843 | |||||||||||||
| Share of profit of equity-accounted investees |
(649,569 | ) | (676,260 | ) | (269,678 | ) | ||||||||||
| Expenses related to post-employment benefits |
243,567 | 228,611 | 206,614 | |||||||||||||
| Increase to provisions |
159,592 | 289,915 | 160,880 | |||||||||||||
| Impairment loss on trade and other receivables |
27,178 | 34,615 | 265,914 | |||||||||||||
| Loss on valuation of inventories |
78,783 | 259,678 | 309,317 | |||||||||||||
| Impairment loss on goodwill and intangible assets |
224,328 | 370,663 | 129,907 | |||||||||||||
| Gain on disposals of assets held for sale |
(60,208 | ) | (55,262 | ) | (1,312 | ) | ||||||||||
| Loss on disposal of assets held for sale |
— | 3,964 | 103,366 | |||||||||||||
| Compensation for insured losses |
(15,558 | ) | (236,344 | ) | (7,682 | ) | ||||||||||
| Others, net |
(21,456 | ) | 28,674 | (43,415 | ) | |||||||||||
| |
|
|
|
|
|
|||||||||||
| 6,088,849 | 5,296,409 | 6,030,045 | ||||||||||||||
| |
|
|
|
|
|
|||||||||||
| Changes in operating assets and liabilities |
40 | (7,044,310 | ) | (368,489 | ) | (1,087,529 | ) | |||||||||
| Interest received |
279,554 | 249,751 | 447,621 | |||||||||||||
| Interest paid |
(433,794 | ) | (560,766 | ) | (1,038,005 | ) | ||||||||||
| Dividends received |
782,053 | 757,502 | 696,941 | |||||||||||||
| Income taxes paid |
(588,969 | ) | (2,773,599 | ) | (727,437 | ) | ||||||||||
| |
|
|
|
|
|
|||||||||||
| Net cash provided by operating activities |
￦ |
6,259,365 | 6,186,765 | 6,167,695 | ||||||||||||
| |
|
|
|
|
|
|||||||||||
(in millions of Won) |
Notes |
2021 |
2022 |
2023 |
||||||||||
| Cash flows from investing activities |
||||||||||||||
| Acquisitions of short-term financial instruments |
￦ |
(41,797,503 | ) | (89,327,182 | ) | (39,830,719 | ) | |||||||
| Proceeds from disposal of short-term financial instruments |
40,336,417 | 91,539,884 | 40,174,440 | |||||||||||
| Acquisitions of long-term financial instruments |
(289,612 | ) | (21,638 | ) | (5,362 | ) | ||||||||
| Increase in loans |
(526,643 | ) | (1,087,409 | ) | (1,238,668 | ) | ||||||||
| Collection of loans |
568,536 | 1,086,964 | 1,369,763 | |||||||||||
| Acquisitions of securities |
(300,807 | ) | (493,054 | ) | (380,744 | ) | ||||||||
| Proceeds from disposal of securities |
273,935 | 332,724 | 142,791 | |||||||||||
| Acquisitions of investment in associates and joint ventures |
(492,435 | ) | (518,158 | ) | (417,603 | ) | ||||||||
| Proceeds from disposal of investment in associates and joint ventures |
61,013 | 169,365 | 142,316 | |||||||||||
| Acquisitions of property, plant and equipment |
(3,068,591 | ) | (4,927,586 | ) | (6,733,289 | ) | ||||||||
| Proceeds from (payment for) disposal of property, plant and equipment |
(11,117 | ) | 864 | (11,895 | ) | |||||||||
| Acquisitions of investment property |
(91,880 | ) | (1,561 | ) | (56,043 | ) | ||||||||
| Proceeds from disposal of investment property |
3,809 | 23,401 | 707 | |||||||||||
| Acquisitions of intangible assets |
(431,122 | ) | (492,873 | ) | (481,882 | ) | ||||||||
| Proceeds from disposal of intangible assets |
9,485 | 7,748 | 30,328 | |||||||||||
| Proceeds from disposal of assets held for sale |
67,293 | 111,488 | 4,850 | |||||||||||
| Increase in cash from acquisition of business, net of cash acquired |
5,472 | — | — | |||||||||||
| Collection of lease receivables |
97,701 | 54,614 | 52,657 | |||||||||||
| Cash outflows due to business combinations |
— | (901,223 | ) | (150,201 | ) | |||||||||
| Cash received as compensation for insured losses |
— | 236,344 | 7,682 | |||||||||||
| Others, net |
2,542 | (12,583 | ) | (7,352 | ) | |||||||||
| |
|
|
|
|
|
|||||||||
| Net cash used in investing activities |
(5,583,507 | ) | (4,219,871 | ) | (7,388,224 | ) | ||||||||
| |
|
|
|
|
|
|||||||||
| Cash flows from financing activities |
||||||||||||||
| Proceeds from borrowings |
4,358,955 | 4,553,746 | 7,817,217 | |||||||||||
| Repayment of borrowings |
(3,719,542 | ) | (4,138,054 | ) | (4,461,114 | ) | ||||||||
| Proceeds from (repayment of) short-term borrowings, net |
(329,897 | ) | 1,764,569 | (2,524,077 | ) | |||||||||
| Payment of cash dividends |
(1,310,920 | ) | (1,218,405 | ) | (815,451 | ) | ||||||||
| Repayment of hybrid bonds |
— | — | (340,000 | ) | ||||||||||
| Payment of interest of hybrid bonds |
(16,493 | ) | (16,494 | ) | (10,043 | ) | ||||||||
| Capital contribution from non-controlling interests and proceeds from disposal of subsidiary while maintaining control |
|
660,488 |
|
|
577,330 |
|
|
299,342 |
| |||||
| Capital deduction from non-controlling interests and additional acquisition of interests in subsidiaries |
|
(16,138 |
) |
|
(16,336 |
) |
|
(9,721 |
) | |||||
| Repayment of lease liabilities |
(281,288 | ) | (268,082 | ) | (222,829 | ) | ||||||||
| Acquisition of treasury shares |
(116,771 | ) | — | — | ||||||||||
| Others, net |
2,940 | 81,134 | 88,083 | |||||||||||
| |
|
|
|
|
|
|||||||||
| Net cash provided by (used in) financing activities |
40 | (768,666 | ) | 1,319,408 | (178,593 | ) | ||||||||
| |
|
|
|
|
|
|||||||||
| Effect of exchange rate fluctuation on cash held |
112,950 | (8,740 | ) | 16,719 | ||||||||||
| |
|
|
|
|
|
|||||||||
| Net increase in cash and cash equivalents |
20,142 | 3,277,562 | (1,382,403 | ) | ||||||||||
| Cash and cash equivalents at beginning of the period |
5,10 | 4,755,578 | 4,775,720 | 8,053,282 | ||||||||||
| |
|
|
|
|
|
|||||||||
| Cash and cash equivalents at end of the period |
5,10 | ￦ |
4,775,720 | 8,053,282 | 6,670,879 | |||||||||
| |
|
|
|
|
|
|||||||||
1. |
General Information |
| (a) | The controlling company |
| Shareholder’s name |
Number of shares |
Ownership (%) |
||||||
| National Pension Service |
5,393,999 | 6.38 | ||||||
| BlackRock Fund Advisors(*1) |
4,206,522 | 4.97 | ||||||
| Nippon Steel Corporation |
2,894,712 | 3.42 | ||||||
| Pohang University of Science and Technology |
1,981,047 | 2.34 | ||||||
| The Government of Singapore(GIC) |
1,759,571 | 2.08 | ||||||
| Others |
68,335,379 | 80.81 | ||||||
| |
|
|
|
|||||
| 84,571,230 | 100.00 | |||||||
| |
|
|
|
|||||
| (*1) | Includes shares held by subsidiaries and others. |
(b) |
Consolidated subsidiaries |
| Principal operations |
Ownership (%) |
|
||||||||||||||||||||||||||||
December 31, 2022 |
December 31, 2023 |
|||||||||||||||||||||||||||||
POSCO HOLDINGS INC. |
Subsidiaries |
Total |
POSCO HOLDINGS INC. |
Subsidiaries |
Total |
Region |
||||||||||||||||||||||||
[Domestic] |
||||||||||||||||||||||||||||||
| POSCO |
Steel, rolled products and plates | 100.00 |
— |
100.00 |
100.00 |
— |
100.00 |
Pohang | ||||||||||||||||||||||
| POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,LTD.) |
Engineering and construction | 52.80 |
— |
52.80 |
52.80 |
— |
52.80 |
Pohang | ||||||||||||||||||||||
| POSCO STEELEON Co., Ltd. |
Coated steel manufacturing | — |
56.87 |
56.87 |
— |
56.96 |
56.96 |
Pohang | ||||||||||||||||||||||
| POSCO DX (formerly, POSCO ICT) |
Computer hardware and software distribution | 65.38 |
— |
65.38 |
65.38 |
— |
65.38 |
Pohang | ||||||||||||||||||||||
| POSCO Research Institute |
Economic research and consulting | 100.00 |
— |
100.00 |
100.00 |
— |
100.00 |
Seoul | ||||||||||||||||||||||
| POSCO WIDE Co., Ltd. (formerly, POSCO O&M Co., Ltd.) |
Business facility maintenance | 47.17 |
52.83 |
100.00 |
100.00 |
— |
100.00 |
Seoul | ||||||||||||||||||||||
| POSCO A&C |
Architecture and consulting | 45.66 |
54.34 |
100.00 |
— |
100.00 |
100.00 |
Seoul | ||||||||||||||||||||||
| POSCO Venture Capital Co., Ltd. |
Investment in venture companies | 95.00 |
— |
95.00 |
100.00 |
— |
100.00 |
Pohang | ||||||||||||||||||||||
| eNtoB Corporation |
Electronic commerce | — |
69.32 |
69.32 |
— |
69.32 |
69.32 |
Seoul | ||||||||||||||||||||||
| POSCO FUTURE M CO.,LTD. (formerly, POSCO CHEMICAL CO., LTD.) |
Refractories, Anode/Cathode materials manufacturing and sales | 59.76 |
— |
59.76 |
59.75 |
— |
59.75 |
Pohang | ||||||||||||||||||||||
| POSCO FLOW Co., Ltd. |
Transporting and warehousing | 100.00 |
— |
100.00 |
100.00 |
— |
100.00 |
Gwangyang | ||||||||||||||||||||||
| POSCO M-TECH
|
Packing materials manufacturing and sales | — |
48.85 |
48.85 |
— |
48.94 |
48.94 |
Pohang | ||||||||||||||||||||||
| POSCO ENERGY CO., LTD.(*1) |
Generation of electricity | 100.00 |
— |
100.00 |
— |
— |
— |
Seoul | ||||||||||||||||||||||
| PNR |
Steel by product manufacturing and sales | — |
70.00 |
70.00 |
— |
70.00 |
70.00 |
Pohang | ||||||||||||||||||||||
| Future Creation Fund Postech Early Stage account |
Investment in venture companies | — |
40.00 |
40.00 |
— |
— |
— |
Seoul | ||||||||||||||||||||||
| POSCO WOMAN’S FUND |
Investment in venture companies | — |
40.00 |
40.00 |
— |
40.00 |
40.00 |
Seoul | ||||||||||||||||||||||
| SPH Co., Ltd. |
House manufacturing and management | — |
100.00 |
100.00 |
— |
— |
— |
Incheon | ||||||||||||||||||||||
| Principal operations |
Ownership (%) |
|
||||||||||||||||||||||||||||
December 31, 2022 |
December 31, 2023 |
|||||||||||||||||||||||||||||
POSCO HOLDINGS INC. |
Subsidiaries |
Total |
POSCO HOLDINGS INC. |
Subsidiaries |
Total |
Region |
||||||||||||||||||||||||
[Domestic] |
||||||||||||||||||||||||||||||
| POSCO Group University |
Education service and real estate business | 100.00 |
— |
100.00 |
100.00 |
— |
100.00 |
Incheon | ||||||||||||||||||||||
| Growth Ladder POSCO K-Growth Global Fund |
Investment in venture companies | — |
50.00 |
50.00 |
— |
50.00 |
50.00 |
Pohang | ||||||||||||||||||||||
| POSCO IH (formerly, POSCO Research & Technology) |
Intellectual Property Services and consulting | 100.00 |
— |
100.00 |
100.00 |
— |
100.00 |
Seoul | ||||||||||||||||||||||
| TANCHEON E&E |
Refuse derived fuel and power generation | — |
100.00 |
100.00 |
— |
100.00 |
100.00 |
Seoul | ||||||||||||||||||||||
| POSCO Humans |
Business assistance service | — |
100.00 |
100.00 |
— |
100.00 |
100.00 |
Pohang | ||||||||||||||||||||||
| Mapo Hibroad Parking Co., Ltd. |
Construction | — |
71.00 |
71.00 |
— |
71.00 |
71.00 |
Seoul | ||||||||||||||||||||||
| Busan E&E Co., Ltd. |
Refuse derived fuel and power generation | 70.00 |
— |
70.00 |
70.00 |
— |
70.00 |
Busan | ||||||||||||||||||||||
| POSCO INTERNATIONAL Corporation |
Trading, power generation, energy & resource development and others | 62.92 |
— |
62.92 |
73.21 |
— |
73.21 |
Incheon | ||||||||||||||||||||||
| Pohang Scrap Recycling Distribution Center Co., Ltd. |
Steel processing and sales | — |
51.00 |
51.00 |
— |
51.00 |
51.00 |
Pohang | ||||||||||||||||||||||
| Songdo Development PMC (Project Management Company) LLC. |
Housing business agency | — |
100.00 |
100.00 |
— |
100.00 |
100.00 |
Incheon | ||||||||||||||||||||||
| Korea Fuel Cell |
Fuel cell | — |
100.00 |
100.00 |
— |
100.00 |
100.00 |
Pohang | ||||||||||||||||||||||
| POSCO GEM 1 st Fund |
Investment in venture companies | 98.81 |
1.19 |
100.00 |
98.81 |
1.19 |
100.00 |
Pohang | ||||||||||||||||||||||
| POSCO MOBILITY SOLUTION |
STC, TMC, Plate manufacturing and sales | — |
100.00 |
100.00 |
— |
100.00 |
100.00 |
Cheonan | ||||||||||||||||||||||
| P&O Chemical Co., Ltd. |
Chemical production | — |
51.00 |
51.00 |
— |
51.00 |
51.00 |
Gwangyang | ||||||||||||||||||||||
| Posco New Growth |
Investment in venture companies | 99.67 |
0.18 |
99.85 |
99.86 |
0.14 |
100.00 |
Seoul | ||||||||||||||||||||||
| IMP Fund I |
Investment in venture companies | 98.04 |
— |
98.04 |
98.04 |
— |
98.04 |
Pohang | ||||||||||||||||||||||
| POSCO-Pilbara LITHIUM SOLUTION Co., Ltd. |
Lithium manufacturing and sales | 82.00 |
— |
82.00 |
82.00 |
— |
82.00 |
Gwangyang | ||||||||||||||||||||||
| POSCO-HY Clean Metal Co., Ltd. |
Non-ferrous metal smelting | — |
65.00 |
65.00 |
— |
65.00 |
65.00 |
Gwangyang | ||||||||||||||||||||||
| Consus Pf Private Real Estate Fund |
REITs | — |
66.67 |
66.67 |
— |
66.67 |
66.67 |
— |
||||||||||||||||||||||
| Principal operations |
Ownership (%) |
|
||||||||||||||||||||||||||||
December 31, 2022 |
December 31, 2023 |
|||||||||||||||||||||||||||||
POSCO HOLDINGS INC. |
Subsidiaries |
Total |
POSCO HOLDINGS INC. |
Subsidiaries |
Total |
Region |
||||||||||||||||||||||||
[Domestic] |
||||||||||||||||||||||||||||||
| New Energy Hub |
Electricity and gas supply | 50.00 |
50.00 |
100.00 |
— |
100.00 |
100.00 |
Gwangyang | ||||||||||||||||||||||
| Posco Busan Newdeal Fund |
Investment in venture companies | — |
32.00 |
32.00 |
— |
32.00 |
32.00 |
Pohang | ||||||||||||||||||||||
| Shinan Green Energy Co., LTD |
Electricity production | — |
54.53 |
54.53 |
— |
54.53 |
54.53 |
Shinahn | ||||||||||||||||||||||
| eSteel4U |
Wholesales and retail | — |
61.12 |
61.12 |
— |
61.12 |
61.12 |
Seoul | ||||||||||||||||||||||
| POSCO Social Investment Fund |
Investment in venture companies | 20.00 |
50.00 |
70.00 |
20.00 |
50.00 |
70.00 |
Pohang | ||||||||||||||||||||||
| POSCO Silicon Solution Co., Ltd |
Other engineering R&D industries | 100.00 |
— |
100.00 |
100.00 |
— |
100.00 |
Sejong | ||||||||||||||||||||||
| Consus Pf Private Real Estate Fund No.2 |
Real estate development | — |
66.67 |
66.67 |
— |
66.67 |
66.67 |
— | ||||||||||||||||||||||
| POSCO GS Eco Materials Co., Ltd |
Rechargeable battery | 100.00 |
— |
100.00 |
51.00 |
— |
51.00 |
Seoul | ||||||||||||||||||||||
| POSCO Lithium Solution Co., Ltd. |
Lithium manufacturing and sales | 100.00 |
— |
100.00 |
100.00 |
— |
100.00 |
Gwangyang | ||||||||||||||||||||||
| QSONE Co.,Ltd.(*3) |
Real estate rental | — |
— |
— |
100.00 |
— |
100.00 |
Seoul | ||||||||||||||||||||||
| POSCO PS Tech |
Maintenance service | — |
— |
— |
— |
100.00 |
100.00 |
Pohang | ||||||||||||||||||||||
| POSCO PR Tech |
Maintenance service | — |
— |
— |
— |
100.00 |
100.00 |
Pohang | ||||||||||||||||||||||
| POSCO PH Solution |
Maintenance service | — |
— |
— |
— |
100.00 |
100.00 |
Pohang | ||||||||||||||||||||||
| POSCO GYS Tech |
Maintenance service | — |
— |
— |
— |
100.00 |
100.00 |
Gwangyang | ||||||||||||||||||||||
| POSCO GYR Tech |
Maintenance service | — |
— |
— |
— |
100.00 |
100.00 |
Gwangyang | ||||||||||||||||||||||
| POSCO GY Solution |
Maintenance service | — |
— |
— |
— |
100.00 |
100.00 |
Gwangyang | ||||||||||||||||||||||
| PCC Facilities Component Fund |
Investment Association | — |
— |
— |
— |
60.00 |
60.00 |
Pohang | ||||||||||||||||||||||
| POSCO HOLDINGS CVC 2nd Fund |
Investment in new technologies business | — |
— |
— |
98.80 |
1.20 |
100.00 |
Pohang | ||||||||||||||||||||||
| International Energy Expansion for Technology Innovation Fund |
Investment in new technologies business | — |
— |
— |
— |
60.00 |
60.00 |
Pohang | ||||||||||||||||||||||
| Principal operations |
Ownership (%) |
Region | ||||||||||||||||||||||||||
December 31, 2022 |
December 31, 2023 |
|||||||||||||||||||||||||||
POSCO HOLDINGS INC. |
Subsidiaries |
Total |
POSCO HOLDINGS INC. |
Subsidiaries |
Total |
|||||||||||||||||||||||
[Foreign] |
||||||||||||||||||||||||||||
| POSCO America Corporation |
Research&Consulting | 99.45 | 0.55 | 100.00 | 99.45 | 0.54 | 99.99 | USA | ||||||||||||||||||||
| POSCO AUSTRALIA PTY LTD |
Raw material sales & mine development | 100.00 | — | 100.00 | 100.00 | — | 100.00 | Australia | ||||||||||||||||||||
| POSCO Canada Ltd. |
Coal sales | 100.00 | — | 100.00 | 100.00 | — | 100.00 | Canada | ||||||||||||||||||||
| POSCO Asia Co., Ltd. |
Finance | 100.00 | — | 100.00 | 100.00 | — | 100.00 | China | ||||||||||||||||||||
| POSCO-CTPC Co., Ltd. |
Steel manufacturing and sales | 100.00 | — | 100.00 | 100.00 | — | 100.00 | China | ||||||||||||||||||||
| POSCO E&C Vietnam Co., Ltd. |
Steel structure manufacturing and sales | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Vietnam | ||||||||||||||||||||
| POSCO (Zhangjiagang) Stainless Steel Co., Ltd. |
Stainless steel manufacturing and sales | 58.60 | 23.88 | 82.48 | 58.60 | 23.88 | 82.48 | China | ||||||||||||||||||||
| POSCO (Thailand) Company Limited |
Steel manufacturing and sales | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Thailand | ||||||||||||||||||||
| POSCO-MKPC SDN BHD |
Steel manufacturing and sales | — | 70.00 | 70.00 | — | 70.00 | 70.00 | Malaysia | ||||||||||||||||||||
| Qingdao Pohang Stainless Steel Co., Ltd. |
Stainless steel manufacturing and sales | 70.00 | 30.00 | 100.00 | 70.00 | 30.00 | 100.00 | China | ||||||||||||||||||||
| POSCO (Suzhou) Automotive Processing Center Co., Ltd. |
Steel manufacturing and sales | 90.00 | 10.00 | 100.00 | 90.00 | 10.00 | 100.00 | China | ||||||||||||||||||||
| POSCO-China Qingdao Processing Center Co. Ltd. |
Steel manufacturing and sales | 100.00 | — | 100.00 | 100.00 | — | 100.00 | China | ||||||||||||||||||||
| POS-ORE PTY LTD |
Iron ore development and sales | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Australia | ||||||||||||||||||||
| POSCO-China Holding Corp. |
Holding company | 100.00 | — | 100.00 | 100.00 | — | 100.00 | China | ||||||||||||||||||||
| POSCO JAPAN Co., Ltd. |
Steel Marketing, demand development and technology research |
100.00 | — | 100.00 | 100.00 | — | 100.00 | Japan | ||||||||||||||||||||
| POS-CD PTY LTD |
Coal sales | — | 100.00 | 100.00 | — | — | — | Australia | ||||||||||||||||||||
| POS-GC PTY LTD |
Coal sales | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Australia | ||||||||||||||||||||
| POSCO-India Private Limited |
Steel manufacturing and sales | — | 100.00 | 100.00 | — | 100.00 | 100.00 | India | ||||||||||||||||||||
| POSCO-India Pune Processing Center. Pvt. Ltd. |
Steel manufacturing and sales | 65.00 | — | 65.00 | 65.00 | — | 65.00 | India | ||||||||||||||||||||
| POSCO Japan PC CO., LTD |
Steel manufacturing and sales | — | 86.12 | 86.12 | — | 86.12 | 86.12 | Japan | ||||||||||||||||||||
| POSCO-CFPC Co., Ltd. |
Steel manufacturing and sales | 44.66 | 55.34 | 100.00 | 44.66 | 55.34 | 100.00 | China | ||||||||||||||||||||
| Principal operations |
Ownership (%) |
Region | ||||||||||||||||||||||||||
December 31, 2022 |
December 31, 2023 |
|||||||||||||||||||||||||||
|
POSCO HOLDINGS INC. |
Subsidiaries |
Total |
POSCO HOLDINGS INC. |
Subsidiaries |
Total |
|||||||||||||||||||||||
[Foreign] |
||||||||||||||||||||||||||||
| POSCO E&C CHINA Co., Ltd. |
Civil engineering and construction | — | 100.00 | 100.00 | — | 100.00 | 100.00 | China | ||||||||||||||||||||
| POSCO MPPC S.A. de C.V. |
Steel manufacturing and sales | 21.02 | 75.29 | 96.31 | 21.02 | 75.29 | 96.31 | Mexico | ||||||||||||||||||||
| Zhangjigang Pohang Port Co., Ltd. |
Loading and unloading service | — | 100.00 | 100.00 | — | 100.00 | 100.00 | China | ||||||||||||||||||||
| POSCO-VIETNAM Co., Ltd. |
Steel manufacturing and sales | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Vietnam | ||||||||||||||||||||
| POSCO MEXICO S.A. DE C.V. |
Automotive steel sheet manufacturing and sales | 83.28 | 14.88 | 98.16 | — | 98.16 | 98.16 | Mexico | ||||||||||||||||||||
| POSCO-Poland Wroclaw Processing Center Sp. z o. o. |
Steel manufacturing and sales | 60.00 | — | 60.00 | — | 60.00 | 60.00 | Poland | ||||||||||||||||||||
| POS-NP PTY LTD |
Coal sales | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Australia | ||||||||||||||||||||
| DAEWOO INTERNATIONAL SHANGHAI WAIGAOQIAO CO., LTD |
Intermediary trade & bonded warehouse operation
|
— | 100.00 | 100.00 | — | 100.00 | 100.00 | China | ||||||||||||||||||||
| PT. Bio Inti Agrindo |
Forest resources development | — | 85.00 | 85.00 | — | 85.00 | 85.00 | Indonesia | ||||||||||||||||||||
| POSCO ENGINEERING AND CONSTRUCTION AUSTRALIA (POSCO E&C AUSTRALIA) PTY LTD |
Construction and engineering service | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Australia | ||||||||||||||||||||
| POSCO-TISCO (JILIN) PROCESSING CENTER Co., Ltd. |
Steel manufacturing and sales | 50.00 | 10.00 | 60.00 | 50.00 | 10.00 | 60.00 | China | ||||||||||||||||||||
| POSCO Thainox Public Company Limited |
STS cold-rolled steel manufacturing and sales | — | 74.56 | 74.56 | — | 74.56 | 74.56 | Thailand | ||||||||||||||||||||
| HUNCHUN POSCO HMM INTERNATIONAL LOGISTICS CO., LTD. |
Logistics | — | 81.55 | 81.55 | — | 81.55 | 81.55 | China | ||||||||||||||||||||
| POSCO INTERNATIONAL VIETNAM CO., LTD |
Trading business | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Vietnam | ||||||||||||||||||||
| POSCO (Chongqing) Automotive Processing Center Co., Ltd. |
Steel manufacturing and sales | — | 100.00 | 100.00 | — | 100.00 | 100.00 | China | ||||||||||||||||||||
| SUZHOU POSCO-CORE TECHNOLOGY CO., LTD. |
Component manufacturing and sales | — | 100.00 | 100.00 | — | 100.00 | 100.00 | China | ||||||||||||||||||||
| PT.KRAKATAU POSCO FUTUREM (formerly, PT.Krakatau Posco Chemical Calcination) |
Quicklime manufacturing and sales | — | 80.00 | 80.00 | — | 80.00 | 80.00 | Indonesia | ||||||||||||||||||||
| POSCO AFRICA (PROPRIETARY) LIMITED |
Mine development | 100.00 | — | 100.00 | 100.00 | — | 100.00 | South Africa | ||||||||||||||||||||
| Principal operations |
Ownership (%) |
Region | ||||||||||||||||||||||||||
December 31, 2022 |
December 31, 2023 |
|||||||||||||||||||||||||||
|
POSCO HOLDINGS INC. |
Subsidiaries |
Total |
POSCO HOLDINGS INC. |
Subsidiaries |
Total |
|||||||||||||||||||||||
[Foreign] |
||||||||||||||||||||||||||||
| POSCO DX BRASIL |
IT service and engineering | — | 100.00 | 100.00 | — | — | — | Brazil | ||||||||||||||||||||
| POSCO Center Beijing |
Real estate development, rental and management
|
— | 100.00 | 100.00 | — | 100.00 | 100.00 | China | ||||||||||||||||||||
| POSCO-Malaysia SDN. BHD. |
Steel manufacturing and sales | — | 95.42 | 95.42 | — | 95.42 | 95.42 | Malaysia | ||||||||||||||||||||
| PT KRAKATAU BLUE WATER |
Wastewater treatment facilities operation and maintenance
|
— | 67.00 | 67.00 | — | 67.00 | 67.00 | Indonesia | ||||||||||||||||||||
| POSCO INTERNATIONAL MYANMAR CO., LTD. |
Trading business | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Myanmar | ||||||||||||||||||||
| POSCO-Italy Processing Center |
Stainless steel sheet manufacturing and sales | 88.89 | 11.11 | 100.00 | 88.89 | 11.11 | 100.00 | Italy | ||||||||||||||||||||
| Myanmar POSCO C&C Company, Limited. |
Steel manufacturing and sales | — | 70.00 | 70.00 | — | 70.00 | 70.00 | Myanmar | ||||||||||||||||||||
| POSCO DX VIETNAM |
IT service and electric control engineering | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Vietnam | ||||||||||||||||||||
| POSCO INTERNATIONAL GLOBAL DEVELOPMENT PTE.LTD. |
Real estate development | — | 75.00 | 75.00 | — | 75.00 | 75.00 | Singapore | ||||||||||||||||||||
| Myanmar POSCO Engineering & Construction Company, Limited. |
Construction and engineering service | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Myanmar | ||||||||||||||||||||
| POS-Minerals Corporation |
Mine development management and sales | — | 100.00 | 100.00 | — | 100.00 | 100.00 | USA | ||||||||||||||||||||
| POSCO(Wuhu) Automotive Processing Center Co., Ltd. |
Steel manufacturing and sales | 68.57 | 31.43 | 100.00 | 68.57 | 31.43 | 100.00 | China | ||||||||||||||||||||
| POSCO Engineering and Construction India Private Limited |
Civil engineering and construction | — | 100.00 | 100.00 | — | 100.00 | 100.00 | India | ||||||||||||||||||||
| POSCO COATED STEEL (THAILAND) CO., LTD. |
Vehicle steel manufacturing and sales | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Thailand | ||||||||||||||||||||
| POSCO INTERNATIONAL AMARA Co., Ltd. |
Real estate development | — | 85.00 | 85.00 | — | 85.00 | 85.00 | Myanmar | ||||||||||||||||||||
| POSCO WIDE-CHINA CO., LTD |
Business facility maintenance | — | 100.00 | 100.00 | — | 100.00 | 100.00 | China | ||||||||||||||||||||
| POSCO-Mexico Villagran Wire-rod
Processing Center |
Steel manufacturing and sales | 56.75 | 10.00 | 66.75 | — | 66.75 | 66.75 | Mexico | ||||||||||||||||||||
| POSCO ChengDu Processing Center |
Steel manufacturing and sales | — | 43.00 | 43.00 | — | 43.00 | 43.00 | China | ||||||||||||||||||||
| Principal operations |
Ownership (%) |
Region | ||||||||||||||||||||||||||
December 31, 2022 |
December 31, 2023 |
|||||||||||||||||||||||||||
|
POSCO HOLDINGS INC. |
Subsidiaries |
Total |
POSCO HOLDINGS INC. |
Subsidiaries |
Total |
|||||||||||||||||||||||
[Foreign] |
||||||||||||||||||||||||||||
| POSCO(Suzhou) Steel Processing Center CO., LTD. |
Steel manufacturing and sales | — | 100.00 | 100.00 | — | 100.00 | 100.00 | China | ||||||||||||||||||||
| POSCO E&C SMART S DE RL DE CV |
Civil engineering and construction | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Mexico | ||||||||||||||||||||
| POSCO Philippine Manila Processing Center, Inc. |
Steel manufacturing and sales | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Philippines | ||||||||||||||||||||
| POSCO E&C HOLDINGS CO., Ltd. |
Holding company | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Thailand | ||||||||||||||||||||
| POSCO INTERNATIONAL POWER (PNGLAE) LTD. |
Electricity production | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Papua New Guinea | ||||||||||||||||||||
| PT.KRAKATAU POSCO SOCIAL ENTERPRISE SERVICES INDONESIA |
Social enterprise | — | 100.00 | 100.00 | — | 99.91 | 99.91 | Indonesia | ||||||||||||||||||||
| Ventanas Philippines Construction Inc |
Construction | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Philippines | ||||||||||||||||||||
| SANPU TRADING Co., Ltd. |
Raw material trading | — | 70.04 | 70.04 | — | 70.04 | 70.04 | China | ||||||||||||||||||||
| Zhangjiagang BLZ Pohang International Trading |
Steel Intermediate trade | — | 100.00 | 100.00 | — | 100.00 | 100.00 | China | ||||||||||||||||||||
| POSCO RU Limited Liability Company |
Trade and business development | 100.00 | — | 100.00 | 100.00 | — | 100.00 | Russia | ||||||||||||||||||||
| GOLDEN LACE POSCO INTERNATIONAL CO., LTD. |
Rice processing | — | 60.00 | 60.00 | — | 60.00 | 60.00 | Myanmar | ||||||||||||||||||||
| POSCO DX China CO., LTD |
IT service and DVR business | — | 100.00 | 100.00 | — | 100.00 | 100.00 | China | ||||||||||||||||||||
| Pos-Sea Pte Ltd |
Steel Intermediate trade | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Singapore | ||||||||||||||||||||
| POSCO Europe Steel Distribution Center |
Logistics & Steel sales | — | 70.00 | 70.00 | — | 70.00 | 70.00 | Slovenia | ||||||||||||||||||||
| POSCO ENGINEERING (THAILAND) CO., LTD. |
Construction and engineering service | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Thailand | ||||||||||||||||||||
| POSCO VST CO., LTD. |
Stainless steel sheet manufacturing and sales | 95.65 | — | 95.65 | 95.65 | — | 95.65 | Vietnam | ||||||||||||||||||||
| POSCO INTERNATIONAL UKRAINE, LLC. |
Grain sales | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Ukraine | ||||||||||||||||||||
| Zhangjiagang Pohang Refractories Co., Ltd. |
Refractory materials sales & furnace maintenance
|
— | 51.00 | 51.00 | — | 51.00 | 51.00 | China | ||||||||||||||||||||
| POSCO Maharashtra Steel Private Limited |
Steel manufacturing and sales | 100.00 | — | 100.00 | 100.00 | — | 100.00 | India | ||||||||||||||||||||
| POSCO INDIA PROCESSING CENTER PRIVATE LIMITED |
Steel manufacturing and sales | 93.34 | 1.98 | 95.32 | 93.34 | 1.98 | 95.32 | India | ||||||||||||||||||||
| POSCO TNPC Otomotiv Celik San. Ve Tic. A.S |
Steel manufacturing and sales | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Turkiye | ||||||||||||||||||||
| Principal operations |
Ownership (%) |
Region | ||||||||||||||||||||||||||
December 31, 2022 |
December 31, 2023 |
|||||||||||||||||||||||||||
POSCO HOLDINGS INC. |
Subsidiaries |
Total |
POSCO HOLDINGS INC. |
Subsidiaries |
Total |
|||||||||||||||||||||||
[Foreign] |
||||||||||||||||||||||||||||
| POSCO Vietnam Processing Center Joint Stock Company |
Steel manufacturing and sales |
94.05 |
5.95 |
100.00 |
84.04 |
15.96 |
100.00 |
Vietnam | ||||||||||||||||||||
| POSCO(Liaoning) Automotive Processing Center Co., Ltd. |
Steel manufacturing and sales |
90.00 |
10.00 |
100.00 |
90.00 |
10.00 |
100.00 |
China | ||||||||||||||||||||
| POSCO-Indonesia Jakarta Processing Center |
Steel manufacturing and sales |
70.51 |
21.69 |
92.20 |
— |
92.20 |
92.20 |
Indonesia | ||||||||||||||||||||
| PT.MOTTA RESOURCES INDONESIA |
Mine development |
65.00 |
— |
65.00 |
65.00 |
— |
65.00 |
Indonesia | ||||||||||||||||||||
| POSCO TMC INDIA PRIVATE LIMITED |
Steel manufacturing and sales |
— |
100.00 |
100.00 |
— |
100.00 |
100.00 |
India | ||||||||||||||||||||
| POSCO AMERICA ALABAMA PROCESSING CENTER CO., LTD. |
Steel manufacturing and sales |
— |
97.80 |
97.80 |
— |
97.80 |
97.80 |
USA | ||||||||||||||||||||
| POSCO(Yantai) Automotive Processing Center Co., Ltd. |
Steel manufacturing and sales |
90.00 |
10.00 |
100.00 |
90.00 |
10.00 |
100.00 |
China | ||||||||||||||||||||
| POSCO India Steel Distribution Center Private Ltd. |
Steel logistics |
— |
100.00 |
100.00 |
— |
100.00 |
100.00 |
India | ||||||||||||||||||||
| POSCO YAMATO VINA STEEL JOINT STOCK COMPANY |
Steel manufacturing and sales |
— |
51.00 |
51.00 |
— |
51.00 |
51.00 |
Vietnam | ||||||||||||||||||||
| PT.POSCO DX INDONESIA |
IT service and electric control engineering |
— |
66.99 |
66.99 |
— |
66.99 |
66.99 |
Indonesia | ||||||||||||||||||||
| POSCO NCR Coal Ltd. |
Coal sales |
— |
100.00 |
100.00 |
— |
100.00 |
100.00 |
Canada | ||||||||||||||||||||
| POSCO WA PTY LTD |
Iron ore sales & mine development | 100.00 |
— |
100.00 |
100.00 |
— |
100.00 |
Australia | ||||||||||||||||||||
| POSCO AUSTRALIA GP PTY LIMITED |
Resource development |
— |
100.00 |
100.00 |
— |
100.00 |
100.00 |
Australia | ||||||||||||||||||||
| PT. KRAKATAU POSCO ENERGY |
Electricity production construction and operation |
— |
90.00 |
90.00 |
— |
55.00 |
55.00 |
Indonesia | ||||||||||||||||||||
| POSCO INTERNATIONAL AMERICA CORP. |
Trading business |
— |
100.00 |
100.00 |
— |
100.00 |
100.00 |
USA | ||||||||||||||||||||
| POSCO INTERNATIONAL Deutschland GMBH |
Trading business |
— |
100.00 |
100.00 |
— |
100.00 |
100.00 |
Germany | ||||||||||||||||||||
| POSCO INTERNATIONAL JAPAN CORP. |
Trading business |
— |
100.00 |
100.00 |
— |
100.00 |
100.00 |
Japan | ||||||||||||||||||||
| POSCO INTERNATIONAL SINGAPORE PTE. LTD. |
Trading business |
— |
100.00 |
100.00 |
— |
100.00 |
100.00 |
Singapore | ||||||||||||||||||||
| POSCO INTERNATIONAL ITALIA S.R.L. |
Trading business |
— |
100.00 |
100.00 |
— |
100.00 |
100.00 |
Italy | ||||||||||||||||||||
| POSCO INTERNATIONAL (CHINA) CO., LTD |
Trading business |
— |
100.00 |
100.00 |
— |
100.00 |
100.00 |
China | ||||||||||||||||||||
| POSCO INTERNATIONAL TEXTILE LLC. |
Textile manufacturing |
— |
100.00 |
100.00 |
— |
100.00 |
100.00 |
Uzbekistan | ||||||||||||||||||||
| Principal operations |
Ownership (%) |
Region | ||||||||||||||||||||||||||
December 31, 2022 |
December 31, 2023 |
|||||||||||||||||||||||||||
|
POSCO HOLDINGS INC. |
Subsidiaries |
Total |
POSCO HOLDINGS INC. |
Subsidiaries |
Total |
|||||||||||||||||||||||
[Foreign] |
||||||||||||||||||||||||||||
| POSCO INTERNATIONAL AUSTRALIA HOLDINGS PTY. LTD. |
Resource development | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Australia | ||||||||||||||||||||
| POSCO MAURITIUS LIMITED |
Coal development and sales | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Mauritius | ||||||||||||||||||||
| PT. KRAKATAU POSCO |
Steel manufacturing and sales | 50.00 | — | 50.00 | — | 50.00 | 50.00 | Indonesia | ||||||||||||||||||||
| POSCO INTERNATIONAL MEXICO, S.A de C.V.. |
Trading business | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Mexico | ||||||||||||||||||||
| POSCO INTERNATIONAL MALAYSIA SDN BHD |
Trading business | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Malaysia | ||||||||||||||||||||
| PT.POSCO INDONESIA INTI |
Consulting | 100.00 | — | 100.00 | 100.00 | — | 100.00 | Indonesia | ||||||||||||||||||||
| POSCO INTERNATIONAL SHANGHAI CO., LTD. |
Trading business | — | 100.00 | 100.00 | — | 100.00 | 100.00 | China | ||||||||||||||||||||
| PGSF, L.P. |
Investment in bio tech Industry | — | 100.00 | 100.00 | — | — | — | USA | ||||||||||||||||||||
| POSCO INTERNATIONAL INDIA PVT., LTD |
Trading business | — | 100.00 | 100.00 | — | 100.00 | 100.00 | India | ||||||||||||||||||||
| POSCO(Dalian) IT Center Development Co., Ltd. |
Real estate development and investment | — | 100.00 | 100.00 | — | 100.00 | 100.00 | China | ||||||||||||||||||||
| PT. POSCO E&C INDONESIA |
Civil engineering and construction | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Indonesia | ||||||||||||||||||||
| HUME COAL PTY LTD |
Raw material manufacturing | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Australia | ||||||||||||||||||||
| Brazil Sao Paulo Steel Processing Center |
Steel manufacturing and sales | — | 76.00 | 76.00 | — | 76.00 | 76.00 | Brazil | ||||||||||||||||||||
| POSCO ENGINEERING & CONSTRUCTION DO BRAZIL LTDA. |
Construction | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Brazil | ||||||||||||||||||||
| POSCO ASSAN TST STEEL INDUSTRY Inc |
Steel manufacturing and sales | 60.00 | 10.00 | 70.00 | 60.00 | 10.00 | 70.00 | Turkiye | ||||||||||||||||||||
| HONG KONG POSCO E&C (CHINA) INVESTMENT Co., Ltd. |
Real estate development and investment | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Hongkong | ||||||||||||||||||||
| JB CLARK HILLS |
Apartment construction | — | 70.00 | 70.00 | — | 70.00 | 70.00 | Philippines | ||||||||||||||||||||
| POS-LT Pty Ltd |
Lithium mining investment | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Australia | ||||||||||||||||||||
| ZHEJIANG POSCO-HUAYOU ESM CO., LTD |
Anode material manufacturing | 18.70 | 41.30 | 60.00 | 14.67 | 45.33 | 60.00 | China | ||||||||||||||||||||
| POSCO Argentina S.A.U. |
Mineral exploration/manufacturing/sales | 100.00 | — | 100.00 | 100.00 | — | 100.00 | Argentina | ||||||||||||||||||||
| GRAIN TERMINAL HOLDING PTE. LTD. |
Trading business | — | 75.00 | 75.00 | — | 75.00 | 75.00 | Singapore | ||||||||||||||||||||
| Mykolaiv Milling Works PJSC. |
Grain trading | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Ukraine | ||||||||||||||||||||
| Principal operations |
Ownership (%) |
Region | ||||||||||||||||||||||||||
December 31, 2022 |
December 31, 2023 |
|||||||||||||||||||||||||||
|
POSCO HOLDINGS INC. |
Subsidiaries |
Total |
POSCO HOLDINGS INC. |
Subsidiaries |
Total |
|||||||||||||||||||||||
[Foreign] |
||||||||||||||||||||||||||||
| Yuzhnaya Stevedoring Company Limited LLC. |
Cargo handling | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Ukraine | ||||||||||||||||||||
| Posco International (Thailand) Co., Ltd. |
Trade | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Thailand | ||||||||||||||||||||
| PT POSCO INTERNATIONAL INDONESIA |
Trade | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Indonesia | ||||||||||||||||||||
| PEC POWERCON SDN. BHD. |
Construction and engineering service | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Malaysia | ||||||||||||||||||||
| Poland Legnica Sourcing Center Sp. z o.o |
Non-ferrous metal Smetling | 100.00 | — | 100.00 | 100.00 | — | 100.00 | Poland | ||||||||||||||||||||
| POSCO INTERNATIONAL E&P MALAYSIA SDN. BHD. |
Extraction of Crude petroleum and Natural gas | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Malaysia | ||||||||||||||||||||
| AGPA PTE. LTD. |
Holding company | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Singapore | ||||||||||||||||||||
| Senex Holdings PTY LTD(*2) |
Resource Development | — | 50.10 | 50.10 | — | 50.10 | 50.10 | Australia | ||||||||||||||||||||
| Posco International Mexico e-Mobility S.A DE C.V. |
Electric Vehicle Parts Manufacturing | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Mexico | ||||||||||||||||||||
| Posco Future Materials Canada Inc. (formerly, POSCO CHEMICAL CANADA INC) |
Holding company | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Canada | ||||||||||||||||||||
| ULTIUM CAM GP INC. |
Holding company | — | 85.00 | 85.00 | — | 85.00 | 85.00 | Canada | ||||||||||||||||||||
| ULTIUM CAM LIMITED PARTNERSHIP |
Anode material manufacturing | — | 85.00 | 85.00 | — | 85.00 | 85.00 | Canada | ||||||||||||||||||||
| POSCO(Wuhan) Automotive Processing Center Co.,Ltd |
Steel manufacturing and sales | 68.57 | 31.43 | 100.00 | 68.57 | 31.43 | 100.00 | China | ||||||||||||||||||||
| POSCO BRAZIL LTDA |
Office Administration, Management Consulting | — | 100.00 | 100.00 | — | 100.00 | 100.00 | Brazil | ||||||||||||||||||||
| Port Hedland Green Steel Pty Ltd |
Iron and steel manufacturing | — | — | — | — | 100.00 | 100.00 | Australia | ||||||||||||||||||||
| PT AGPA REFINERY COMPLEX |
Animal/vegetable oil manufacturing | — | — | — | — | 60.00 | 60.00 | Indonesia | ||||||||||||||||||||
| POSCO MOBILITY SOLUTION POLAND Sp. z o.o., |
Manufacturing, automobile motor parts | — | — | — | — | 100.00 | 100.00 | Poland | ||||||||||||||||||||
| PT POSCO INTERNATIONAL ENP INDONESIA |
Crude oil and natural gas | — | — | — | — | 100.00 | 100.00 | Indonesia | ||||||||||||||||||||
| POSCO INTERNATIONAL E&P USA Inc. |
Carbon capture and storage, resource development | — | — | — | — | 100.00 | 100.00 | USA | ||||||||||||||||||||
| POSCO FLOW CANADA INC. |
Transporting and warehousing | — | — | — | — | 100.00 | 100.00 | Canada | ||||||||||||||||||||
| POSCO FLOW (Shanghai) Co.,Ltd |
Transporting | — | — | — | — | 100.00 | 100.00 | China | ||||||||||||||||||||
| (*1) | POSCO ENERGY CO., LTD. was merged into POSCO INTERNATIONAL Corporation as of January 1, 2023. |
| (*2) | Senex Holdings PTY LTD includes 22 subsidiaries including Senex Energy Limited. |
| (*3) | During the year ended December 31, 2023, the Company acquired an additional 50% of the shares held by external shareholders of QSONE Co.,Ltd., which was previously classified as investment in associate. Accordingly, the entity was newly included in consolidated subsidiary due to obtaining control of the entity. |
| (c) | Details of non-controlling interest as of and for the years ended December 31, 2021, 2022 and 2023 are as follows: |
| 1) | December 31, 2021 |
(in millions of Won) |
POSCO INTERNATIONAL Corporation |
PT. KRAKATAU POSCO |
POSCO FUTURE M Co., LTD |
POSCO Eco & Challenge CO., LTD. |
POSCO DX CO., LTD. |
Others |
Total |
|||||||||||||||||||||
| Current assets |
￦ |
5,952,771 | 968,129 | 2,071,307 | 5,221,691 | 423,422 | 9,496,214 | 24,133,534 | ||||||||||||||||||||
| Non-current assets |
3,322,590 | 2,388,139 | 1,708,558 | 1,929,362 | 185,508 | 4,772,409 | 14,306,566 | |||||||||||||||||||||
| Current liabilities |
(4,537,785 | ) | (1,155,003 | ) | (604,333 | ) | (3,100,971 | ) | (263,794 | ) | (7,918,852 | ) | (17,580,738 | ) | ||||||||||||||
| Non-current liabilities |
(1,666,455 | ) | (1,778,668 | ) | (835,222 | ) | (1,306,648 | ) | (10,051 | ) | (1,706,779 | ) | (7,303,823 | ) | ||||||||||||||
| Equity |
3,071,121 | 422,597 | 2,340,310 | 2,743,434 | 335,085 | 4,642,992 | 13,555,539 | |||||||||||||||||||||
| Non-controlling interests |
1,138,360 | 126,779 | 942,660 | 1,294,925 | 116,000 | 1,542,960 | 5,161,684 | |||||||||||||||||||||
| Sales |
30,545,740 | 2,694,601 | 1,939,524 | 6,693,933 | 832,127 | 28,538,963 | 71,244,888 | |||||||||||||||||||||
| Profit (loss) for the period |
223,845 | 500,801 | 128,960 | 266,821 | (18,802 | ) | 690,197 | 1,791,822 | ||||||||||||||||||||
| Profit (loss) attributable to non-controlling interests |
82,972 | 150,240 | 51,944 | 125,942 | (6,509 | ) | 189,590 | 594,179 | ||||||||||||||||||||
| Cash flows from operating activities |
(235,359 | ) | 151,393 | 36,745 | 113,021 | (18,494 | ) | 130,828 | 178,134 | |||||||||||||||||||
| Cash flows from investing activities |
(91,619 | ) | (4,022 | ) | (639,965 | ) | (243,463 | ) | (17,309 | ) | (86,585 | ) | (1,082,963 | ) | ||||||||||||||
| Cash flows from financing activities (before dividends to non-controlling interest) |
279,529 | (81,187 | ) | 595,521 | 36,359 | (226 | ) | 9,604 | 839,600 | |||||||||||||||||||
| Dividend to non-controlling interest |
(32,004 | ) | — | (7,370 | ) | (9,867 | ) | (2,628 | ) | (7,671 | ) | (59,540 | ) | |||||||||||||||
| Effect of exchange rate fluctuation on cash held |
1,937 | 3,916 | 6 | 3,048 | 3 | 6,216 | 15,126 | |||||||||||||||||||||
| Net increase (decrease) in cash and cash equivalents |
(77,516 | ) | 70,100 | (15,063 | ) | (100,902 | ) | (38,654 | ) | 52,392 | (109,643 | ) | ||||||||||||||||
| 2) | December 31, 2022 |
(in millions of Won) |
POSCO INTERNATIONAL Corporation |
PT. KRAKATAU POSCO |
POSCO FUTURE M Co., LTD |
POSCO Eco & Challenge CO., LTD. |
POSCO DX CO., LTD. |
Others |
Total |
|||||||||||||||||||||
| Current assets |
￦ |
5,289,899 | 1,125,123 | 1,832,804 | 5,326,049 | 585,766 | 10,305,149 | 24,464,790 | ||||||||||||||||||||
| Non-current assets |
3,470,861 | 3,062,378 | 2,261,649 | 2,033,432 | 226,598 | 7,264,540 | 18,319,458 | |||||||||||||||||||||
| Current liabilities |
(3,809,495 | ) | (2,486,616 | ) | (920,656 | ) | (3,372,310 | ) | (419,452 | ) | (8,680,121 | ) | (19,688,650 | ) | ||||||||||||||
| Non-current liabilities |
(2,203,923 | ) | (834,456 | ) | (938,447 | ) | (1,076,909 | ) | (4,431 | ) | (2,094,774 | ) | (7,152,940 | ) | ||||||||||||||
| Equity |
2,747,342 | 866,429 | 2,235,350 | 2,910,262 | 388,481 | 6,794,794 | 15,942,658 | |||||||||||||||||||||
| Non-controlling interests |
1,018,764 | 433,214 | 899,416 | 1,373,670 | 134,484 | 2,480,625 | 6,340,173 | |||||||||||||||||||||
| Sales |
32,532,465 | 3,006,300 | 3,041,287 | 8,376,559 | 1,101,037 | 34,933,760 | 82,991,408 | |||||||||||||||||||||
| Profit (loss) for the period |
323,749 | 140,967 | 114,365 | 174,061 | 42,832 | 269,926 | 1,065,900 | |||||||||||||||||||||
| Profit (loss) attributable to non-controlling interests |
120,052 | 70,483 | 46,016 | 82,158 | 14,828 | 106,091 | 439,628 | |||||||||||||||||||||
| Cash flows from operating activities |
480,927 | 342,484 | (27,009 | ) | (54,506 | ) | (594 | ) | 68,906 | 810,208 | ||||||||||||||||||
| Cash flows from investing activities |
(389,092 | ) | (372,345 | ) | (26,492 | ) | 160,750 | 3,973 | (619,072 | ) | (1,242,278 | ) | ||||||||||||||||
| Cash flows from financing activities (before dividends to non-controlling interest) |
136,954 | (115,046 | ) | 107,266 | 154,946 | (561 | ) | 614,001 | 897,560 | |||||||||||||||||||
| Dividend to non-controlling interest |
(36,585 | ) | — | (9,360 | ) | (14,800 | ) | (2,628 | ) | (16,921 | ) | (80,294 | ) | |||||||||||||||
| Effect of exchange rate fluctuation on cash held |
853 | 12,690 | (2,469 | ) | (450 | ) | (35 | ) | (1,412 | ) | 9,177 | |||||||||||||||||
| Net increase (decrease) in cash and cash equivalents |
193,057 | (132,217 | ) | 41,936 | 245,940 | 155 | 45,502 | 394,373 | ||||||||||||||||||||
| 3) | December 31, 2023 |
(in millions of Won) |
POSCO INTERNATIONAL Corporation |
PT. KRAKATAU POSCO |
POSCO FUTURE M Co., LTD |
POSCO Eco & Challenge CO., LTD. |
POSCO DX CO., LTD. |
Others |
Total |
|||||||||||||||||||||
| Current assets |
￦ |
5,717,154 | 810,988 | 2,049,879 | 6,097,118 | 561,725 | 10,280,517 | 25,517,381 | ||||||||||||||||||||
| Non-current assets |
5,787,515 | 2,664,861 | 3,056,029 | 2,040,682 | 184,667 | 8,086,165 | 21,819,919 | |||||||||||||||||||||
| Current liabilities |
(4,379,238 | ) | (1,318,286 | ) | (1,221,829 | ) | (4,742,476 | ) | (328,558 | ) | (8,445,386 | ) | (20,165,773 | ) | ||||||||||||||
| Non-current liabilities |
(2,938,204 | ) | (1,429,590 | ) | (2,228,191 | ) | (522,622 | ) | 14,841 | (2,680,943 | ) | (9,784,709 | ) | |||||||||||||||
| Equity |
4,187,227 | 727,973 | 1,655,888 | 3,142,702 | 432,675 | 7,240,353 | 17,386,818 | |||||||||||||||||||||
| Non-controlling interests |
1,121,823 | 363,987 | 666,420 | 1,483,382 | 149,812 | 2,600,462 | 6,385,886 | |||||||||||||||||||||
| Sales |
28,542,084 | 3,130,551 | 4,457,201 | 9,465,614 | 1,439,715 | 29,630,513 | 76,665,678 | |||||||||||||||||||||
| Profit (loss) for the period |
528,592 | 72,609 | 63,024 | 188,645 | 88,104 | (400,634 | ) | 540,340 | ||||||||||||||||||||
| Profit (loss) attributable to non-controlling interests |
141,618 | 36,304 | 25,365 | 89,042 | 30,506 | (143,784 | ) | 179,051 | ||||||||||||||||||||
| Cash flows from operating activities |
258,910 | 182,199 | (193,324 | ) | (168,120 | ) | 7,257 | 95,392 | 182,314 | |||||||||||||||||||
| Cash flows from investing activities |
53,876 | (13,992 | ) | (389,075 | ) | 192,970 | 6,832 | (334,276 | ) | (483,665 | ) | |||||||||||||||||
| Cash flows from financing activities (before dividends to non-controlling interest) |
(324,134 | ) | (154,212 | ) | 577,158 | 63,164 | (319 | ) | 330,622 | 492,279 | ||||||||||||||||||
| Dividend to non-controlling interest |
(47,765 | ) | — | (9,344 | ) | (9,867 | ) | (3,941 | ) | (19,963 | ) | (90,880 | ) | |||||||||||||||
| Effect of exchange rate fluctuation on cash held |
651 | 46 | (1 | ) | 260 | (63 | ) | 864 | 1,757 | |||||||||||||||||||
| Net increase (decrease) in cash and cash equivalents |
(58,462 | ) | 14,041 | (14,586 | ) | 78,407 | 9,766 | 72,639 | 101,805 | |||||||||||||||||||
| (d) | Details of associates and joint ventures |
| 1) | Associates |
Ownership (%) |
Region | |||||||||||
| Investee |
Category of business |
2022 |
2023 |
|||||||||
[Domestic] |
||||||||||||
| New Songdo International City Development, LLC |
Real estate rental | 29.90 | 29.90 | Incheon | ||||||||
| Gale International Korea, LLC |
Real estate rental | 29.90 | 29.90 | Incheon | ||||||||
| SNNC |
Raw material manufacturing and sales | 49.00 | 49.00 | Gwangyang | ||||||||
| KONES, Corp. |
Technical service | 26.72 | 27.41 | Gyeongju | ||||||||
| CHUNGJU ENTERPRISE CITY DEVELOPMENT Co.,Ltd |
Real estate development | 29.53 | 29.53 | Chungju | ||||||||
| DAEHO GLOBAL MANAGEMENT CO., LTD. |
Investment advisory service | 35.82 | 35.82 | Pohang | ||||||||
| Mokpo Deayang Industrial Corporation(*3) |
Real estate development and rental | 27.40 | — | Mokpo | ||||||||
| Gunggi Green Energy(*1) |
Electricity generation | 19.00 | 19.00 | Hwaseong | ||||||||
| Pohang Special Welding Co.,Ltd. |
Welding material and tools manufacturing and sales | 50.00 | 50.00 | Pohang | ||||||||
| EQP POSCO Global NO1 Natural Resources Private Equity Fund |
Investment in new technologies | 27.23 | 27.23 | Seoul | ||||||||
| KC Chemicals CORP.(*1) |
Machinery manufacturing | 18.76 | 18.76 | Hwaseong | ||||||||
| POSTECH Social Enterprise Fund(*3) |
Investment in new technologies | 9.17 | — | Seoul | ||||||||
| QSONE Co.,Ltd.(*5) |
Real estate rental | 50.00 | — | Seoul | ||||||||
| Chun-cheon Energy Co., Ltd |
Electricity generation | 49.10 | 49.10 | Chuncheon | ||||||||
| Noeul Green Energy(*1) |
Electricity generation | 10.00 | 10.00 | Seoul | ||||||||
| Posco-IDV Growth Ladder IP Fund(*1) |
Investment in new technologies | 17.86 | 17.86 | Seoul | ||||||||
| DaeSung SnM Co., Ltd.(*1) (formerly, Daesung Steel) |
Steel sales | 17.54 | 17.54 | Busan | ||||||||
| Pohang E&E Co., LTD |
Investment in waste energy | 30.00 | 30.00 | Pohang | ||||||||
| POSCO Energy Valley Fund |
Investment in new technologies | 20.00 | 22.08 | Pohang | ||||||||
| Hyundai Invest Guggenheim CLO Qualified Private Special Asset Trust No.2(*4) |
Investment in new technologies | 38.57 | — | Seoul | ||||||||
| Posco Agri-Food Export Fund |
Investment in new technologies | 30.00 | 30.00 | Seoul | ||||||||
| Posco Culture Contents Fund |
Investment in new technologies | 31.67 | 31.67 | Seoul | ||||||||
| PCC Amberstone Private Equity Fund 1(*1) |
Investment in new technologies | 8.80 | 8.80 | Seoul | ||||||||
| UITrans LRT Co., Ltd. |
Transporting | 38.19 | 38.19 | Seoul | ||||||||
| POSCO Advanced Technical Staff Fund(*1) |
Investment in new technologies | 15.86 | 15.87 | Seoul | ||||||||
| POSCO 4th Industrial Revolution Fund(*1) |
Investment in new technologies | 19.05 | 19.05 | Seoul | ||||||||
| Pureun Tongyeong Enviro Co., Ltd. |
Sewerage treatment | 20.40 | 20.40 | Tongyeong | ||||||||
| Pure Gimpo Co., Ltd. |
Construction | 28.79 | 28.79 | Gimpo | ||||||||
| Posgreen Co., Ltd.(*1) |
Lime and plaster manufacturing | 19.00 | 19.00 | Gwangyang | ||||||||
| Clean Iksan Co., Ltd. |
Construction | 23.50 | 23.50 | Iksan | ||||||||
| Innovalley Co., Ltd. |
Real estate development | 28.77 | 29.48 | Yongin | ||||||||
| BLUE OCEAN Private Equity Fund |
Private equity financial | 27.52 | 27.52 | Seoul | ||||||||
| Pocheon-Hwado Highway Corp. |
Investment in Expressway | 27.64 | 27.89 | Incheon | ||||||||
| INNOPOLIS Job Creation Fund II(*1) |
Investment in new technologies | 6.13 | 6.13 | Seoul | ||||||||
| Samcheok Blue Power Co.,Ltd. |
Generation of electricity | 34.00 | 34.00 | Samcheok | ||||||||
| INKOTECH, INC.(*1) |
Electricity generation and sales | 10.00 | 10.00 | Seoul | ||||||||
| PCC Social Enterprise Fund II(*1) |
Investment in new technologies business | 16.67 | 16.67 | Seoul | ||||||||
| PCC Amberstone Private Equity Fund II(*4) |
Private equity trust | 19.91 | — | Seoul | ||||||||
| PCC-Conar No.1 Fund(*1) |
Investment in new technologies business | 15.34 | 15.49 | Pohang | ||||||||
Ownership (%) |
Region | |||||||||||
| Investee |
Category of business |
2022 |
2023 |
|||||||||
[Domestic] |
||||||||||||
| HYOCHUN Co., Ltd(*1) |
Screen door operation and other | 18.00 | 18.00 | Seoul | ||||||||
| IBKC-PCC 1st Fund(*1) |
Investment in new technologies business | 18.18 | 18.18 | Pohang | ||||||||
| 2019 PCC Materials and Parts Fund(*3) |
Investment in new technologies business | 8.70 | — | Pohang | ||||||||
| PCC-Woori LP secondary Fund(*1) |
Investment in new technologies business | 18.85 | 18.85 | Pohang | ||||||||
| CURO CO.,LTD.(*4) |
Manufacturing, construction | 0.53 | — | Ulsan | ||||||||
| Link City PFV Inc. |
Contruction, housing construction and sales | 44.00 | 44.00 | Uijeongbu | ||||||||
| BNH-POSCO Bio Healthcare Fund(*1) |
Investment in new technologies business | 18.14 | 18.14 | Pohang | ||||||||
| PCC-BM Project Fund(*1) |
Investment in new technologies business | 8.77 | 8.77 | Pohang | ||||||||
| Energy Innovation Fund I(*1) |
Investment in new technologies business | 10.11 | 10.11 | Pohang | ||||||||
| Consus PS development Professional Private Real Estate Fund |
Real estate development | 50.00 | 50.00 | Seoul | ||||||||
| POSTECH Holdings 4th Fund |
Private Investment Association | 40.00 | 40.00 | Pohang | ||||||||
| SNU STH IP Fund |
Private Investment Association | 33.33 | 33.33 | Seoul | ||||||||
| PCC-BM Project Fund 2(*1) |
Investment in new technologies business | 13.70 | 13.70 | Pohang | ||||||||
| G&G Technology Innovation Fund No.1(*1) |
Investment in new technologies business | 13.97 | 13.97 | Seongnam | ||||||||
| NPX-PCC Edutech Fund(*3) |
Investment in new technologies business | 19.96 | — | Pohang | ||||||||
| C&-PCC I Fund(*3) |
Investment in new technologies business | 0.68 | — | Pohang | ||||||||
| 2020 POSCO-MOORIM Bio New Technology Fund(*3) |
Investment in new technologies business | 5.00 | — | Pohang | ||||||||
| PCC-KAI Secondary I Fund(*1) |
Investment in new technologies business | 19.12 | 19.12 | Seoul | ||||||||
| 2021 PCC Bio New Technology Fund(*1) |
Investment in new technologies | 5.45 | 5.45 | Pohang | ||||||||
| Consus BG Private Real Estate Fund No.2 |
Real estate development | 50.00 | 50.00 | Seoul | ||||||||
| Consus OS Private Real Estate Fund(*3) |
Real estate development | 50.00 | — | Seoul | ||||||||
| Consus NewDeal Infra Development Specialized Private Special Asset Investment Trust 1 |
Investment Association | 40.00 | 40.00 | Seoul | ||||||||
| Hybrid ESG Secondary Venture No.1(*1) |
Investment Association | 18.27 | 18.27 | Pohang | ||||||||
| PCC-Bailey Project Fund(*1) |
Investment in new technologies business | 7.27 | 7.27 | Pohang | ||||||||
| CR Inotech Co., Ltd.(*1) |
Manufacturing | 19.00 | 19.00 | Gwangyang | ||||||||
| Posco JK Solid Solution Co., ltd. |
Material manufacturing for rechargeable battery | 40.00 | 40.00 | Yangsan | ||||||||
| PCC-Xinova PRE-IPO Fund(*1) |
Investment in new technologies business | 9.09 | 9.09 | Pohang | ||||||||
| Erae Ams Co.,Ltd.(*4) |
Automotive parts manufacturing | 16.66 | — | Daegu | ||||||||
| Consus OS Private Real Estate Fund 2(*2) |
Real estate development | — | 50.00 | Seoul | ||||||||
[Foreign] |
||||||||||||
| POSCHROME (PROPRIETARY) LIMITED |
Raw material manufacturing and sales | 50.00 | 50.00 | South Africa | ||||||||
| CAML RESOURCES PTY LTD |
Raw material manufacturing and sales | 33.34 | 33.34 | Australia | ||||||||
| Nickel Mining Company SAS |
Raw material manufacturing and sales | 49.00 | 49.00 | New Caledonia | ||||||||
| PT. Wampu Electric Power |
Construction and civil engineering | 20.00 | 20.00 | Indonesia | ||||||||
| POSK(Pinghu) Steel Processing Center Co., Ltd. |
Steel processing and sales | 20.00 | 20.00 | China | ||||||||
| PT.INDONESIA POS CHEMTECH CHOSUN Ref |
Refractory manufacturing and sales | 30.19 | 30.19 | Indonesia | ||||||||
| NS-Thainox Auto Co., Ltd. |
Stainless sales and transporting | 49.00 | 49.00 | Thailand | ||||||||
| PT. Tanggamus Electric Power(*1) |
Construction and civil engineering | 17.50 | 17.50 | Indonesia | ||||||||
| LLP POSUK Titanium |
Titanium manufacturing and sales | 35.30 | 35.30 | Kazakhstan | ||||||||
| IMFA ALLOYS FINLEASE LTD |
Raw material manufacturing and sales | 24.00 | 24.00 | India | ||||||||
| KRAKATAU POS-CHEM DONG-SUH CHEMICAL(*1) |
Chemical by-product manufacturing and sales | 19.00 | 19.00 | Indonesia | ||||||||
| 9404-5515 Quebec Inc. |
Investments management | 25.85 | 25.85 | Canada | ||||||||
| Hamparan Mulya |
Resource development | 45.00 | 45.00 | Indonesia | ||||||||
| POS-SEAHSTEELWIRE(TIANJIN)CO.,Ltd. |
Steel manufacturing and sales | 25.00 | 25.00 | China | ||||||||
| Eureka Moly LLC |
Raw material manufacturing and sales | 20.00 | 20.00 | USA | ||||||||
Ownership (%) |
Region | |||||||||||
| Investee |
Category of business |
2022 |
2023 |
|||||||||
[Foreign] |
||||||||||||
| KIRIN VIETNAM CO., LTD(*1) |
Panel manufacturing | 19.00 | 19.00 | Vietnam | ||||||||
| POSCO SeAH Steel Wire(Nantong) Co., Ltd. |
Steel processing and sales | 25.00 | 25.00 | China | ||||||||
| POS-SeAH Steel Wire (Thailand) Co., Ltd. |
Steel manufacturing and sales | 25.00 | 25.00 | Thailand | ||||||||
| Jupiter Mines Limited(*1) |
Resource development | 6.89 | 6.89 | Australia | ||||||||
| SAMHWAN VINA CO., LTD(*1) |
Steel manufacturing and sales | 19.00 | 17.26 | Vietnam | ||||||||
| Saudi-Korean Company for Maintenance Properties Management LLC(*1) |
Building management | 19.00 | 19.00 | Saudi Arabia | ||||||||
| NCR LLC |
Coal sales | 22.10 | 22.10 | Canada | ||||||||
| AMCI (WA) PTY LTD |
Iron ore sales & mine development | 49.00 | 49.00 | Australia | ||||||||
| SHANGHAI LANSHENG DAEWOO CORP. |
Trading | 49.00 | 49.00 | China | ||||||||
| SHANGHAI WAIGAOQIAO FREE TRADE ZONE LANSHENG DAEWOO IN’L TRADING CO., LTD. |
Trading | 49.00 | 49.00 | China | ||||||||
| General Medicines Company Ltd. |
Medicine manufacturing and sales | 33.00 | 33.00 | Sudan | ||||||||
| KOREA LNG LTD. |
Gas production and sales | 20.00 | 20.00 | England | ||||||||
| AES Mong Duong Power Company Limited |
Electricity generation | 30.00 | 30.00 | Vietnam | ||||||||
| South-East Asia Gas Pipeline Company Ltd. |
Pipeline construction and management | 25.04 | 25.04 | Myanmar | ||||||||
| GLOBAL KOMSCO Daewoo LLC |
Cotton celluloid manufacturing and sales | 35.00 | 35.00 | Uzbekistan | ||||||||
| POSCO-Poggenamp Electrical Steel Pvt. Ltd. |
Steel processing and sales | 26.00 | 26.00 | India | ||||||||
| Qingdao Pohang DGENX Stainless SteelPipeCo., Ltd |
Exhaust meter manufacturing | 40.00 | 40.00 | China | ||||||||
| SHINPOONG DAEWOO PHARMA VIETNAM CO.,LTD(*1) |
Medicine production | 3.42 | 3.42 | Vietnam | ||||||||
| ZHEJIANG HUAYOU-POSCO ESM CO., LTD |
Anode material Production | 40.00 | 40.00 | China | ||||||||
| MONG DUONG FINANCE HOLDINGS B.V. |
Financial Holdings | 30.00 | 30.00 | Netherlands | ||||||||
| FQM Australia Holdings Pty Ltd |
Non-ferrous metal Mining | 30.00 | 24.32 | Australia | ||||||||
| Qingdao ZhongShou New Energy Technology Co.,Ltd(*1) |
Artificial Graphite manufacturing | 13.01 | 13.00 | China | ||||||||
| Black Rock Mining LTD(*1) |
Mining | 12.90 | 11.72 | Australia | ||||||||
| Inner Mongolia Sinuo New Material Technology Co.,Ltd(*1) |
Artificial Graphite manufacturing | 12.85 | 12.85 | China | ||||||||
| ZHANGJIAGANG XIAO-SHA COIL SERVICE CENTER CO.,LTD(*1) |
Steel processing and sales | 17.50 | 17.50 | China | ||||||||
| TMK Gulf International Pipe Industry L.L.C.(*4) |
Manufacturing | 6.77 | — | Oman | ||||||||
| (*1) | The Company has determined that it has significant influence even though the Company’s percentage of ownership is less than 20% considering the composition of board of directors. |
(*2) |
During the year ended December 31, 2023, the entity was newly included as an associate. |
| (*3) | During the year ended December 31, 2023, the entities were excluded from associates due to liquidation. |
| (*4) | During the year ended December 31, 2023, the entities were excluded from associates due to sale of interest, etc. |
| (*5) | During the year ended December 31, 2023, the entities were excluded from associates and classified as a subsidiary due to the whole acquisition of external shareholders. |
| 2) | Joint ventures |
Ownership (%) |
||||||||||||||
| Investee |
Category of business |
2022 |
2023 |
Region |
||||||||||
| [Domestic] |
||||||||||||||
| POSCO MC MATERIALS (formerly, POSCO MITSUBISHI CARBON TECHNOLOGY) |
Steel processing and sales | 60.00 | 60.00 | Gwangyang | ||||||||||
| POSCO-KB Shipbuilding Restructuring Fund |
Investment in new technologies | 18.75 | 18.75 | Seoul | ||||||||||
| POSCO-NSC Venture Fund |
Investment in new technologies | 16.67 | 16.67 | Seoul | ||||||||||
| PoscoPlutus Project 3rd Project fund |
Investment in new technologies | 5.96 | 5.96 | Seoul | ||||||||||
| PCC Bio 2nd Fund |
Investment in new technologies | 19.72 | 19.72 | Seoul | ||||||||||
| Union PCC Portfolio Fund |
Investment in new technologies | 14.12 | 14.12 | Seoul | ||||||||||
| Eco Energy Solution Co., ltd. |
Service | 50.00 | 50.00 | Seoul | ||||||||||
| [Foreign] |
||||||||||||||
| KOBRASCO |
Steel materials manufacturing and sales | 50.00 | 50.00 | Brazil | ||||||||||
| CSP—Compania Siderurgica do Pecem(*1) |
Steel manufacturing and sales | 20.00 | — | Brazil | ||||||||||
| BX STEEL POSCO Cold Rolled Sheet Co., Ltd. |
Steel processing and sales | 25.00 | 25.00 | China | ||||||||||
| POSCO-SAMSUNG-Slovakia Processing Center |
Steel processing and sales | 30.00 | 30.00 | Slovakia | ||||||||||
| YULCHON MEXICO S.A. DE C.V. |
Tube for automobile manufacturing | 11.85 | 11.85 | Mexico | ||||||||||
| Hyunson Engineering & Construction HYENCO |
Construction | 4.89 | 4.89 | Algeria | ||||||||||
| POSCO E&C Saudi Arabia |
Civil engineering and construction | 40.00 | 40.00 | Saudi Arabia | ||||||||||
| Pos-Austem Suzhou Automotive Co., Ltd |
Automotive parts manufacturing | 19.90 | 19.90 | China | ||||||||||
| POS-InfraAuto (Suzhou) Co., Ltd |
Automotive parts manufacturing | 16.20 | 16.20 | China | ||||||||||
| POS-AUSTEM YANTAI AUTOMOTIVE CO., LTD |
Automotive parts manufacturing | 11.10 | 11.10 | China | ||||||||||
| POS-AUSTEM WUHAN AUTOMOTIVE CO., LTD |
Automotive parts manufacturing | 7.43 | 7.43 | China | ||||||||||
| DMSA/AMSA |
Energy & resource development | 3.89 | 3.89 | Madagascar | ||||||||||
| Roy Hill Holdings Pty Ltd |
Energy & resource development | 12.50 | 12.50 | Australia | ||||||||||
| POSCO-NPS Niobium LLC |
Mine development | 50.00 | 50.00 | USA | ||||||||||
| HBIS-POSCO Automotive Steel Co., Ltd |
Steel manufacturing and sales | 50.00 | 50.00 | China | ||||||||||
| PT NICOLE METAL INDUSTRY(*2) |
Nickel smelting | — | 49.00 | Indonesia | ||||||||||
(*1) |
During the year ended December 31, 2023, the entity was excluded from joint ventures due to sales of interest. |
| (*2) | During the year ended December 31, 2023, the entity was newly included as a joint venture. |
| (e) | Newly included subsidiaries |
| Company |
Date of addition |
Ownership (%) |
Reason | |||||
| QSONE Co., Ltd. |
March 2023 | 100.00 | Reclassification from associate | |||||
| POSCO PS Tech |
April 2023 | 100.00 | New establishment | |||||
| POSCO PR Tech |
April 2023 | 100.00 | New establishment | |||||
| POSCO PH Solution |
April 2023 | 100.00 | New establishment | |||||
| POSCO GYS Tech |
April 2023 | 100.00 | New establishment | |||||
| POSCO GYR Tech |
April 2023 | 100.00 | New establishment | |||||
| POSCO GY Solution |
April 2023 | 100.00 | New establishment | |||||
| PT AGPA REFINERY COMPLEX |
May 2023 | 100.00 | New establishment | |||||
| Port Hedland Green Steel Pty Ltd |
June 2023 | 100.00 | New establishment | |||||
| POSCO MOBILITY SOLUTION POLAND Sp. z o.o., |
July 2023 | 100.00 | New establishment | |||||
| PCC Facilities Component Fund |
July 2023 | 60.00 | New establishment | |||||
| PT POSCO INTERNATIONAL ENP INDONESIA |
September 2023 | 100.00 | New establishment | |||||
| POSCO INTERNATIONAL E&P USA Inc. |
October 2023 | 100.00 | New establishment | |||||
| POSCO FLOW CANADA INC. |
November 2023 | 100.00 | New establishment | |||||
| POSCO FLOW (Shanghai) Co.,Ltd |
December 2023 | 100.00 | New establishment | |||||
| POSCO HOLDINGS CVC 2nd Fund |
December 2023 | 100.00 | New establishment | |||||
| International Energy Expansion for Technology Innovation Fund |
December 2023 | 60.00 | New establishment | |||||
| (f) | Loss of control |
| Company |
Date of exclusion |
Reason | ||
| POSCO ENERGY CO., LTD. |
January 2023 | Merged into POSCO INTERNATIONAL Corporation(*1) | ||
| POS-CD PTY LTD |
January 2023 | Liquidation | ||
| POSCO ICT BRASIL |
August 2023 | Divestiture | ||
| PGSF, L.P. |
September 2023 | Liquidation | ||
| Future Creation Fund Postech Early Stage account |
December 2023 | Liquidation | ||
| Songdo Posco family Housing |
December 2023 | Liquidation |
| (*1) | As a result of the merger transaction, the ownership of the Company in POSCO INTERNATIONAL Corporation increased from 62.92% to 73.21%. |
2. |
Statement of Compliance |
| (a) | Derivatives instruments measured at fair value |
| (b) | Financial instruments measured at fair value through profit or loss |
| (c) | Financial instruments measured at fair value through other comprehensive income |
| (d) | Defined benefit liabilities measured at the present value of the defined benefit obligation less the fair value of the plan assets |
| (a) | Judgments |
| • | Note 1 - Subsidiaries, associates and joint ventures |
| • | Note 11 - Investments in associates and joint ventures |
| • | Note 12 - Joint operations |
| (b) | Assumptions and estimation uncertainties |
| • | Note 15 - Goodwill and other intangible assets, net |
| • | Note 20 - Provisions |
| • | Note 21 - Employee benefits |
| • | Note 23 - Financial instruments |
| • | Note 30 - Revenue – contract for revenue recognized over time |
| • | Note 36 - Income taxes |
| • | Note 39 - Commitments and contingencies |
(c) |
Measurement of fair value |
| • | Level 1 - unadjusted quoted prices in active markets for identical assets or liabilities. |
| • | Level 2 - inputs other than quoted prices included in Level 1 that are observable for the assets or liability, either directly or indirectly. |
| • | Level 3 - inputs for the assets or liability that are not based on observable market data. |
| • | Note 23 - Financial instruments |
(a) |
IAS No. 12 “Income Taxes”—Deferred Tax related to Assets and Liabilities arising from a Single Transaction |
(b) |
IAS No. 1 “Presentation of Financial Statements”—Disclosure of Accounting Policies |
(c) |
IAS No. 8 “Accounting Policies, Changes in Accounting Estimates and Errors”—Definition of Accounting Estimates |
| (d) | IAS No. 12 “Income Taxes”—Global Minimum Top-Up Tax |
3. |
Summary of Material Accounting Policy Information |
| (a) | Business combinations |
| (b) | Non-controlling interests |
(c) |
Subsidiaries |
(d) |
Transactions eliminated on consolidation |
(e) |
Business combination of entities or businesses under common control |
| (a) | Financial assets measured at amortized cost |
(b) |
Equity instruments measured at fair value through other comprehensive income |
(c) |
Financial assets measured at fair value through profit or loss |
(d) |
Derecognition of financial assets |
| (a) | it is probable that future economic benefits associated with the item will flow to the Company, and |
| (b) | the cost can be measured reliably. |
| Buildings |
5-50 years |
|||
| Structures |
4-50 years |
|||
| Machinery and equipment |
4-25 years |
|||
| Vehicles |
3-20 years |
|||
| Tools |
3-20 years |
|||
| Furniture and fixtures |
3-20 years |
|||
| Lease assets |
2-45 years |
|||
| Bearer plants |
20 years |
| Intellectual property rights |
4-25 years |
|||
| Development expense |
3-5 years |
|||
| Port facilities usage rights |
4-75 years |
|||
| Other intangible assets |
2-15 years |
| (a) | Exploration and evaluation assets |
| (b) | Development assets |
(a) |
Grants related to assets |
(b) |
Grants related to income |
1) |
As a lessee |
2) |
As a lessor |
• |
financial assets measured at amortized cost |
• |
debt instruments measured at fair value through other comprehensive income |
• |
lease receivables, contractual assets, loan commitments, and financial guarantee contracts |
(a) |
Judgments on credit risk |
(b) |
Expected credit losses |
(c) |
Credit-impaired financial assets |
• |
significant financial difficulty of the issuer or borrower |
• |
a breach of contract, such as a default or delinquency in interest or principal payments |
• |
the lender, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a concession that the lender would not otherwise consider. |
• |
it becoming probable that the borrower will enter bankruptcy or other financial reorganization |
• |
the disappearance of an active market for that financial asset because of financial difficulties |
(d) |
Write-off |
(a) |
Hedge accounting |
① |
Fair value hedge |
② |
Cash flow hedge |
(b) |
Other derivatives |
(a) |
Greenhouse Gases Emission Right |
(b) |
Emission liability |
(a) |
Sale of good |
(b) |
Transportation service |
(c) |
Construction contracts |
(d) |
Certain construction contracts for apartments |
• |
interest income; |
• |
interest expense; |
• |
dividend income; |
• |
the foreign currency gain or loss on financial assets and financial liabilities; |
• |
the net gain or loss on financial assets measured at fair value through profit or loss; |
• |
hedge ineffectiveness recognized in profit or loss; and |
• |
the net gain or loss on the disposal of investments in debt securities measured at fair value through other comprehensive income. |
(a) |
IAS No. 1 “Presentation of Financial Statements”—Classification of Liabilities as Current or Non-current |
(b) |
IAS No. 7 “Statements of Cash Flows”, IFRS No. 7 “Financial Instruments: Disclosure”—Supplier Finance Arrangements |
(c) |
IFRS No. 18 “Presentation and Disclosure in Financial Statements” |
| • | credit risk |
| • | liquidity risk |
| • | market risk |
| • | capital risk |
| (a) | Financial risk management |
| 1) | Risk management framework |
2) |
Credit risk |
| 3) | Liquidity risk |
4) |
Market risk |
① |
Currency risk |
② |
Interest rate risk |
③ |
Interest rate benchmark reform risk |
(in millions of Won) |
WIBOR |
|||||||
Category(* 2) |
Transition not yet completed |
Modification of clause completed |
||||||
Non-derivative financial liabilities(* 1) |
||||||||
Borrowings |
￦ |
67,943 | — | |||||
(*1) |
Based on nominal amount |
(*2) |
Financial instruments that are not obliged to be transitioned to alternative benchmark rate as of December 31, 2023 are excluded. |
④ |
Other market price risk |
| (b) | Management of capital |
(in millions of Won) |
202 2
|
202 3
|
||||||
Total borrowings |
￦ |
24,305,662 | 25,970,379 | |||||
Less: Cash and cash equivalents |
8,053,108 | 6,670,879 | ||||||
Net borrowings |
16,252,554 | 19,299,500 | ||||||
Total equity |
58,191,897 | 59,598,600 | ||||||
Net borrowings-to-equity |
27.93 | % | 32.38 | % | ||||
5. |
Cash and Cash Equivalents |
(in millions of Won) |
2022 |
2023 |
||||||
Cash |
￦ |
7,510 | 12,312 | |||||
Demand deposits and checking accounts |
2,826,227 | 2,537,545 | ||||||
Time deposits |
2,638,838 | 1,473,081 | ||||||
Other cash equivalents |
2,580,533 | 2,647,941 | ||||||
￦ |
8,053,108 | 6,670,879 | ||||||
6. |
Trade Accounts and Notes Receivable |
(in millions of Won) |
2022 |
2023 |
||||||
Current |
||||||||
Trade accounts and notes receivable |
￦ |
8,695,788 | 9,382,308 | |||||
Unbilled due from customers for contract work |
1,340,146 | 1,704,256 | ||||||
Less: Allowance for doubtful accounts |
(333,792 | ) | (283,575 | ) | ||||
￦ |
9,702,142 | 10,802,989 | ||||||
Non-current |
||||||||
Trade accounts and notes receivable |
￦ |
68,342 | 89,839 | |||||
Less: Allowance for doubtful accounts |
(44,309 | ) | (47,323 | ) | ||||
￦ |
24,033 | 42,516 | ||||||
7. |
Other Receivables |
| (a) | The details of other receivables as of December 31, 2022 and 2023, are as follows: |
(in millions of Won) |
2022 |
2023 |
||||||
| Current |
||||||||
| Short-term loans |
￦ |
278,346 | 223,011 | |||||
| Other accounts receivable |
1,381,804 | 1,433,423 | ||||||
| Accrued income(* 1) |
334,741 | 237,154 | ||||||
| Deposits |
131,468 | 125,854 | ||||||
| Others |
23,201 | 15,349 | ||||||
| Lease receivables |
46,764 | 23,948 | ||||||
| Less: Allowance for doubtful accounts |
(83,627 | ) | (111,210 | ) | ||||
| |
|
|
|
|||||
￦ |
2,112,697 | 1,947,529 | ||||||
| |
|
|
|
|||||
| Non-current |
||||||||
| Long-term loans(* 1) |
￦ |
1,082,139 | 1,204,645 | |||||
| Other accounts receivable |
237,161 | 186,492 | ||||||
| Accrued income |
121,783 | 184,739 | ||||||
| Deposits |
292,722 | 308,185 | ||||||
| Lease receivables |
55,312 | 78,994 | ||||||
| Less: Allowance for doubtful accounts |
(268,786 | ) | (510,610 | ) | ||||
| |
|
|
|
|||||
￦ |
1,520,331 | 1,452,445 | ||||||
| |
|
|
|
|||||
| |
(*1) | Due to the continuous operating losses and deteriorating business environment of FQM Australia Holdings Pty Ltd, an associate, the Company assessed the recoverability of the related loans and accrued interest and recognized a full allowance for doubtful accounts of ￦ 257,500 million. |
| (b) | The details of lease receivables are as follows: |
(in millions of Won) |
||||||||||
| Customer |
Leased items |
2022 |
2023 |
|||||||
| Pohang University of Science and Technology |
Lease contract |
￦ |
7,738 | 7,586 | ||||||
| Korea Business Angels Association |
Lease contract |
2,621 | 2,339 | |||||||
| HEUNG-A SHIPPING CO., LTD., HEUNG-A LINE CO., LTD. |
4 Container Ships, 4 Tankers |
88,573 | 50,429 | |||||||
| Executive Offshore, PT Wintermar, COHC, Myanma Port Authority |
Helicopter, Ship, Jetty |
3,144 | 42,588 | |||||||
| |
|
|
|
|||||||
￦ |
102,076 | 102,942 | ||||||||
| |
|
|
|
|||||||
| (c) | As of December 31, 2022 and 2023, total and net lease investments in the leases are as follows: |
(in millions of Won) |
2022 |
2023 |
||||||
| Less than 1 year |
￦ |
48,127 | 24,965 | |||||
| 1 year - 3 years |
19,861 | 31,840 | ||||||
| 3 years - 5 years |
5,371 | 20,820 | ||||||
| Over 5 years |
64,811 | 63,583 | ||||||
| |
|
|
|
|||||
| Undiscounted lease payments |
138,170 | 141,208 | ||||||
| Unrealized interest income |
(36,094 | ) | (38,266 | ) | ||||
| |
|
|
|
|||||
| Present value of minimum lease payment |
￦ |
102,076 | 102,942 | |||||
| |
|
|
|
|||||
8. |
Other Financial Assets |
(in millions of Won) |
2022 |
2023 |
||||||
| Current |
||||||||
| Derivatives assets |
￦ |
223,771 | 166,873 | |||||
| Debt securities |
121,122 | 295,619 | ||||||
| Deposit instruments(* 1) |
2,558,946 | 4,400,267 | ||||||
| Short-term financial instruments(* 1) |
8,006,081 | 6,540,407 | ||||||
| |
|
|
|
|||||
￦ |
10,909,920 | 11,403,166 | ||||||
| |
|
|
|
|||||
| Non-current |
||||||||
| Derivatives assets |
￦ |
136,224 | 134,269 | |||||
| Equity securities(* 2) |
1,462,088 | 1,793,531 | ||||||
| Debt securities |
78,901 | 87,778 | ||||||
| Other securities(* 2) |
632,469 | 669,687 | ||||||
| Deposit instruments(* 1) |
22,856 | 23,060 | ||||||
| |
|
|
|
|||||
￦ |
2,332,538 | 2,708,325 | ||||||
| |
|
|
|
|||||
| (*1) | As of December 31, 2022 and 2023, financial instruments amounting to ￦ 73,192 million and ￦ 101,888 million, respectively, are restricted in use for financial arrangements, pledge and others. |
| (*2) | As of December 31, 2022 and 2023, ￦ 153,640 million and ￦ 181,617 million of equity and other securities, respectively, have been provided as collateral for borrowings, construction projects and others. |
9. |
Inventories |
| (a) | Inventories as of December 31, 2022 and 2023 are as follows: |
(in millions of Won) |
2022 |
2023 |
||||||
| Finished goods |
￦ |
2,508,370 | 2,615,009 | |||||
| Merchandise |
1,237,203 | 1,049,467 | ||||||
| Semi-finished goods |
3,453,150 | 3,039,516 | ||||||
| Raw materials |
4,171,049 | 3,237,691 | ||||||
| Fuel and materials |
1,109,100 | 921,742 | ||||||
| Construction inventories |
1,131,776 | 988,463 | ||||||
| Materials-in-transit |
2,738,439 | 2,965,306 | ||||||
| Others |
100,873 | 87,802 | ||||||
| |
|
|
|
|||||
| 16,449,960 | 14,904,996 | |||||||
| |
|
|
|
|||||
| Less: Allowance for inventories valuation |
(316,557 | ) | (347,577 | ) | ||||
| |
|
|
|
|||||
￦ |
16,133,403 | 14,557,419 | ||||||
| |
|
|
|
|||||
| (b) | The changes in allowance for inventories valuation for the years ended December 31, 2021, 2022 and 2023 were as follows: |
(in millions of Won) |
2021 |
2022 |
2023 |
|||||||||
| Beginning |
￦ |
131,642 | 161,929 | 316,557 | ||||||||
| Loss on valuation of inventories |
78,783 | 259,678 | 309,317 | |||||||||
| Realization on sale of inventories |
(49,528 | ) | (97,749 | ) | (256,969 | ) | ||||||
| Others |
1,032 | (7,301 | ) | (21,328 | ) | |||||||
| |
|
|
|
|
|
|||||||
| Ending |
￦ |
161,929 | 316,557 | 347,577 | ||||||||
| |
|
|
|
|
|
|||||||
10. |
Assets Held for Sale |
(in millions of Won) |
2022 |
2023(*1) |
||||||
| Asset |
||||||||
| Cash and cash equivalents(*2) |
￦ |
174 | — | |||||
| Account receivables and other receivables |
648 | 728 | ||||||
| Inventories |
— | 39,054 | ||||||
| Other financial assets |
— | 119,881 | ||||||
| Investment in joint ventures(*3) |
— | — | ||||||
| Property, plant and equipment(*4) |
10,552 | 149,612 | ||||||
| Intangible assets |
— | 97,372 | ||||||
| Others |
629 | 298 | ||||||
| |
|
|
|
|||||
￦ |
12,003 | 406,945 | ||||||
| |
|
|
|
|||||
| Liability |
||||||||
| Other payables
|
￦ |
5 | 22,180 | |||||
| Provisions |
— | 119,710 | ||||||
| |
|
|
|
|||||
￦ |
5 | 141,890 | ||||||
| |
|
|
|
|||||
| (*1) | POSCO Canada Ltd., a subsidiary of the Company, made investment in kind the assets and liabilities of Greenhills Mine and the shares of Elkview Mine Limited Partnership, which were classified as joint operation and financial assets at fair values through profit or loss, respectively, to a newly established partnership by Teck Coal Partnership which is the principal operator and majority shareholder. As a result, the Company recognized ￦ 401,804 million of asset held for sale and ￦ 141,890 million of liability held for sale. |
| (*2) | Cash and cash equivalents in the statement of cash flows include cash and cash equivalents that are classified as assets held for sale as of December 31, 2022. |
| (*3) | During the year ended December 31, 2022, the Company decided to dispose of CSP—Compania Siderurgica do Pecem and recognized full impairment loss of ￦ 160,415 million, which is the difference between carrying amount and recoverable amount. The Company reclassified the investment to assets held for sale. Meanwhile, during the year ended December 31, 2023, the Company disposed of CSP—Compania Siderurgica do Pecem, and recognized ￦ 103,366 million of loss on disposal of assets held for sale. The loss on disposal of assets held for sale recognized as profit or loss includes ￦ 102,470 million, which was reclassified from accumulated other comprehensive loss arising from translating the financial statements of foreign operation. |
| (*4) | During the past period, the Company decided to dispose Synthetic Natural Gas (SNG) facility for which use was discontinued, and classified as assets held for sale for ￦ 10,305 million. Meanwhile, during the year ended December 31, 2023, the Company disposed of the assets held for sale for ￦ 9,599 million and reclassified the remaining amount ￦ 706 million to property, plant and equipment. |
11. |
Investments in Associates and Joint ventures |
| (a) | Investments in associates and joint ventures as of December 31, 2022 and 2023 are as follows: |
(in millions of Won) |
2022 |
2023 |
||||||
| Investments in associates |
￦ |
2,518,906 | 2,292,253 | |||||
| Investments in joint ventures |
2,477,645 | 2,728,011 | ||||||
| |
|
|
|
|||||
￦ |
4,996,551 | 5,020,264 | ||||||
| |
|
|
|
|||||
(in millions of Won) |
Number of shares |
Ownership (%) |
Acquisition cost |
Book value |
||||||||||||||||
| Company |
2022 |
2023 |
||||||||||||||||||
| [Domestic] |
||||||||||||||||||||
| Samcheok Blue Power Co.,Ltd.(*1) |
4,507,138 | 34.00 | ￦ |
429,904 | ￦ |
352,500 | 323,521 | |||||||||||||
| SNNC |
18,130,000 | 49.00 | 90,650 | 182,414 | 100,692 | |||||||||||||||
| Chun-cheon Energy Co., Ltd(*1) |
17,308,143 | 49.10 | 86,541 | 9,513 | 15,040 | |||||||||||||||
| Pocheon-Hwado Highway Corp.(*1) |
7,109,230 | 27.89 | 35,546 | 27,165 | 23,998 | |||||||||||||||
| CHUNGJU ENTERPRISE CITY DEVELOPMENT Co.,Ltd |
1,181,160 | 29.53 | 5,906 | 14,605 | 13,967 | |||||||||||||||
| DaeSung SnM Co., Ltd (formerly, Daesung Steel)(*2) |
108,038 | 17.54 | 14,000 | 20,469 | 20,296 | |||||||||||||||
| PCC Amberstone Private Equity Fund 1(*2) |
7,636,948,293 | 8.80 | 7,519 | 9,326 | 8,904 | |||||||||||||||
| Others (49 companies)(*1) |
238,086 | 122,366 | ||||||||||||||||||
| |
|
|
|
|||||||||||||||||
| 854,078 | 628,784 | |||||||||||||||||||
| |
|
|
|
|||||||||||||||||
| [Foreign] |
||||||||||||||||||||
| South-East Asia Gas Pipeline Company Ltd. |
135,219,000 | 25.04 | 132,907 | 290,318 | 287,282 | |||||||||||||||
| AES Mong Duong Power Company Limited(*1) |
— | 30.00 | 164,303 | 209,594 | 230,699 | |||||||||||||||
| 9404-5515 Quebec Inc. |
284,463,243 | 25.85 | 328,509 | 331,261 | 346,724 | |||||||||||||||
| FQM Australia Holdings Pty Ltd |
186,000,030 | 24.32 | 109,568 | 98,103 | — | |||||||||||||||
| Eureka Moly LLC |
— | 20.00 | 240,123 | 14,574 | — | |||||||||||||||
| AMCI (WA) PTY LTD |
49 | 49.00 | 209,664 | 57,830 | 60,225 | |||||||||||||||
| NCR LLC |
— | 22.10 | 247,077 | 187,372 | 253,121 | |||||||||||||||
| KOREA LNG LTD. |
2,400 | 20.00 | 135,205 | 29,124 | 58,759 | |||||||||||||||
| Nickel Mining Company SAS |
3,234,698 | 49.00 | 157,585 | 90,636 | 87,967 | |||||||||||||||
| ZHEJIANG HUAYOU-POSCO ESM CO., LTD |
648,530,000 | 40.00 | 120,072 | 98,933 | 105,300 | |||||||||||||||
| PT. Wampu Electric Power(*1) |
8,708,400 | 20.00 | 10,054 | 16,659 | 15,632 | |||||||||||||||
| POS-SeAH Steel Wire(Nantong) Co., Ltd. |
50 | 25.00 | 4,723 | 8,590 | 8,642 | |||||||||||||||
| Others (28 companies)(*1) |
231,834 | 209,118 | ||||||||||||||||||
| |
|
|
|
|||||||||||||||||
| 1,664,828 | 1,663,469 | |||||||||||||||||||
| |
|
|
|
|||||||||||||||||
￦ |
2,518,906 | 2,292,253 | ||||||||||||||||||
| |
|
|
|
|||||||||||||||||
| (*1) | As of December 31, 2022 and 2023, investments in associates amounting to ￦ 628,573 million and ￦ 650,116 million, respectively, are provided as collateral in relation to the associates’ borrowings. |
| (*2) | As of December 31, 2023, it was classified as an associate even though the Company’s ownership percentage is less than 20% since the Company has significant influence over the investee when considering the structure of its Board of Directors and others. |
| (c) | Details of investments in joint ventures as of December 31, 2022 and 2023 are as follows: |
(in millions of Won) |
Number of shares |
Ownership (%) |
Acquisition cost |
Book value |
||||||||||||||||
| Company |
2022 |
2023 |
||||||||||||||||||
| [Domestic] |
||||||||||||||||||||
| POSCO MC MATERIALS (formerly, POSCO MITSUBISHI CARBON TECHNOLOGY) |
11,568,000 | 60.00 | ￦ |
115,680 | ￦ |
161,465 | 155,748 | |||||||||||||
| Others (6 companies) |
8,845 | 8,323 | ||||||||||||||||||
| |
|
|
|
|||||||||||||||||
| 170,310 | 164,071 | |||||||||||||||||||
| |
|
|
|
|||||||||||||||||
| [Foreign] |
||||||||||||||||||||
| Roy Hill Holdings Pty Ltd(*1) |
13,117,972 | 12.50 | 1,528,672 | 1,418,022 | 1,400,009 | |||||||||||||||
| POSCO-NPS Niobium LLC |
325,050,000 | 50.00 | 364,609 | 412,002 | 419,192 | |||||||||||||||
| KOBRASCO |
2,010,719,185 | 50.00 | 32,950 | 103,044 | 99,768 | |||||||||||||||
| BX STEEL POSCO Cold Rolled Sheet Co., Ltd. |
— | 25.00 | 61,961 | 111,219 | 111,001 | |||||||||||||||
| DMSA/AMSA(*1) |
— | 3.89 | 346,880 | 23,740 | 16,572 | |||||||||||||||
| PT NICOLE METAL INDUSTRY(*2) |
76,382,353 | 49.00 | 292,780 | — | 284,351 | |||||||||||||||
| HBIS-POSCO Automotive Steel Co., Ltd |
— | 50.00 | 235,251 | 216,138 | 208,765 | |||||||||||||||
| Others (9 companies) |
23,170 | 24,282 | ||||||||||||||||||
| |
|
|
|
|||||||||||||||||
| 2,307,335 | 2,563,940 | |||||||||||||||||||
| |
|
|
|
|||||||||||||||||
￦ |
2,477,645 | 2,728,011 | ||||||||||||||||||
| |
|
|
|
|||||||||||||||||
| |
(*1) | As of December 31, 2022 and 2023, the investments in joint ventures are provided as collateral in relation to the joint ventures’ borrowings. |
| |
(*2) | During the year ended December 31, 2023, the Company acquired 49% shares of PT NICOLE METAL INDUSTRY, for ￦ 292,780 million and classified as investments in joint ventures. |
| (d) | The movements of investments in associates and joint ventures for the years ended December 31, 2022 and 2023 were as follows: |
| 1) | For the year ended December 31, 2022 |
(in millions of Won) |
||||||||||||||||||||||||
| Company |
December 31, 2021 Book value |
Acquisition |
Dividends |
Share of profits (losses) |
Other increase (decrease)(*1) |
December 31, 2022 Book value |
||||||||||||||||||
| [Domestic] |
||||||||||||||||||||||||
| EQP POSCO Global NO1 Natural Resources Private Equity Fund(*3) |
￦ |
176,136 | — | (143,170 | ) | 145,822 | (178,788 | ) | — | |||||||||||||||
| Samcheok Blue Power Co.,Ltd. |
382,887 | — | (9,992 | ) | (19,354 | ) | (1,041 | ) | 352,500 | |||||||||||||||
| SNNC |
171,332 | — | (5,348 | ) | 15,484 | 946 | 182,414 | |||||||||||||||||
| QSONE Co.,Ltd. |
86,058 | — | (1,100 | ) | 1,420 | — | 86,378 | |||||||||||||||||
| Chun-cheon Energy Co., Ltd |
9,571 | — | — | (802 | ) | 744 | 9,513 | |||||||||||||||||
| Western Inland highway CO.,LTD. |
53,563 | — | — | (125 | ) | (53,438 | ) | — | ||||||||||||||||
| Pocheon-Hwado Highway Corp. |
28,813 | 5,519 | — | (4,683 | ) | (2,484 | ) | 27,165 | ||||||||||||||||
| CHUNGJU ENTERPRISE CITY DEVELOPMENT Co.,Ltd |
19,191 | — | — | (453 | ) | (4,133 | ) | 14,605 | ||||||||||||||||
| DaeSung SnM Co., Ltd (formerly, Daesung Steel) |
19,073 | — | — | 1,396 | — | 20,469 | ||||||||||||||||||
| PCC Amberstone Private Equity Fund 1 |
9,251 | — | (652 | ) | 1,104 | (377 | ) | 9,326 | ||||||||||||||||
| POSCO MC MATERIALS (formerly, POSCO MITSUBISHI CARBON TECHNOLOGY) |
169,838 | — | (24,000 | ) | 15,604 | 23 | 161,465 | |||||||||||||||||
| Others (64 companies) |
113,711 | 45,563 | (4,368 | ) | (3,931 | ) | 9,578 | 160,553 | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 1,239,424 | 51,082 | (188,630 | ) | 151,482 | (228,970 | ) | 1,024,388 | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| [Foreign] |
||||||||||||||||||||||||
| South-East Asia Gas Pipeline Company Ltd. |
238,601 | — | (14,541 | ) | 50,143 | 16,115 | 290,318 | |||||||||||||||||
| AES Mong Duong Power Company Limited |
182,639 | — | (33,174 | ) | 45,382 | 14,747 | 209,594 | |||||||||||||||||
| 9404-5515 Quebec Inc.(*2) |
135,738 | 172,316 | (31,949 | ) | 25,195 | 29,961 | 331,261 | |||||||||||||||||
| FQM Australia Holdings Pty Ltd |
91,052 | — | — | 166 | 6,885 | 98,103 | ||||||||||||||||||
| Eureka Moly LLC |
13,633 | — | — | — | 941 | 14,574 | ||||||||||||||||||
| AMCI (WA) PTY LTD |
67,972 | — | — | (3,964 | ) | (6,178 | ) | 57,830 | ||||||||||||||||
| NCR LLC |
102,319 | 82,798 | — | (2,338 | ) | 4,593 | 187,372 | |||||||||||||||||
| KOREA LNG LTD. |
31,340 | — | (21,161 | ) | 21,027 | (2,082 | ) | 29,124 | ||||||||||||||||
| Nickel Mining Company SAS |
48,249 | — | — | 42,169 | 218 | 90,636 | ||||||||||||||||||
| ZHEJIANG HUAYOU-POSCO ESM CO., LTD |
22,769 | 82,010 | — | (1,302 | ) | (4,544 | ) | 98,933 | ||||||||||||||||
| Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd |
19,099 | — | — | 213 | (19,312 | ) | — | |||||||||||||||||
| PT. Wampu Electric Power |
15,851 | — | (2,474 | ) | 823 | 2,459 | 16,659 | |||||||||||||||||
| POS-SeAH Steel Wire(Nantong) Co., Ltd. |
9,140 | — | — | (220 | ) | (330 | ) | 8,590 | ||||||||||||||||
| Roy Hill Holdings Pty Ltd |
1,346,712 | — | (233,592 | ) | 273,084 | 31,818 | 1,418,022 | |||||||||||||||||
| POSCO-NPS Niobium LLC |
393,793 | — | (34,909 | ) | 25,884 | 27,234 | 412,002 | |||||||||||||||||
| KOBRASCO |
68,296 | — | (21,287 | ) | 48,267 | 7,768 | 103,044 | |||||||||||||||||
| BX STEEL POSCO Cold Rolled Sheet Co., Ltd. |
107,650 | — | — | 6,527 | (2,958 | ) | 111,219 | |||||||||||||||||
| DMSA/AMSA |
24,144 | — | — | (2,108 | ) | 1,704 | 23,740 | |||||||||||||||||
| CSP - Compania Siderurgica do Pecem |
52,257 | — | — | (90,395 | ) | 38,138 | — | |||||||||||||||||
| HBIS-POSCO Automotive Steel Co., Ltd |
110,769 | 126,195 | — | (10,515 | ) | (10,311 | ) | 216,138 | ||||||||||||||||
| Others (37 companies) |
193,200 | 29,975 | (56,527 | ) | 96,740 | (8,384 | ) | 255,004 | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 3,275,223 | 493,294 | (449,614 | ) | 524,778 | 128,482 | 3,972,163 | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
￦ |
4,514,647 | 544,376 | (638,244 | ) | 676,260 | (100,488 | ) | 4,996,551 | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (*1) | Other increase or decrease represents the changes in investments in associates and joint ventures due to disposals and change in capital adjustments effect from translations of financial statements of foreign investees and others during the year ended December 31, 2022. |
| (*2) | During the year ended December 31, 2022, it was additionally acquired due to the in-kind dividend of EQP POSCO Global NO1 Natural Resources Private Equity Fund, and the Company classify it as other increase or decrease. |
| (*3) | During the year ended December 31, 2022, dividends were declared prior to liquidation. The Company recognized full impairment loss of ￦ 10,065 million considering the low asset quality and assessment of recoverable amount. |
| 2) | For the year ended December 31, 2023 |
(in millions of Won) |
||||||||||||||||||||||||
| Company |
December 31, 2022 Book value |
Acquisition |
Dividends |
Share of profits (losses) |
Other increase (decrease)(*1) |
December 31, 2023 Book value |
||||||||||||||||||
| [Domestic] |
||||||||||||||||||||||||
| Samcheok Blue Power Co.,Ltd. |
￦ |
352,500 | — | (10,020 | ) | (18,802 | ) | (157 | ) | 323,521 | ||||||||||||||
| SNNC |
182,414 | — | — | (81,803 | ) | 81 | 100,692 | |||||||||||||||||
| QSONE Co.,Ltd.(*2) |
86,378 | — | — | 245 | (86,623 | ) | — | |||||||||||||||||
| Chun-cheon Energy Co., Ltd |
9,513 | — | — | 4,990 | 537 | 15,040 | ||||||||||||||||||
| Pocheon-Hwado Highway Corp. |
27,165 | 636 | — | (3,803 | ) | — | 23,998 | |||||||||||||||||
| CHUNGJU ENTERPRISE CITY DEVELOPMENT Co.,Ltd |
14,605 | — | — | (638 | ) | — | 13,967 | |||||||||||||||||
| DaeSung SnM Co., Ltd (formerly, Daesung Steel) |
20,469 | — | — | 75 | (248 | ) | 20,296 | |||||||||||||||||
| PCC Amberstone Private Equity Fund 1 |
9,326 | — | (622 | ) | 562 | (362 | ) | 8,904 | ||||||||||||||||
| POSCO MC MATERIALS (formerly, POSCO MITSUBISHI CARBON TECHNOLOGY) |
161,465 | — | (9,000 | ) | 3,176 | 107 | 155,748 | |||||||||||||||||
| Others (55 companies) |
160,553 | 16,439 | (4,292 | ) | 1,966 | (43,977 | ) | 130,689 | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 1,024,388 | 17,075 | (23,934 | ) | (94,032 | ) | (130,642 | ) | 792,855 | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| [Foreign] |
||||||||||||||||||||||||
| South-East Asia Gas Pipeline Company Ltd. |
290,318 | — | (59,295 | ) | 50,340 | 5,919 | 287,282 | |||||||||||||||||
| AES Mong Duong Power Company Limited |
209,594 | — | (33,839 | ) | 38,782 | 16,162 | 230,699 | |||||||||||||||||
| 9404-5515 Quebec Inc.(*2) |
331,261 | — | (14,251 | ) | 16,494 | 13,220 | 346,724 | |||||||||||||||||
| FQM Australia Holdings Pty Ltd |
98,103 | — | — | (111,783 | ) | 13,680 | — | |||||||||||||||||
| Eureka Moly LLC |
14,574 | — | — | (15,020 | ) | 446 | — | |||||||||||||||||
| AMCI (WA) PTY LTD |
57,830 | — | — | (503 | ) | 2,898 | 60,225 | |||||||||||||||||
| NCR LLC |
187,372 | 65,542 | — | (6,999 | ) | 7,206 | 253,121 | |||||||||||||||||
| KOREA LNG LTD. |
29,124 | — | (21,106 | ) | 21,060 | 29,681 | 58,759 | |||||||||||||||||
| Nickel Mining Company SAS |
90,636 | — | — | (8,358 | ) | 5,689 | 87,967 | |||||||||||||||||
| ZHEJIANG HUAYOU-POSCO ESM CO., LTD |
98,933 | 15,640 | — | (8,435 | ) | (838 | ) | 105,300 | ||||||||||||||||
| PT. Wampu Electric Power |
16,659 | — | (1,624 | ) | 1,890 | (1,293 | ) | 15,632 | ||||||||||||||||
| POS-SeAH Steel Wire(Nantong) Co., Ltd. |
8,590 | — | — | 98 | (46 | ) | 8,642 | |||||||||||||||||
| Roy Hill Holdings Pty Ltd |
1,418,022 | — | (367,445 | ) | 292,478 | 56,954 | 1,400,009 | |||||||||||||||||
| POSCO-NPS Niobium LLC |
412,002 | — | (35,543 | ) | 35,148 | 7,585 | 419,192 | |||||||||||||||||
| KOBRASCO |
103,044 | — | (36,471 | ) | 21,795 | 11,400 | 99,768 | |||||||||||||||||
| BX STEEL POSCO Cold Rolled Sheet Co., Ltd. |
111,219 | — | (12,386 | ) | 12,669 | (501 | ) | 111,001 | ||||||||||||||||
| DMSA/AMSA |
23,740 | — | — | (7,681 | ) | 513 | 16,572 | |||||||||||||||||
| PT NICOLE METAL INDUSTRY |
— | 292,780 | — | 39 | (8,468 | ) | 284,351 | |||||||||||||||||
| HBIS-POSCO Automotive Steel Co., Ltd |
216,138 | — | — | (6,765 | ) | (608 | ) | 208,765 | ||||||||||||||||
| Others (37 companies) |
255,004 | — | (52,444 | ) | 38,461 | (7,621 | ) | 233,400 | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 3,972,163 | 373,962 | (634,404 | ) | 363,710 | 151,978 | 4,227,409 | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
￦ |
4,996,551 | 391,037 | (658,338 | ) | 269,678 | 21,336 | 5,020,264 | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (*1) | Other increase or decrease represents the changes in investments in associates and joint ventures due to disposals and change in capital adjustments effect from translations of financial statements of foreign investees and others during the year ended December 31, 2023. |
| (*2) | During the year ended December 31, 2023, the Company additionally acquired 50% of the shares held by external shareholders of QSONE Co.,Ltd., which was previously classified as an investment in associate. Accordingly, the entity was newly included in consolidated subsidiary due to obtaining control of the entity. |
| (e) | Summarized financial information of associates and joint ventures as of and for the years ended December 31, 2022 and 2023 are as follows: |
| 1) | December 31, 2022 |
(in millions of Won) |
||||||||||||||||||||
| Company |
Assets |
Liabilities |
Equity |
Sales |
Net income (loss) |
|||||||||||||||
| [Domestic] |
||||||||||||||||||||
| EQP POSCO Global NO1 Natural Resources Private Equity Fund |
￦ |
9,471 | 480 | 8,991 | — | 425,366 | ||||||||||||||
| Samcheok Blue Power Co.,Ltd. |
3,515,861 | 2,885,218 | 630,643 | — | (8,447 | ) | ||||||||||||||
| SNNC |
667,440 | 274,801 | 392,639 | 986,557 | 10,273 | |||||||||||||||
| QSONE Co.,Ltd. |
253,078 | 80,322 | 172,756 | 18,753 | 2,840 | |||||||||||||||
| Chun-cheon Energy Co., Ltd |
634,842 | 527,190 | 107,652 | 585,610 | 20,224 | |||||||||||||||
| Pocheon-Hwado Highway Corp. |
366,163 | 244,455 | 121,708 | — | (1,175 | ) | ||||||||||||||
| CHUNGJU ENTERPRISE CITY DEVELOPMENT Co.,Ltd |
24,926 | 5,769 | 19,157 | 17,189 | (1,521 | ) | ||||||||||||||
| DaeSung SnM Co., Ltd (formerly, Daesung Steel) |
175,429 | 90,126 | 85,303 | 128,401 | 7,957 | |||||||||||||||
| PCC Amberstone Private Equity Fund 1 |
106,024 | — | 106,024 | 13,877 | 12,546 | |||||||||||||||
| POSCO MC MATERIALS (formerly, POSCO MITSUBISHI CARBON TECHNOLOGY) |
447,604 | 175,229 | 272,375 | 252,246 | 27,628 | |||||||||||||||
| [Foreign] |
||||||||||||||||||||
| South-East Asia Gas Pipeline Company Ltd. |
1,705,670 | 546,262 | 1,159,408 | 447,696 | 200,246 | |||||||||||||||
| AES Mong Duong Power Company Limited |
1,701,272 | 1,019,227 | 682,045 | 417,021 | 151,022 | |||||||||||||||
| 9404-5515 Quebec Inc. |
1,397,061 | — | 1,397,061 | — | 182,708 | |||||||||||||||
| FQM Australia Holdings Pty Ltd |
1,458,318 | 1,131,628 | 326,690 | 493,202 | (22,768 | ) | ||||||||||||||
| KOREA LNG LTD. |
145,845 | 225 | 145,620 | 107,295 | 105,135 | |||||||||||||||
| Nickel Mining Company SAS |
539,318 | 279,291 | 260,027 | 379,922 | 91,008 | |||||||||||||||
| ZHEJIANG HUAYOU-POSCO ESM CO., LTD |
305,740 | 57,932 | 247,808 | 45,771 | (3,176 | ) | ||||||||||||||
| PT. Wampu Electric Power |
209,815 | 129,520 | 80,295 | 21,760 | 4,115 | |||||||||||||||
| POS-SeAH Steel Wire(Nantong) Co., Ltd. |
79,116 | 45,677 | 33,439 | 136,663 | (992 | ) | ||||||||||||||
| Roy Hill Holdings Pty Ltd |
9,859,888 | 2,152,428 | 7,707,460 | 7,706,908 | 2,542,223 | |||||||||||||||
| POSCO-NPS Niobium LLC |
823,800 | — | 823,800 | — | 49,341 | |||||||||||||||
| KOBRASCO |
262,724 | 57,242 | 205,482 | 147,843 | 96,534 | |||||||||||||||
| BX STEEL POSCO Cold Rolled Sheet Co., Ltd. |
663,509 | 245,499 | 418,010 | 1,881,946 | 26,106 | |||||||||||||||
| DMSA/AMSA |
3,022,659 | 2,412,377 | 610,282 | 1,368,730 | (54,212 | ) | ||||||||||||||
| CSP—Compania Siderurgica do Pecem |
4,422,752 | 3,678,956 | 743,796 | 3,101,132 | 500,082 | |||||||||||||||
| HBIS-POSCO Automotive Steel Co., Ltd |
712,633 | 270,668 | 441,965 | 473,494 | (15,515 | ) | ||||||||||||||
| 2) | December 31, 2023 |
(in millions of Won) |
||||||||||||||||||||
| Company |
Assets |
Liabilities |
Equity (deficit) |
Sales |
Net income (loss) |
|||||||||||||||
| [Domestic] |
||||||||||||||||||||
| Samcheok Blue Power Co.,Ltd. |
￦ |
4,228,568 | 3,669,074 | 559,494 | 14,002 | (28,880 | ) | |||||||||||||
| SNNC |
612,992 | 388,715 | 224,277 | 766,011 | (168,553 | ) | ||||||||||||||
| Chun-cheon Energy Co., Ltd |
571,495 | 453,390 | 118,105 | 502,879 | 10,453 | |||||||||||||||
| Pocheon-Hwado Highway Corp. |
583,935 | 462,900 | 121,035 | — | (1,824 | ) | ||||||||||||||
| CHUNGJU ENTERPRISE CITY DEVELOPMENT Co.,Ltd |
19,995 | 2,998 | 16,997 | 5,595 | (2,160 | ) | ||||||||||||||
| DaeSung SnM Co., Ltd (formerly, Daesung Steel) |
178,251 | 93,930 | 84,321 | 108,660 | 430 | |||||||||||||||
| PCC Amberstone Private Equity Fund 1 |
105,145 | 3,923 | 101,222 | 12,134 | 6,391 | |||||||||||||||
| POSCO MC MATERIALS (formerly, POSCO MITSUBISHI CARBON TECHNOLOGY) |
431,090 | 170,518 | 260,572 | 194,238 | 2,998 | |||||||||||||||
| [Foreign] |
||||||||||||||||||||
| South-East Asia Gas Pipeline Company Ltd. |
1,758,765 | 611,484 | 1,147,281 | 434,358 | 201,031 | |||||||||||||||
| AES Mong Duong Power Company Limited |
1,612,793 | 889,424 | 723,369 | 449,807 | 129,274 | |||||||||||||||
| 9404-5515 Quebec Inc. |
1,430,295 | — | 1,430,295 | — | 63,809 | |||||||||||||||
| FQM Australia Holdings Pty Ltd |
180,931 | 1,219,922 | (1,038,991 | ) | 453,626 | (1,480,586 | ) | |||||||||||||
| KOREA LNG LTD. |
94,661 | 136 | 94,525 | 108,081 | 105,300 | |||||||||||||||
| Nickel Mining Company SAS |
520,209 | 272,567 | 247,642 | 296,130 | (26,786 | ) | ||||||||||||||
| ZHEJIANG HUAYOU-POSCO ESM CO., LTD |
297,683 | 33,927 | 263,756 | 34,372 | (21,081 | ) | ||||||||||||||
| PT. Wampu Electric Power |
206,942 | 131,822 | 75,120 | 20,166 | 9,452 | |||||||||||||||
| POS-SeAH Steel Wire(Nantong) Co., Ltd. |
82,568 | 48,727 | 33,841 | 117,208 | 522 | |||||||||||||||
| Roy Hill Holdings Pty Ltd |
10,929,518 | 3,007,919 | 7,921,599 | 8,146,546 | 2,826,424 | |||||||||||||||
| POSCO-NPS Niobium LLC |
838,180 | — | 838,180 | — | 64,687 | |||||||||||||||
| KOBRASCO |
224,406 | 25,475 | 198,931 | 63,338 | 43,591 | |||||||||||||||
| BX STEEL POSCO Cold Rolled Sheet Co., Ltd. |
659,704 | 242,566 | 417,138 | 1,647,395 | 50,675 | |||||||||||||||
| DMSA/AMSA |
3,058,209 | 2,632,239 | 425,970 | 1,106,369 | (197,482 | ) | ||||||||||||||
| HBIS-POSCO Automotive Steel Co., Ltd |
826,886 | 398,751 | 428,135 | 340,341 | (12,584 | ) | ||||||||||||||
| PT NICOLE METAL INDUSTRY |
389,077 | 2,237 | 386,840 | — | 79 | |||||||||||||||
(f) |
Changes in accumulated losses of equity-accounted investees that were not recognized since the Company discontinued the use of the equity method during the year ended December 31, 2023 were as follows: |
(in millions of Won) |
||||||||||||
| Company |
Beginning balance |
Increase (decrease) |
Ending balance |
|||||||||
| New Songdo International City Development, LLC |
￦ |
134,495 | (17,780 | ) | 116,715 | |||||||
| UITrans LRT Co., Ltd. |
43,872 | 2,583 | 46,455 | |||||||||
| Clean Iksan Co., Ltd. |
703 | (217 | ) | 486 | ||||||||
| HYOCHUN Co.,Ltd. |
4,396 | 713 | 5,109 | |||||||||
| KIRIN VIETNAM CO., LTD |
103 | (1 | ) | 102 | ||||||||
| INKOTECH, INC. |
540 | 453 | 993 | |||||||||
| POSCO-Poggenamp Electrical Steel Pvt. Ltd. |
557 | 239 | 796 | |||||||||
| Gunggi Green Energy |
4,296 | 6,893 | 11,189 | |||||||||
| Link City PFV Inc. |
5,452 | 18,396 | 23,848 | |||||||||
| Noeul Green Energy Co.,Ltd. |
1,886 | 726 | 2,612 | |||||||||
| Pohang E&E Co., Ltd. |
6,391 | 5,755 | 12,146 | |||||||||
| FQM Australia Holdings Pty Ltd |
— | 252,727 | 252,727 | |||||||||
| |
|
|
|
|
|
|||||||
￦ |
202,691 | 270,487 | 473,178 | |||||||||
| |
|
|
|
|
|
|||||||
12. |
Joint Operations |
| Joint operations |
Operation |
Ownership (%) |
Location | |||||
| Myanmar A-1/A-3 |
Mine development and gas production | 51.00 | Myanmar | |||||
| Offshore Midstream |
Gas transportation facility | 51.00 | Myanmar | |||||
| Greenhills Mine(*1) |
Mine development | 20.00 | Canada | |||||
| Mt. Thorley J/V |
Mine development | 20.00 | Australia | |||||
| POSMAC J/V |
Mine development | 20.00 | Australia | |||||
| Samcheok Thermal Power Plant EPC (Unit 1, 2) Construction work |
Construction | 49.00 | Korea | |||||
| Sinansan Line Double Track Train Private Investment project construction work |
Construction | 36.00 | Korea | |||||
| Panama Metro Line 3 Project construction work |
Construction | 20.00 | Panama | |||||
| 2*600 MW Matarbari Ultra Super Critical Coal-Fired Power construction work |
Construction | 67.00 | Bangladesh | |||||
| Yangsan Sasong 2nd Apartment Project (B5,6,7,9 Block) Construction work |
Construction | 49.00 | Korea | |||||
| Yongmun 123 Construction Work Reconstruction Maintenance Project |
Construction | 70.00 | Korea | |||||
| Songdo B5 Block office Complex Project Construction work |
Construction | 80.00 | Korea | |||||
| Particle Accelerator Facility Construction work |
Construction | 55.00 | Korea | |||||
| Anyang Jinheung Apartment Construction work |
Construction | 45.00 | Korea | |||||
| (*1) | As of December 31, 2023, the joint operation is classified as assets and liablities held for sale. |
13. |
Investment Property, Net |
(in millions of Won) |
2022 |
2023 |
||||||||||||||||||||||
Acquisition cost |
Accumulated depreciation and impairment loss |
Book value |
Acquisition cost |
Accumulated depreciation and impairment loss |
Book value |
|||||||||||||||||||
| Land |
￦ |
325,241 | (16,718 | ) | 308,523 | 804,022 | (16,718 | ) | 787,304 | |||||||||||||||
| Buildings |
825,183 | (231,678 | ) | 593,505 | 905,649 | (249,863 | ) | 655,786 | ||||||||||||||||
| Structures |
3,569 | (2,213 | ) | 1,356 | 3,384 | (1,511 | ) | 1,873 | ||||||||||||||||
| Right of use assets |
206,166 | (35,519 | ) | 170,647 | 208,036 | (36,705 | ) | 171,331 | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
￦ |
1,360,159 | (286,128 | ) | 1,074,031 | 1,921,091 | (304,797 | ) | 1,616,294 | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (b) | Changes in the carrying amount of investment property for the years ended December 31, 2022 and 2023 were as follows: |
| 1) | For the year ended December 31, 2022 |
(in millions of Won) |
Beginning |
Acquisitions |
Disposals |
Depreciation |
Others(*1) |
Ending |
||||||||||||||||||
| Land |
￦ |
332,308 | — | (2,921 | ) | — | (20,864 | ) | 308,523 | |||||||||||||||
| Buildings |
584,549 | 1,661 | (34 | ) | (28,336 | ) | 35,665 | 593,505 | ||||||||||||||||
| Structures |
753 | — | — | (797 | ) | 1,400 | 1,356 | |||||||||||||||||
| Right of use assets |
168,467 | — | (21,151 | ) | (6,888 | ) | 30,219 | 170,647 | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
￦ |
1,086,077 | 1,661 | (24,106 | ) | (36,021 | ) | 46,420 | 1,074,031 | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (*1) | Includes reclassification resulting from changing purpose of use, adjustment of foreign currency translation difference and others. |
| 2) | For the year ended December 31, 2023 |
(in millions of Won) |
Beginning |
Acquisitions |
Business Combination(*2) |
Disposals |
Depreciation |
Others(*1) |
Ending |
|||||||||||||||||||||
| Land |
￦ |
308,523 | 54,891 | 473,301 | (60 | ) | — | (49,351 | ) | 787,304 | ||||||||||||||||||
| Buildings |
593,505 | 1,006 | 83,739 | (303 | ) | (28,902 | ) | 6,741 | 655,786 | |||||||||||||||||||
| Structures |
1,356 | — | — | — | (1,049 | ) | 1,566 | 1,873 | ||||||||||||||||||||
| Right of use assets |
170,647 | 216 | — | (78 | ) | (5,635 | ) | 6,181 | 171,331 | |||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
￦ |
1,074,031 | 56,113 | 557,040 | (441 | ) | (35,586 | ) | (34,863 | ) | 1,616,294 | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| (*1) | Includes reclassification resulting from changing purpose of use, adjustment of foreign currency translation difference and others. |
| (*2) | Represents increases in investment property due to business combination upon reclassification of QSONE Co.,Ltd. into a subsidiary during the year ended December 31, 2023. |
14. |
Property, Plant and Equipment, Net |
| (a) | Property, plant and equipment as of December 31, 2022 and 2023 are as follows: |
(in millions of Won) |
2022 |
2023 |
||||||||||||||||||||||||||||||
Acquisition cost |
Accumulated depreciation and impairment loss |
Government grants |
Book value |
Acquisition cost |
Accumulated depreciation and impairment loss |
Government grants |
Book value |
|||||||||||||||||||||||||
| Land |
￦ |
3,103,218 | (53 | ) | — | 3,103,165 | 3,295,768 | (5,524 | ) | — | 3,290,244 | |||||||||||||||||||||
| Buildings |
10,102,634 | (5,922,285 | ) | (5,455 | ) | 4,174,894 | 10,671,833 | (6,237,883 | ) | (6,318 | ) | 4,427,632 | ||||||||||||||||||||
| Structures |
6,989,634 | (3,826,658 | ) | (49 | ) | 3,162,927 | 7,159,034 | (4,077,472 | ) | (38 | ) | 3,081,524 | ||||||||||||||||||||
| Machinery and equipment |
52,198,121 | (35,767,810 | ) | (7,481 | ) | 16,422,830 | 54,184,134 | (37,630,472 | ) | (14,470 | ) | 16,539,192 | ||||||||||||||||||||
| Vehicles |
337,932 | (284,897 | ) | (904 | ) | 52,131 | 383,891 | (302,246 | ) | (2,050 | ) | 79,595 | ||||||||||||||||||||
| Tools |
497,173 | (405,844 | ) | (368 | ) | 90,961 | 557,394 | (428,215 | ) | (314 | ) | 128,865 | ||||||||||||||||||||
| Furniture and fixtures |
796,405 | (622,944 | ) | (116 | ) | 173,345 | 840,366 | (650,424 | ) | (55 | ) | 189,887 | ||||||||||||||||||||
| Lease assets |
1,299,779 | (378,581 | ) | — | 921,198 | 1,468,295 | (469,990 | ) | — | 998,305 | ||||||||||||||||||||||
| Bearer plants |
180,486 | (38,766 | ) | — | 141,720 | 186,723 | (49,392 | ) | — | 137,331 | ||||||||||||||||||||||
| Construction-in- progress |
3,621,269 | (73,266 | ) | (9,978 | ) | 3,538,025 | 6,421,533 | (76,357 | ) | (11,503 | ) | 6,333,673 | ||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
￦ |
79,126,651 | (47,321,104 | ) | (24,351 | ) | 31,781,196 | 85,168,971 | (49,927,975 | ) | (34,748 | ) | 35,206,248 | ||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| (b) | Changes in the carrying amount of property, plant and equipment for the years ended December 31, 2022 and 2023 were as follows: |
| 1) | For the year ended December 31, 2022 |
(in millions of Won) |
Beginning |
Acquisitions |
Business Combination(*2) |
Disposals |
Depreciation |
Impairment loss(*3) |
Others(*1) |
Ending |
||||||||||||||||||||||||
| Land |
￦ |
2,702,715 | 89,357 | 248,858 | (1,247 | ) | — | — | 63,482 | 3,103,165 | ||||||||||||||||||||||
| Buildings |
4,204,450 | 127,837 | 37,741 | (9,957 | ) | (317,350 | ) | (11,230 | ) | 143,403 | 4,174,894 | |||||||||||||||||||||
| Structures |
3,131,795 | 82,130 | 38,535 | (3,274 | ) | (253,996 | ) | (5,084 | ) | 172,821 | 3,162,927 | |||||||||||||||||||||
| Machinery and equipment |
16,420,156 | 597,172 | 1,216 | (33,511 | ) | (2,303,917 | ) | (184,706 | ) | 1,926,420 | 16,422,830 | |||||||||||||||||||||
| Vehicles |
46,030 | 15,592 | 902 | (1,017 | ) | (18,717 | ) | (123 | ) | 9,464 | 52,131 | |||||||||||||||||||||
| Tools |
77,795 | 32,386 | 203 | (187 | ) | (37,170 | ) | (351 | ) | 18,285 | 90,961 | |||||||||||||||||||||
| Furniture and fixtures |
166,162 | 33,936 | 1,963 | (1,175 | ) | (59,359 | ) | (1,990 | ) | 33,808 | 173,345 | |||||||||||||||||||||
| Lease assets |
867,746 | 184,260 | 193,572 | (22,029 | ) | (168,521 | ) | — | (133,830 | ) | 921,198 | |||||||||||||||||||||
| Bearer plants |
154,682 | — | — | — | (9,691 | ) | — | (3,271 | ) | 141,720 | ||||||||||||||||||||||
| Construction-
in-progress
|
1,825,167 | 3,947,703 | 11,111 | (383 | ) | — | (9,699 | ) | (2,235,874 | ) | 3,538,025 | |||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
￦ |
29,596,698 | 5,110,373 | 534,101 | (72,780) | (3,168,721 | ) | (213,183 | ) | (5,292 | ) | 31,781,196 | |||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| (*1) | Represents assets transferred from construction-in-progress |
| (*2) | Represents increases in property, plant and equipment due to business combination upon acquisition of Senex Energy Limited during the year ended December 31, 2022. |
(*3) |
The Company estimated the recoverable amounts (net fair value) of damaged assets due the flooding of Naengcheon stream in Pohang, and recognized an impairment loss of 207,072 million since recoverable amounts are less than their carrying amounts. |
| 2) | For the year ended December 31, 2023 |
(in millions of Won) |
Beginning |
Acquisitions |
Business Combination(*2) |
Disposals |
Depreciation |
Impairment loss(*3,4) |
Others(*1) |
Ending |
||||||||||||||||||||||||
| Land |
￦ |
3,103,165 | 83,489 | 32,565 | (7,502 | ) | — | (5,471 | ) | 83,998 | 3,290,244 | |||||||||||||||||||||
| Buildings |
4,174,894 | 53,344 | 5,770 | (14,619 | ) | (326,280 | ) | (28,614 | ) | 563,137 | 4,427,632 | |||||||||||||||||||||
| Structures |
3,162,927 | 16,498 | 3,651 | (6,915 | ) | (261,970 | ) | (28,483 | ) | 195,816 | 3,081,524 | |||||||||||||||||||||
| Machinery and equipment |
16,422,830 | 211,181 | — | (63,195 | ) | (2,401,947 | ) | (202,885 | ) | 2,573,208 | 16,539,192 | |||||||||||||||||||||
| Vehicles |
52,131 | 34,004 | — | (782 | ) | (26,322 | ) | — | 20,564 | 79,595 | ||||||||||||||||||||||
| Tools |
90,961 | 40,170 | — | (607 | ) | (52,444 | ) | (77 | ) | 50,862 | 128,865 | |||||||||||||||||||||
| Furniture and fixtures |
173,345 | 36,975 | 655 | (1,516 | ) | (61,947 | ) | (63 | ) | 42,438 | 189,887 | |||||||||||||||||||||
| Lease assets |
921,198 | 243,433 | — | (15,095 | ) | (170,386 | ) | — | 19,155 | 998,305 | ||||||||||||||||||||||
| Bearer plants |
141,720 | — | — | — | (9,579 | ) | — | 5,190 | 137,331 | |||||||||||||||||||||||
| Construction-in-progress |
3,538,025 | 6,388,837 | — | (2,269 | ) | — | (8,420 | ) | (3,582,500 | ) | 6,333,673 | |||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
￦ |
31,781,196 | 7,107,931 | 42,641 | (112,500 | ) | (3,310,875 | ) | (274,013 | ) | (28,132 | ) | 35,206,248 | ||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| (*1) | Represents assets transferred from construction-in-progress |
| (*2) | Represents increases in property, plant and equipment upon reclassification of QSONE Co.,Ltd., which was previously an associate, into a subsidiary by acquiring additional shares during the year ended December 31, 2023. |
| (*3) | The Company terminated operations of certain portions of the lithium production facilities and others located in Gwangyang and Argentina due to changes in operation plans. The Company estimated the recoverable amount of these assets at the net fair value, and recognized an impairment loss of ￦ 196,207 million since recoverable amounts are less than their carrying amounts. |
| (*4) | The Company identified impairment indications for the hydrogen peroxide production facilities located in Gwangyang due to fluctuations in raw material prices and changes in production plans. The Company estimated the recoverable amount of these assets at the net fair value, and recognized an impairment loss of ￦ 46,535 million since recoverable amounts are less than their carrying amounts. |
| (c) | Borrowing costs capitalized and the capitalized interest rate for the years ended December 31, 2021, 2022 and 2023 were as follows: |
(in millions of Won) |
2021 |
2022 |
2023 |
|||||||||
| Weighted average expenditure |
￦ |
1,230,145 | 1,657,425 | 3,585,047 | ||||||||
| Borrowing costs capitalized |
31,295 | 44,264 | 126,260 | |||||||||
| Capitalization rate (%) |
2.25 ~ 3.16 | 2.39 ~ 3.85 | 1.53 ~ 6.91 | |||||||||
| (d) | Property, plant and equipment and investment property pledged as collateral as of December 31, 2022 and 2023 are as follows: |
(in millions of Won) |
Book value |
|||||||||
| Collateral right holder |
2022 |
2023 |
||||||||
| Land |
Korean Development Bank and others |
￦ |
1,161,696 | 1,100,811 | ||||||
| Buildings and structures |
Korean Development Bank and others |
1,449,066 | 1,410,864 | |||||||
| Machinery and equipment |
Korean Development Bank and others |
2,123,621 | 2,014,210 | |||||||
| |
|
|
|
|||||||
￦ |
4,734,383 | 4,525,885 | ||||||||
| |
|
|
|
|||||||
| (e) | Changes in the carrying amount of right of use assets presented as investment property and property, plant and equipment for the years ended December 31, 2022 and 2023 were as follows: |
| 1) | For the year ended December 31, 2022 |
(in millions of Won) |
Beginning |
Acquisitions |
Business Combination(*1) |
Depreciation |
Others |
Ending |
||||||||||||||||||
| Land |
￦ |
391,446 | 18,077 | — | (16,843 | ) | (24,513 | ) | 368,167 | |||||||||||||||
| Buildings and structures |
143,854 | 74,454 | 6,714 | (50,397 | ) | (10,977 | ) | 163,648 | ||||||||||||||||
| Machinery and equipment |
256,205 | 43,088 | 175,795 | (56,333 | ) | (99,734 | ) | 319,021 | ||||||||||||||||
| Vehicles |
14,753 | 12,467 | 98 | (12,015 | ) | 3,349 | 18,652 | |||||||||||||||||
| Ships |
210,056 | 23,793 | — | (18,355 | ) | 2 | 215,496 | |||||||||||||||||
| others |
19,899 | 12,381 | 10,965 | (21,467 | ) | (14,916 | ) | 6,862 | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
￦ |
1,036,213 | 184,260 | 193,572 | (175,410 | ) | (146,789 | ) | 1,091,846 | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
(*1) |
Represents increases in right-in-use |
| 2) | For the year ended December 31, 2023 |
(in millions of Won) |
Beginning |
Acquisitions |
Depreciation |
Others |
Ending |
|||||||||||||||
| Land |
￦ |
368,167 | 10,470 | (15,582 | ) | 734 | 363,789 | |||||||||||||
| Buildings and structures |
163,648 | 49,929 | (52,697 | ) | (9,514 | ) | 151,366 | |||||||||||||
| Machinery and equipment |
319,021 | 73,761 | (55,481 | ) | 18,303 | 355,604 | ||||||||||||||
| Vehicles |
18,652 | 38,410 | (16,456 | ) | 7,622 | 48,228 | ||||||||||||||
| Ships |
215,496 | 28,178 | (22,920 | ) | — | 220,754 | ||||||||||||||
| others |
6,862 | 42,901 | (12,885 | ) | (6,983 | ) | 29,895 | |||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
￦ |
1,091,846 | 243,649 | (176,021 | ) | 10,162 | 1,169,636 | ||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| (f) | The amount recognized in profit or loss related to leases for the years ended December 31, 2021, 2022 and 2023 were as follows: |
(in millions of Won) |
2021 |
2022 |
2023 |
|||||||||
| Interest on lease liabilities |
￦ |
32,331 | 34,936 | 41,109 | ||||||||
| Expenses related to short-term leases |
20,885 | 29,931 | 52,486 | |||||||||
| Expenses related to leases of low-value assets |
18,577 | 17,877 | 20,103 | |||||||||
| |
|
|
|
|
|
|||||||
￦ |
71,793 | 82,744 | 113,698 | |||||||||
| |
|
|
|
|
|
|||||||
15. |
Goodwill and Other Intangible Assets, Net |
| (a) | Goodwill and other intangible assets as of December 31, 2022 and 2023 are as follows: |
2022 |
2023 |
|||||||||||||||||||||||||||||||
(in millions of Won) |
Acquisition cost |
Accumulated amortization and impairment loss |
Government grants |
Book value |
Acquisition cost |
Accumulated amortization and impairment loss |
Government grants |
Book value |
||||||||||||||||||||||||
| Goodwill |
￦ |
1,723,974 | (1,281,487 | ) | — | 442,487 | 1,720,753 | (1,317,581 | ) | — | 403,172 | |||||||||||||||||||||
| Intellectual property rights |
4,944,973 | (1,808,901 | ) | — | 3,136,072 | 5,167,677 | (2,138,026 | ) | — | 3,029,651 | ||||||||||||||||||||||
| Membership |
135,905 | (2,963 | ) | — | 132,942 | 141,306 | (3,122 | ) | — | 138,184 | ||||||||||||||||||||||
| Development expense |
687,437 | (571,266 | ) | — | 116,171 | 758,878 | (631,974 | ) | (86 | ) | 126,818 | |||||||||||||||||||||
| Port facilities usage rights |
681,530 | (484,319 | ) | — | 197,211 | 681,530 | (499,119 | ) | — | 182,411 | ||||||||||||||||||||||
| Exploration and evaluation assets |
260,548 | (159,557 | ) | — | 100,991 | 324,324 | (160,878 | ) | — | 163,446 | ||||||||||||||||||||||
| Development assets |
78,970 | — | — | 78,970 | 10,235 | — | — | 10,235 | ||||||||||||||||||||||||
| Customer relationships |
865,691 | (624,380 | ) | — | 241,311 | 865,753 | (668,858 | ) | — | 196,895 | ||||||||||||||||||||||
| Other intangible assets |
1,175,409 | (783,088 | ) | (25 | ) | 392,296 | 1,260,067 | (796,052 | ) | (43 | ) | 463,972 | ||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
￦ |
10,554,437 | (5,715,961 | ) | (25 | ) | 4,838,451 | 10,930,523 | (6,215,610 | ) | (129 | ) | 4,714,784 | ||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| (b) | The changes in carrying amount of goodwill and other intangible assets for the years ended December 31, 2022 and 2023 were as follows: |
| 1) | For the year ended December 31, 2022 |
(in millions of Won) |
Beginning |
Acquisitions |
Business Combination(*3,4) |
Disposals |
Amortization |
Impairment loss(*5) |
Others(*2) |
Ending |
||||||||||||||||||||||||
| Goodwill |
￦ |
735,969 | — | 66,206 | — | — | (369,337 | ) | 9,649 | 442,487 | ||||||||||||||||||||||
| Intellectual property rights |
2,225,808 | 354,179 | 912,971 | (582 | ) | (326,494 | ) | 379 | (30,189 | ) | 3,136,072 | |||||||||||||||||||||
| Membership(*1) |
142,370 | 9,230 | — | (2,082 | ) | (145 | ) | 854 | (17,285 | ) | 132,942 | |||||||||||||||||||||
| Development expense |
153,973 | 1,800 | — | (13 | ) | (67,446 | ) | (1,046 | ) | 28,903 | 116,171 | |||||||||||||||||||||
| Port facilities usage rights |
216,021 | — | — | — | (14,800 | ) | — | (4,010 | ) | 197,211 | ||||||||||||||||||||||
| Exploratation and evaluation assets |
61,957 | 24,583 | 21,266 | — | — | — | (6,815 | ) | 100,991 | |||||||||||||||||||||||
| Development assets |
— | 6,607 | 76,591 | — | — | — | (4,228 | ) | 78,970 | |||||||||||||||||||||||
| Customer relationships |
285,720 | — | — | — | (44,478 | ) | — | 69 | 241,311 | |||||||||||||||||||||||
| Other intangible assets |
344,491 | 99,388 | 26,649 | (145 | ) | (35,472 | ) | (232 | ) | (42,383 | ) | 392,296 | ||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
￦ |
4,166,309 | 495,787 | 1,103,683 | (2,822 | ) | (488,835 | ) | (369,382 | ) | (66,289 | ) | 4,838,451 | ||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| (*1) | Economic useful life of membership is indefinite. |
| (*2) | Represents assets transferred from construction-in-progress |
| (*3) | Represents increases in intangible assets upon acquisition of Senex Energy Limited during the year ended December 31, 2022. |
| (*4) | Represents increases in intangible assets upon acquisition of POSCO Silicon Solution Co., Ltd during the year ended December 31, 2022. |
| (*5) | During the year ended December 31, 2022, impairment loss of 337,953 million on goodwill of POSCO INTERNATIONAL Corporation, a subsidiary included in trading segment of green infrastructure, was recognized as the recoverable amount is less than the carrying amount of the CGU. |
| 2) | For the year ended December 31, 2023 |
(in millions of Won) |
Beginning |
Acquisitions |
Disposals |
Amortization |
Impairment loss(*3) |
Others(*2) |
Ending |
|||||||||||||||||||||
| Goodwill |
￦ |
442,487 | — | — | — | (36,093 | ) | (3,222 | ) | 403,172 | ||||||||||||||||||
| Intellectual property rights |
3,136,072 | 208,874 | (5 | ) | (321,752 | ) | (89,986 | ) | 96,448 | 3,029,651 | ||||||||||||||||||
| Membership(*1) |
132,942 | 7,360 | (1,920 | ) | (170 | ) | 11 | (39 | ) | 138,184 | ||||||||||||||||||
| Development expense |
116,171 | 13,130 | (97 | ) | (73,319 | ) | — | 70,933 | 126,818 | |||||||||||||||||||
| Port facilities usage rights |
197,211 | — | — | (14,800 | ) | — | — | 182,411 | ||||||||||||||||||||
| Exploratation and evaluation assets |
100,991 | 67,000 | — | — | (1,204 | ) | (3,341 | ) | 163,446 | |||||||||||||||||||
| Development assets |
78,970 | 27,831 | — | — | — | (96,566 | ) | 10,235 | ||||||||||||||||||||
| Customer relationships |
241,311 | — | — | (44,478 | ) | — | 62 | 196,895 | ||||||||||||||||||||
| Other intangible assets |
392,296 | 139,100 | (625 | ) | (43,674 | ) | (2,055 | ) | (21,070 | ) | 463,972 | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
￦ |
4,838,451 | 463,295 | (2,647 | ) | (498,193 | ) | (129,327 | ) | 43,205 | 4,714,784 | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| (*1) | Economic useful life of membership is indefinite. |
| (*2) | Represents assets transferred from construction-in-progress |
| (*3) | During the year ended December 31, 2023, POSCO Canada Ltd., a subsidiary, decided to make an investment in kind in Greenhills Mine, which was accounted for as a joint operation, to a new partnership established by Teck Coal Partnership, the main operator. POSCO Canada Ltd. estimated the recoverable amount of the contributed assets of the joint operation considering the fair value of acquired shares of the new partnership, and recognized an impairment loss of 88,518 million since recoverable amounts are less than their carrying amounts. |
| (c) | For the purpose of impairment testing, goodwill is allocated to individual operating entities each of which is determined to be a CGU. The goodwill amounts as of December 31, 2022 and 2023 are as follows: |
|
(in millions of Won) |
Total number of CGUs |
|||||||||||||||||||
| Reportable segments |
2022 |
2023 |
CGUs |
2022 |
2023 |
|||||||||||||||
| Steel | 10 | 10 | POSCO VST CO., LTD. | ￦ |
36,955 | 36,955 | ||||||||||||||
| POSCO Center Beijing | 173 | 173 | ||||||||||||||||||
| Others | 13,741 | 13,806 | ||||||||||||||||||
| Green Infrastructure |
Tranding |
4 | 4 | POSCO INTERNATIONAL Corporation — Global Business Division(*1) | 240,092 | 240,092 | ||||||||||||||
| POSCO INTERNATIONAL Corporation — Energy Division | 26,471 | 26,471 | ||||||||||||||||||
| Others | 7,270 | 7,513 | ||||||||||||||||||
| E&C | 2 | 2 | POSCO Eco & Challenge Co., Ltd. | 24,868 | — | |||||||||||||||
| POSCO WIDE Co., Ltd | 35,728 | 32,585 | ||||||||||||||||||
| Logistics, etc | 1 | 1 | Shinan Green Energy Co., Ltd. | 17,804 | 9,722 | |||||||||||||||
| Green Materials | 3 | 3 | POSCO FUTURE M CO., LTD | 8,800 | 8,800 | |||||||||||||||
| Posco Silicon Solution Co., Ltd | 30,477 | 26,947 | ||||||||||||||||||
| Zhangjiagang Pohang Refractions Co., Ltd. | 108 | 108 | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||||||
| 20 | 20 | ￦ |
442,487 | 403,172 | ||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||||||
| (*1) | The recoverable amount of the Global Business Division of POSCO INTERNATIONAL Corporation, a subsidiary in trading segment of the green infrastructure business, is determined based on its value in use. As of December 31, 2023, the value in use is estimated by applying an 7.73% (2022: 8.97%) post-tax discount rate to the future cash flows estimated based on management’s 5-year business plan and terminal growth rate of 1.0% (2022: 1.7%) thereafter. The terminal growth rate does not exceed long-term growth rate of its industry. No impairment loss on goodwill was recognized for the year ended December 31, 2023 as the recoverable amount exceeded the carrying amount of the CGU. |
16. |
Other Assets |
(in millions of Won) |
2022 |
2023 |
||||||
| Current |
||||||||
| Advance payments |
￦ |
782,439 | 593,300 | |||||
| Prepaid expenses |
263,536 | 226,960 | ||||||
| Firm commitment asset |
9,674 | 3,418 | ||||||
| Others |
20,290 | 17,306 | ||||||
| |
|
|
|
|||||
￦ |
1,075,939 | 840,984 | ||||||
| |
|
|
|
|||||
| Non-current |
||||||||
| Long-term advance payments |
￦ |
23,429 | 46,989 | |||||
| Long-term prepaid expenses |
53,803 | 30,232 | ||||||
| Others(*1) |
90,143 | 95,974 | ||||||
| |
|
|
|
|||||
￦ |
167,375 | 173,195 | ||||||
| |
|
|
|
|||||
| (*1) | As of December 31, 2022, the Company recognized tax assets amounting to ￦ 6,764 million, based on the Company’s best estimate of the tax amounts to be refunded when the result of the Company’s appeal in connection with the additional income tax payment in prior years’ tax audits and claim for rectification are finalized. As of December 31, 2023, there is no estimated tax amounts to be refunded as the result of the Company’s appeal in connection with the additional income tax payment in prior years’ tax audits and claim for rectification. |
17. |
Borrowings |
| (a) | Short-term borrowings and current portion of long-term borrowings as of December 31, 2022 and 2023 are as follows: |
(in millions of Won) |
Bank |
Issuance date |
Maturity date |
Interest rate (%) |
2022 |
2023 |
||||||||||||
| Short-term borrowings |
||||||||||||||||||
| Bank overdrafts |
JP Morgan and others | January, 2023~ December, 2023 | January, 2024~ December, 2024 | 3.65~7.72 | ￦ |
197,718 | 69,160 | |||||||||||
| Short-term borrowings |
HSBC and others | December, 2022~ December, 2023 | January, 2024~ December, 2024 | 0.22~49.69 | 6,635,402 | 4,890,120 | ||||||||||||
| |
|
|
|
|||||||||||||||
| 6,833,120 | 4,959,280 | |||||||||||||||||
| |
|
|
|
|||||||||||||||
| Current portion of long-term liabilities |
||||||||||||||||||
| Current portion of long-term borrowings |
Export-Import Bank of Korea and others | September, 2001~ March, 2023 | April, 2024~ December, 2024 | 0.25~8.69 | 2,302,592 | 990,088 | ||||||||||||
| Current portion of debentures |
KB Securities co.,Ltd. and others | March, 2019~ October, 2021 | January, 2024~ October, 2024 | 1.51~2.52 | 2,782,049 | 3,255,375 | ||||||||||||
| Less: Current portion of discount on debentures issued |
(1,767 | ) | (2,217 | ) | ||||||||||||||
| Current portion of exchangable bonds |
Foreign currency exchangable bonds | September, 2021 | September, 2026 | — | 1,756,691 | |||||||||||||
| |
|
|
|
|||||||||||||||
| 5,082,874 | 5,999,937 | |||||||||||||||||
| |
|
|
|
|||||||||||||||
￦ |
11,915,994 | 10,959,217 | ||||||||||||||||
| |
|
|
|
|||||||||||||||
| (b) | Long-term borrowings, excluding current portion as of December 31, 2022 and 2023 are as follows: |
(in millions of Won) |
Bank |
Issuance date |
Maturity date |
Interest rate (%) |
2022 |
2023 |
||||||||||||
| Long-term borrowings |
Export-Import Bank of Korea and others | September, 2001~ December, 2023 | January, 2025~ March, 2040 | 0.19~8.69 | ￦ |
2,718,212 | 4,590,541 | |||||||||||
| Less: Present value discount |
(8,951 | ) | (9,414 | ) | ||||||||||||||
| Bonds |
KB Securities co.,Ltd. and others | July, 2015~ November, 2023 | January, 2025~ January, 2033 | 1.68~6.85 | 8,351,006 | 10,478,394 | ||||||||||||
| Less: Discount on debentures issued |
(28,893 | ) | (48,359 | ) | ||||||||||||||
| Exchangeable bonds(*1,2) |
Foreign currency exchangeable bonds | September, 2021 | September, 2026 | 1,358,294 | — | |||||||||||||
| |
|
|
|
|||||||||||||||
￦ |
12,389,668 | 15,011,162 | ||||||||||||||||
| |
|
|
|
|||||||||||||||
| (*1) | As of December 31, 2023, exchangeable bonds were reclassified as current liabilities because the bondholders’ put option for redemption is exercisable within 12 months. |
| (*2) | The issuance conditions of the exchangeable bonds issued by the Company are as follows : |
| Foreign currency exchangable bonds | ||
| Type of bond |
Exchangable bonds | |
| Aggregate principal amount |
EUR 1,065,900,000 | |
| Interest rate |
- Coupon rate : - | |
| - Yield to Maturity : (0.78%) | ||
| Maturity date |
September 1, 2026 | |
| Redemption |
1) Redemption at Maturity : Outstanding bond principal, which is not repaid early or which call option is not exercised on, is repaid at maturity as a lump sum 2) Prepayment : The issuer has call option and the bondholders have put option | |
| Exchange rate |
100% | |
| Exchange price (Won/share) |
449,066(*) | |
| Underlying shares exchange |
Registered common shares (treasury shares) | |
| Exchange period |
From October 12, 2021 to August 22, 2026 | |
| Adjustments for exchange price |
Adjusting the exchange price according to the terms and conditions of the bond in the events of reason for adjusting the exchange price such as, bonus issue, share split, share consolidation, change of share type, issuannce of options or warranties to shareholders, share dividend, cash dividend, issuance of new shares under the market price. | |
| Put option by bondholders |
- 3 years (September 1, 2024) from the closing date - In the event of a change of control of the Company - Where the shares issued by the Company are delisted (or suspended for more than 30 consecutive trading days) | |
| Call option by the Issuer |
- Share price (based on closing price) is higher than 130% of exchange price for more than 20 trading days during 30 consecutive trading days in a row, after 3 years (September 1, 2024) from the closing day to 30 business days before the maturity of bonds. - When the outstanding balance of outstanding bonds is less than 10% of the total issuance (Clean-Up Call)- Where additional reasons for tax burden arise due to the amendment of relevant laws and regulations, etc. |
(*) |
The exchange price has changed due to cash dividends during the year ended December 31, 2023. |
| (c) | Assets pledged as collateral with regard to the borrowings as of December 31, 2023 are as follows: |
(in millions of Won) |
Bank |
Book value |
Pledged amount |
|||||||
| Property, plant and equipment and Investment property |
Korea Development Bank and others | ￦ |
4,391,431 | 5,925,533 | ||||||
| Trade accounts and notes receivable |
Korea Development Bank and others | 132,942 | 132,942 | |||||||
| Financial instruments |
Woori Bank and others | 36,018 | 36,018 | |||||||
| |
|
|
|
|||||||
￦ |
4,560,391 | 6,094,493 | ||||||||
| |
|
|
|
|||||||
(in millions of Won) |
2022 |
2023 |
||||||
| Current |
||||||||
| Accounts payable |
￦ |
1,423,402 | 1,174,097 | |||||
| Accrued expenses |
981,609 | 1,046,891 | ||||||
| Dividend payable |
4,371 | 3,261 | ||||||
| Lease liabilities |
149,384 | 163,952 | ||||||
| Withholdings |
307,102 | 349,277 | ||||||
| |
|
|
|
|||||
￦ |
2,865,868 | 2,737,478 | ||||||
| |
|
|
|
|||||
| Non-current |
||||||||
| Accounts payable |
￦ |
15,713 | 14,143 | |||||
| Accrued expenses |
8,102 | 8,073 | ||||||
| Lease liabilities |
674,098 | 760,368 | ||||||
| Long-term withholdings |
92,489 | 90,981 | ||||||
| |
|
|
|
|||||
￦ |
790,402 | 873,565 | ||||||
| |
|
|
|
|||||
19. |
Other Financial Liabilities |
(in millions of Won) |
2022 |
2023 |
||||||
| Current |
||||||||
| Derivatives liabilities |
￦ |
95,157 | 38,631 | |||||
| Financial guarantee liabilities |
11,370 | 5,114 | ||||||
| Others(*1) |
— | 119,881 | ||||||
| |
|
|
|
|||||
￦ |
106,527 | 163,626 | ||||||
| |
|
|
|
|||||
| Non-current |
||||||||
| Derivatives liabilities |
￦ |
79,984 | 81,291 | |||||
| Financial guarantee liabilities |
7,068 | 7,858 | ||||||
| Others |
— | 64,633 | ||||||
| |
|
|
|
|||||
￦ |
87,052 | 153,782 | ||||||
| |
|
|
|
|||||
| (*1) | The Company recognized other financial liabilities in connection with the put option agreement which POSCO FUTURE MATERIALS CANADA INC. (formerly, POSCO CHEMICAL CANADA INC.), a subsidiary, entered into with GM Battery Raw Materials Corporation. |
20. |
Provisions |
| (a) | Provisions as of December 31, 2022 and 2023 are as follows: |
(in millions of Won) |
2022 |
2023 |
||||||||||||||
Current |
Non-current |
Current |
Non-current |
|||||||||||||
| Provision for bonus payments |
￦ |
136,275 | 33,157 | 146,277 | 38,114 | |||||||||||
| Provision for construction warranties |
35,702 | 170,272 | 50,222 | 146,536 | ||||||||||||
| Provision for legal contingencies and claims(*1) |
46,823 | 59,518 | 20,893 | 52,169 | ||||||||||||
| Provision for the restoration(*2,3) |
6,049 | 185,097 | 14,567 | 161,253 | ||||||||||||
| Others(*4,5,6) |
291,139 | 131,874 | 187,785 | 69,937 | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
￦ |
515,988 | 579,918 | 419,744 | 468,009 | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| (*1) | The Company recognized probable outflow of resources amounting to ￦ 52,530 million and ￦ 45,712 million as provisions for legal contingencies and asserted claim in relation to lawsuits against the Company as of December 31, 2022 and 2023, respectively. |
| (*2) | Due to contamination of lands near the Company’s magnesium smelting plant located in Gangneung province and others, the Company recognized present values of estimated costs for recovery amounting to ￦ 17,005 million as provisions for restoration as of December 31, 2023. In order to determine the estimated costs, the Company has assumed that it would use all of technologies and materials available for now to recover the land. In addition, the Company has applied a discount rate of 3.77%~3.89% to measure present value of these costs. |
| (*3) | During the year ended December 31, 2023, due to contamination of river water quality near Greenhills Mine owned as joint operation by POSCO Canada Ltd., the Company calculated present value of estimated costs for recovery amounting to ￦ 119,710 million as provisions for improvement and reclassified as liabilities held for sale as of December 31, 2023. |
| (*4) | As of December 31, 2022 and December 31, 2023, POSCO INTERNATIONAL Corporation and Korea Fuel Cell, recognized ￦ 97,928 million and ￦ 23,224 million of provisions for warranties, respectively, for the service contract on fuel cell based on its estimate of probable outflow of resources. |
| (*5) | As of December 31, 2022 and December 31, 2023, the Company has recognized emission liabilities amounting to ￦ 14,178 million and ￦ 9,065 million respectively, for expected greenhouse gas emissions exceeding the quantity of free quota emission rights. |
| (*6) | According to the Act on the promotion of the development, use and diffusion of new and renewable energy, POSCO INTERNATIONAL Corporation is obliged to supply a certain amount of power generated by new and renewable energy. In accordance with the Act, POSCO INTERNATIONAL Corporation estimated the cost required to fulfill its obligations, such as insufficient supply of power using new and renewable energy to be borne, and as of December 31, 2022 and December 31, 2023, the Company recognized ￦ 123,073 million and ￦ 64,166 million, respectively, as provision liabilities. |
| (b) | The following are the key assumptions concerning the future and other key sources of estimation uncertainties at the end of the reporting period. |
| Key assumptions for the estimation | ||
| Provision for bonus payments |
Estimations based on financial performance and working service rendered | |
| Provision for construction warranties |
Estimations based on historical warranty data | |
| Provision for legal contingencies and claims |
Estimations based on the degree of probability of an unfavorable outcome and the ability to make a sufficient reliable estimate of the amount of loss |
| (c) | Changes in provisions for the years ended December 31, 2022 and 2023 were as follows: |
| 1) | For the year ended December 31, 2022 |
(in millions of Won) |
Beginning |
Increase |
Utilization |
Reversal |
Others(*1) |
Ending |
||||||||||||||||||
| Provision for bonus payments |
￦ |
138,533 | 176,677 | (137,092 | ) | (5,813 | ) | (2,873 | ) | 169,432 | ||||||||||||||
| Provision for construction warranties |
236,660 | 52,438 | (73,853 | ) | (8,287 | ) | (984 | ) | 205,974 | |||||||||||||||
| Provision for legal contingencies and claims |
93,491 | 47,344 | (33,175 | ) | (8,654 | ) | 7,335 | 106,341 | ||||||||||||||||
| Provision for the restoration |
159,531 | 45,130 | (43,168 | ) | (1,299 | ) | 30,952 | 191,146 | ||||||||||||||||
| Others |
360,861 | 317,621 | (203,985 | ) | (60,738 | ) | 9,254 | 423,013 | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
￦ |
989,076 | 639,210 | (491,273 | ) | (84,791 | ) | 43,684 | 1,095,906 | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (*1) | Includes adjustments of foreign currency translation differences and others. |
| 2) | For the year ended December 31, 2023 |
(in millions of Won) |
Beginning |
Increase |
Utilization |
Reversal |
Others(*1) |
Ending |
||||||||||||||||||
| Provision for bonus payments |
￦ |
169,432 | 181,221 | (158,529 | ) | (6,063 | ) | (1,670 | ) | 184,391 | ||||||||||||||
| Provision for construction warranties |
205,974 | 42,653 | (49,117 | ) | (8,350 | ) | 5,598 | 196,758 | ||||||||||||||||
| Provision for legal contingencies and claims |
106,341 | 16,327 | (48,144 | ) | (3,599 | ) | 2,137 | 73,062 | ||||||||||||||||
| Provision for the restoration |
191,146 | 104,227 | (9,887 | ) | (80 | ) | (109,586 | ) | 175,820 | |||||||||||||||
| Others |
423,013 | 189,227 | (255,001 | ) | (112,909 | ) | 13,392 | 257,722 | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
￦ |
1,095,906 | 533,655 | (520,678 | ) | (131,001 | ) | (90,129 | ) | 887,753 | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (*1) | Includes transfer to liabilities held for sale and adjustments of foreign currency translation differences and others. |
21. |
Employee Benefits |
| (a) | Defined contribution plans |
(in millions of Won) |
2021 |
2022 |
2023 |
|||||||||
| Expense related to post-employment benefit plans under defined contribution plans |
￦ |
54,527 | 62,467 | 70,394 | ||||||||
| (b) | Defined benefit plans |
| 1) | The amounts recognized in relation to net defined benefit liabilities in the statements of financial position as of December 31, 2022 and 2023 are as follows: |
(in millions of Won) |
2022 |
2023 |
||||||
| Present value of funded obligations |
￦ |
2,200,127 | 2,445,797 | |||||
| Fair value of plan assets(*1) |
(2,703,639 | ) | (2,902,714 | ) | ||||
| Present value of non-funded obligations |
20,560 | 30,912 | ||||||
| |
|
|
|
|||||
| Net defined benefit liabilities |
￦ |
(482,952 | ) | (426,005 | ) | |||
| |
|
|
|
|||||
| (*1) | As of December 31, 2022 and 2023, the Company recognized net defined benefit assets amounting to ￦ 520,659 million and ￦ 464,758 million, respectively, since there are consolidated entities whose fair value of plan assets exceeded the present value of defined benefit obligations. |
| 2) | Changes in present value of defined benefit obligations for the years ended December 31, 2022 and 2023 were as follows: |
(in millions of Won) |
2022 |
2023 |
||||||
| Defined benefit obligations at the beginning of year |
￦ |
2,415,031 | 2,220,687 | |||||
| Current service costs |
235,007 | 235,340 | ||||||
| Interest costs |
71,348 | 97,660 | ||||||
| Remeasurements : |
(192,339 | ) | 178,649 | |||||
| - Loss (gain) from change in financial assumptions |
(381,800) | 165,919 | ||||||
| - Loss (gain) from change in demographic assumptions |
(621 | ) | (16,094 | ) | ||||
| - Loss (gain) from change in others |
190,082 | 28,824 | ||||||
| Benefits paid |
(300,353 | ) | (263,547 | ) | ||||
| Others |
(8,007 | ) | 7,920 | |||||
| |
|
|
|
|||||
| Defined benefit obligations at the end of year |
￦ |
2,220,687 | 2,476,709 | |||||
| |
|
|
|
|||||
| 3) | Changes in fair value of plan assets for the years ended December 31, 2022 and 2023 were as follows: |
(in millions of Won) |
2022 |
2023 |
||||||
| Fair value of plan assets at the beginning of year |
￦ |
2,620,046 | 2,703,639 | |||||
| Interest on plan assets |
77,745 | 126,386 | ||||||
| Remeasurement of plan assets |
(57,335 | ) | 22,400 | |||||
| Contributions to plan assets |
346,773 | 279,225 | ||||||
| Benefits paid |
(287,312 | ) | (233,689 | ) | ||||
| Others |
3,722 | 4,753 | ||||||
| |
|
|
|
|||||
| Fair value of plan assets at the end of year |
￦ |
2,703,639 | 2,902,714 | |||||
| |
|
|
|
|||||
| 4) | The fair value of plan assets as of December 31, 2022 and 2023 are as follows: |
(in millions of Won) |
2022 |
2023 |
||||||
| Equity instruments |
￦ |
5,949 | 6,867 | |||||
| Debt instruments |
758,250 | 529,313 | ||||||
| Deposits |
1,813,863 | 2,155,063 | ||||||
| Others |
125,577 | 211,471 | ||||||
| |
|
|
|
|||||
￦ |
2,703,639 | 2,902,714 | ||||||
| |
|
|
|
|||||
| 5) | The amounts recognized in consolidated statement of comprehensive income for the years ended December 31, 2021, 2022 and 2023 were as follows: |
(in millions of Won) |
2021 |
2022 |
2023 |
|||||||||
| Current service costs |
￦ |
243,029 | 235,007 | 235,340 | ||||||||
| Net interest costs(*1) |
538 | (6,397 | ) | (28,726 | ) | |||||||
| |
|
|
|
|
|
|||||||
￦ |
243,567 | 228,610 | 206,614 | |||||||||
| |
|
|
|
|
|
|||||||
| (*1) | The actual return on plan assets amounted to ￦ 42,051 million, ￦ 20,410 million and ￦ 148,786 million for the years ended December 31, 2021, 2022 and 2023, respectively. |
(in millions of Won) |
2021 |
2022 |
2023 |
|||||||||
| Cost of sales |
￦ |
166,734 | 156,576 | 135,687 | ||||||||
| Selling and administrative expenses |
76,265 | 71,060 | 70,746 | |||||||||
| Others |
568 | 974 | 181 | |||||||||
| |
|
|
|
|
|
|||||||
￦ |
243,567 | 228,610 | 206,614 | |||||||||
| |
|
|
|
|
|
|||||||
| 6) | Accumulated actuarial gains (losses), net of tax recognized in other comprehensive income for the years ended December 31, 2021, 2022 and 2023 were as follows: |
(in millions of Won) |
2021 |
2022 |
2023 |
|||||||||
| Beginning |
￦ |
(553,221 | ) | (502,066 | ) | (396,297 | ) | |||||
| Current actuarial gains (losses) |
51,155 | 105,769 | (118,548 | ) | ||||||||
| |
|
|
|
|
|
|||||||
| Ending |
￦ |
(502,066 | ) | (396,297 | ) | (514,845 | ) | |||||
| |
|
|
|
|
|
|||||||
| 7) | The principal actuarial assumptions as of December 31, 2022 and 2023 are as follows: |
(%) |
2022 |
2023 | ||
| Discount rate |
2.00 ~ 7.60 | 0.92 ~ 7.60 | ||
| Expected future increase in salaries(*1) |
1.50 ~ 12.20
|
2.30 ~ 28.11 |
| (*1) | The expected future increase in salaries is based on the average salary increase rate for the past 5 years. |
| 8) | Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding the other assumptions constant, would have affected the defined benefit obligation by the amounts shown below: |
(in millions of Won) |
1% Increase |
1% Decrease |
||||||||||||||
Amount |
Percentage(%) |
Amount |
Percentage(%) |
|||||||||||||
| Discount rate |
￦ |
(151,746 | ) | (6.1 | ) | 172,840 | 7.0 | |||||||||
| Expected future increase in salaries |
171,615 | 6.9 | (153,433 | ) | (6.2 | ) | ||||||||||
| 9) | As of December 31, 2023, the maturity of the expected benefit payments are as follows: |
(in millions of Won) |
Within 1 year |
1 year - 5 years |
5 years - 10 years
|
10 years - 20 years |
After 20 years |
Total |
||||||||||||||||||
| Benefits to be paid |
￦ |
305,269 | 1,000,746 | 743,159 | 1,018,133 | 404,773 | 3,472,080 | |||||||||||||||||
22. |
Other Liabilities |
(in millions of Won) |
2022 |
2023 |
||||||
| Current |
||||||||
| Due to customers for contract work |
￦ |
756,316 | 624,632 | |||||
| Advances received |
787,477 | 910,659 | ||||||
| Unearned revenue |
62,030 | 69,062 | ||||||
| Withholdings |
369,067 | 297,442 | ||||||
| Firm commitment liability |
7,566 | 20,136 | ||||||
| Others(*1) |
24,375 | 21,929 | ||||||
| |
|
|
|
|||||
￦ |
2,006,831 | 1,943,860 | ||||||
| |
|
|
|
|||||
| Non-current |
||||||||
| Advances received |
|
￦ |
433,958
|
|
|
|
2
|
|
| Unearned revenue |
22,203 | 8,889 | ||||||
| Others(*1) |
129,673 | 105,583 | ||||||
| |
|
|
|
|||||
￦ |
585,834 | 114,474 | ||||||
| |
|
|
|
|||||
(*1) |
As of December 31, 2022 and liabilities assumed amounted to ￦ 71,248 million and ￦ 56,325 million, respectively, related to unfavorable terms of a customer contract relative to market-terms upon the acquisition of Senex Energy Limited. |
23. |
Financial Instruments |
| (a) | Classification and fair value of financial instruments |
| 1) | The carrying amount and the fair values of financial assets and financial liabilities by fair value hierarchy as of December 31, 2022 and 2023 are as follows: |
(in millions of Won) |
Fair value |
|||||||||||||||||||
Book value |
Level 1 |
Level 2 |
Level 3 |
Total |
||||||||||||||||
| Financial assets |
||||||||||||||||||||
| Fair value through profit or loss |
||||||||||||||||||||
| Derivative assets |
￦ |
350,149 | — | 350,149 | — | 350,149 | ||||||||||||||
| Short-term financial instruments |
8,006,081 | — | 8,006,081 | — | 8,006,081 | |||||||||||||||
| Debt securities |
75,876 | — | 69,926 | 5,950 | 75,876 | |||||||||||||||
| Other securities |
632,469 | 29,687 | 1,022 | 601,760 | 632,469 | |||||||||||||||
| Other receivables |
2,000 | — | — | 2,000 | 2,000 | |||||||||||||||
| Derivative hedging instruments(*2) |
9,846 | — | 9,846 | — | 9,846 | |||||||||||||||
| Fair value through other comprehensive income |
||||||||||||||||||||
| Equity securities |
1,462,088 | 1,210,124 | — | 251,964 | 1,462,088 | |||||||||||||||
| Financial assets measured at amortized cost(*1) |
||||||||||||||||||||
| Cash and cash Equivalents |
8,053,108 | — | — | — | — | |||||||||||||||
| Trade accounts and notes receivable |
8,414,667 | — | — | — | — | |||||||||||||||
| Other receivables |
2,458,227 | — | — | — | — | |||||||||||||||
| Debt securities |
124,147 | — | — | — | — | |||||||||||||||
| Deposit instruments |
2,581,802 | — | — | — | — | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
￦ |
32,170,460 | 1,239,811 | 8,437,024 | 861,674 | 10,538,509 | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Financial liabilities |
||||||||||||||||||||
| Fair value through profit or loss |
||||||||||||||||||||
| Derivative liabilities |
￦ |
157,036 | — | 157,036 | — | 157,036 | ||||||||||||||
| Borrowings |
1,358,294 | 1,358,294 | — | — | 1,358,294 | |||||||||||||||
| Derivative hedging instruments(*2) |
18,105 | — | 18,105 | — | 18,105 | |||||||||||||||
| Financial liabilities measured at amortized cost(*1) |
||||||||||||||||||||
| Trade accounts and notes payable |
5,520,821 | — | — | — | — | |||||||||||||||
| Borrowings |
22,947,368 | — | 22,331,771 | — | 22,331,771 | |||||||||||||||
| Financial guarantee liabilities |
18,438 | — | — | — | — | |||||||||||||||
| Others |
2,789,195 | — | — | — | — | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| 32,809,257 | 1,358,294 | 22,506,912 | — | 23,865,206 | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| (*1) | Fair value of financial assets and liabilities measured at amortized cost except borrowings approximates their carrying amounts. |
| (*2) | The Company applies hedge accounting which uses forward contracts as hedging instrument in order to hedge the risk of changes in fair value of product prices regarding firm commitments or purchase commitments. Also, the Company applies cash flow hedge accounting which uses currency swap as hedging instrument in order to hedge the risk of interest rate and foreign exchange rate changes in foreign currency which influences cash flow from borrowings. |
(in millions of Won) |
Fair value |
|||||||||||||||||||
Book value |
Level 1 |
Level 2 |
Level 3 |
Total |
||||||||||||||||
| Financial assets |
||||||||||||||||||||
| Fair value through profit or loss |
||||||||||||||||||||
| Derivative assets |
￦ |
291,541 | — | 291,541 | — | 291,541 | ||||||||||||||
| Short-term financial instruments |
6,540,407 | — | 6,540,407 | — | 6,540,407 | |||||||||||||||
| Equity securities |
99,254 | 61,665 | — | 37,589 | 99,254 | |||||||||||||||
| Debt securities |
88,196 | — | 75,183 | 13,013 | 88,196 | |||||||||||||||
| Other securities |
669,687 | — | 270 | 669,417 | 669,687 | |||||||||||||||
| Derivative hedging instruments(*2) |
9,601 | — | 9,601 | — | 9,601 | |||||||||||||||
| Fair value through other comprehensive income |
||||||||||||||||||||
| Equity securities |
1,694,277 | 1,539,205 | — | 155,072 | 1,694,277 | |||||||||||||||
| Financial assets measured at amortized cost(*1) |
||||||||||||||||||||
| Cash and cash Equivalents |
6,670,879 | — | — | — | — | |||||||||||||||
| Trade accounts and notes receivable |
9,155,521 | — | — | — | — | |||||||||||||||
| Other receivables |
2,750,036 | — | — | — | — | |||||||||||||||
| Debt securities |
295,201 | — | — | — | — | |||||||||||||||
| Deposit instruments |
4,423,327 | — | — | — | — | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
￦ |
32,687,927 | 1,600,870 | 6,917,002 | 875,091 | 9,392,963 | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Financial liabilities |
||||||||||||||||||||
| Fair value through profit or loss |
||||||||||||||||||||
| Derivative liabilities |
￦ |
116,748 | — | 116,748 | — | 116,748 | ||||||||||||||
| Borrowings |
1,756,691 | 1,756,691 | — | — | 1,756,691 | |||||||||||||||
| Other financial Liabilities |
119,258 | — | — | 119,258 | 119,258 | |||||||||||||||
| Derivative hedging instruments(*2) |
3,174 | — | 3,174 | — | 3,174 | |||||||||||||||
| Financial liabilities measured at amortized cost(*1) |
||||||||||||||||||||
| Trade accounts and notes payable |
5,782,825 | — | — | — | — | |||||||||||||||
| Borrowings |
24,213,689 | — | 24,310,166 | — | 24,310,166 | |||||||||||||||
| Financial guarantee liabilities |
12,972 | — | — | — | — | |||||||||||||||
| Others |
3,241,459 | — | — | — | — | |||||||||||||||
| Other financial Liabilities |
65,256 | — | — | — | — | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| 35,312,072 | 1,756,691 | 24,430,088 | 119,258 | 26,306,037 | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| (*1) | Fair value of financial assets and liabilities measured at amortized cost except borrowings approximates their carrying amounts. |
| (*2) | The Company applies hedge accounting which uses forward contracts as hedging instrument in order to hedge the risk of changes in fair value of product prices regarding firm commitments or purchase commitments. Also, the Company applies cash flow hedge accounting which uses currency swap as hedging instrument in order to hedge the risk of interest rate and foreign exchange rate changes in foreign currency which influences cash flow from borrowings. |
| 2) | Financial assets and financial liabilities classified as fair value hierarchy Level 2 |
| 3) | Financial assets classified as fair value hierarchy Level 3 |
① |
Value measurement method and significant but not observable inputs for the financial assets classified as fair value hierarchy Level 3 as of December 31, 2023 are as follows: |
(in millions of Won) |
Fair value |
Valuation technique |
Inputs |
Range of inputs |
Effect on fair value assessment with unobservable input | |||||||
| Financial assets at fair value |
￦ |
104,529 | Discounted cash flows | Growth rate | 0% ~ 1.00% | As growth rate increases, fair value increases | ||||||
| Discount rate | 9.64% ~ 26.60% | As discount rate increases, fair value decreases | ||||||||||
| 113,626 | Proxy firm valuation method | Price multiples | 0.695~3.343 | As price multiples increases, fair value increases | ||||||||
| 656,936 | Asset value approach | — | — | — | ||||||||
② |
Sensitivity analysis of financial assets classified as Level 3 of fair value hierarchy |
(in millions of Won) |
Input variable |
Favorable changes |
Unfavorable changes |
|||||||
| Financial assets at fair value |
Fluctuation 0.5% of growth rate | ￦ |
1,511 | (1,308 | ) | |||||
| Fluctuation 0.5% of discount rate | 2,125 | (1,938 | ) | |||||||
③ |
Changes in fair value of financial assets and financial liabilities classified as Level 3 for the years ended December 31, 2022 and 2023 were as follows: |
(in millions of Won) |
2022 |
2023 |
||||||
| Beginning |
￦ |
620,914 | 861,674 | |||||
| Acquisition |
182,217 | 100,442 | ||||||
| Gain(Loss) on valuation of financial assets |
24,613 | 39,621 | ||||||
| Other comprehensive income(loss) |
126,510 | 22,526 | ||||||
| Disposal and others |
(92,580 | ) | (149,172 | ) | ||||
| |
|
|
|
|||||
| Ending |
￦ |
861,674 | 875,091 | |||||
| |
|
|
|
|||||
| 4) | Finance income and costs by category of financial instrument for the years ended December 31, 2021, 2022 and 2023 were as follows: |
① |
For the year ended December 31, 2021 |
Finance income and costs |
Other comprehensive income (loss) |
|||||||||||||||||||||||||||
(in millions of Won) |
Interest income (expense) |
Gain and loss on valuation |
Gain and loss on foreign currency |
Gain and loss on disposal |
Others |
Total |
||||||||||||||||||||||
| Financial assets at fair value through profit or loss |
￦ |
158,121 | (12,093 | ) | — | 12,119 | 26,170 | 184,317 | — | |||||||||||||||||||
| Derivative assets |
— | 213,724 | — | 370,547 | — | 584,271 | — | |||||||||||||||||||||
| Financial assets at fair value through other comprehensive income |
— | — | — | — | 48,281 | 48,281 | 214,888 | |||||||||||||||||||||
| Financial assets measured at amortized cost |
134,122 | — | 651,435 | (17,769 | ) | (7,149 | ) | 760,639 | — | |||||||||||||||||||
| Financial liabilities at fair value |
— | 54,057 | 33,069 | — | (15,876 | ) | 71,250 | — | ||||||||||||||||||||
| Derivative liabilities |
— | 55,858 | — | (465,174 | ) | — | (409,316 | ) | 309 | |||||||||||||||||||
| Financial liabilities measured at amortized cost |
(439,826 | ) | — | (846,202 | ) | (16 | ) | 11,537 | (1,274,507 | ) | — | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
￦ |
(147,583 | ) | 311,546 | (161,698 | ) | (100,293 | ) | 62,963 | (35,065 | ) | 215,197 | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
② |
For the year ended December 31, 2022 |
Finance income and costs |
Other comprehensive income (loss) |
|||||||||||||||||||||||||||
(in millions of Won) |
Interest income (expense) |
Gain and loss on valuation |
Gain and loss on foreign currency |
Gain and loss on disposal |
Others |
Total |
||||||||||||||||||||||
| Financial assets at fair value through profit or loss |
￦ |
20,421 | (599,777 | ) | — | 237,771 | 545 | (341,040 | ) | — | ||||||||||||||||||
| Derivative assets |
— | 232,246 | — | 797,211 | — | 1,029,457 | — | |||||||||||||||||||||
| Financial assets at fair value through other comprehensive income |
— | — | — | — | 38,837 | 38,837 | (10,076 | ) | ||||||||||||||||||||
| Financial assets measured at amortized cost |
226,584 | — | 414,944 | (64,244 | ) | (42,433 | ) | 534,851 | — | |||||||||||||||||||
| Financial liabilities at fair value |
— | 85,790 | (8,891 | ) | — | — | 76,899 | — | ||||||||||||||||||||
| Derivative liabilities |
— | (162,649 | ) | — | (647,418 | ) | — | (810,067 | ) | 1,023 | ||||||||||||||||||
| Financial liabilities measured at amortized cost |
(607,458 | ) | — | (893,377 | ) | — | 1,443 | (1,499,392 | ) | — | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
￦ |
(360,453 | ) | (444,390 | ) | (487,324 | ) | 323,320 | (1,608 | ) | (970,455 | ) | (9,053 | ) | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
③ |
For the year ended December 31, 2023 |
(in millions of Won) |
Finance income and costs |
Other comprehensive income (loss) |
||||||||||||||||||||||||||
Interest income (expense) |
Gain and loss on valuation |
Gain and loss on foreign currency |
Gain and loss on disposal |
Others |
Total |
|||||||||||||||||||||||
| Financial assets at fair value through profit or loss |
￦ |
— | 520,884 | — | 190,531 | 560 | 711,975 | — | ||||||||||||||||||||
| Derivative assets |
— | 167,997 | — | 289,423 | — | 457,420 | — | |||||||||||||||||||||
| Financial assets at fair value through other comprehensive income |
— | — | — | — | 49,586 | 49,586 | 257,725 | |||||||||||||||||||||
| Financial assets measured at amortized cost |
502,147 | — | 211,077 | (84,649 | ) | (6,347 | ) | 622,228 | — | |||||||||||||||||||
| Financial liabilities at fair value |
— | (305,562 | ) | (92,835 | ) | — | — | (398,397 | ) | — | ||||||||||||||||||
| Derivative liabilities |
— | (44,323 | ) | — | (276,600 | ) | — | (320,923 | ) | (1,292 | ) | |||||||||||||||||
| Financial liabilities measured at amortized cost |
(1,001,290 | ) | — | (466,244 | ) | 11 | (26,616 | ) | (1,494,139 | ) | — | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
￦ |
(499,143 | ) | 338,996 | (348,002 | ) | 118,716 | 17,183 | (372,250 | ) | 256,433 | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| (b) | Credit risk |
| 1) | Credit risk exposure |
(in millions of Won) |
2022 |
2023 |
||||||
| Cash and cash equivalents |
￦ |
8,053,108 | 6,670,879 | |||||
| Derivative assets |
359,995 | 301,142 | ||||||
| Short-term financial instrument |
8,006,082 | 6,540,407 | ||||||
| Debt securities |
200,023 | 383,397 | ||||||
| Other securities |
632,469 | 669,687 | ||||||
| Other receivables |
2,460,227 | 2,750,036 | ||||||
| Trade accounts and notes receivable |
9,754,813 | 10,845,505 | ||||||
| Deposit instruments |
2,581,802 | 4,423,327 | ||||||
| |
|
|
|
|||||
￦ |
32,048,519 | |
32,584,380 | |||||
| |
|
|
|
|||||
| 2) | Impairment losses on financial assets |
① |
Allowance for doubtful accounts as of December 31, 2022 and 2023 are as follows: |
(in millions of Won) |
2022 |
2023 |
||||||
| Trade accounts and notes receivable |
￦ |
378,100 | 330,898 | |||||
| Other accounts receivable |
178,264 | 185,987 | ||||||
| Loans |
165,051 | 417,725 | ||||||
| Other assets |
9,098 | 18,109 | ||||||
| |
|
|
|
|||||
￦ |
730,513 | 952,719 | ||||||
| |
|
|
|
|||||
② |
Impairment losses on financial assets for the years ended December 31, 2022 and 2023 were as follows: |
(in millions of Won) |
2022 |
2023 |
||||||
| Bad debt expenses |
￦ |
24,791 | (17,785 | ) | ||||
| Other bad debt expenses(*1) |
14,968 | 291,340 | ||||||
| Less: Recovery of allowance for other bad debt accounts |
(5,144 | ) | (7,641 | ) | ||||
| |
|
|
|
|||||
￦ |
34,615 | 265,914 | ||||||
| |
|
|
|
|||||
| (*1) | Other bad debt expenses are mainly related to loans and other accounts receivable. |
③ |
The aging and allowance for doubtful accounts of trade accounts and notes receivable as of December 31, 2022 and 2023 are as follows: |
2022 |
2023 |
|||||||||||||||
(in millions of Won) |
Trade accounts and notes receivable |
Impairment |
Trade accounts and notes receivable |
Impairment |
||||||||||||
| Current (not past due) |
￦ |
7,888,518 | 20,752 | 9,674,258 | 13,155 | |||||||||||
| Over due less than 1 month |
864,391 | 63,311 | 681,782 | 5,448 | ||||||||||||
| 1 month - 3 months |
388,151 | 10,337 | 131,267 | 3,521 | ||||||||||||
| 3 months - 12 months |
517,171 | 12,645 | 291,774 | 27,248 | ||||||||||||
| Over 12 months |
446,045 | 271,055 | 397,322 | 281,526 | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
￦ |
10,104,276 | 378,100 | 11,176,403 | 330,898 | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
④ |
The aging and allowance for doubtful accounts of other receivables as of December 31, 2022 and 2023 are as follows: |
2022 |
2023 |
|||||||||||||||
(in millions of Won) |
Loans and other account receivable |
Impairment |
Loans and other account receivable |
Impairment |
||||||||||||
| Current (not past due) |
￦ |
2,049,908 | 53,070 | 2,948,837 | 347,108 | |||||||||||
| Over due less than 1 month |
141,718 | 2,987 | 29,653 | 40 | ||||||||||||
| 1 month - 3 months |
108,152 | 16,408 | 56,574 | 1,812 | ||||||||||||
| 3 months - 12 months |
24,912 | 930 | 133,081 | 91,621 | ||||||||||||
| over 12 months |
487,950 | 279,018 | 203,712 | 181,240 | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
￦ |
2,812,640 | 352,413 | 3,371,857 | 621,821 | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
⑤ |
Changes in the allowance for doubtful accounts for the years ended December 31, 2021, 2022 and 2023 were as follows: |
(in millions of Won) |
2021 |
2022 |
2023 |
|||||||||
| Beginning |
￦ |
753,693 | 717,365 | 730,513 | ||||||||
| Bad debt expenses(reversal) |
40,153 | 24,791 | (17,785 | ) | ||||||||
| Other bad debt expenses |
(12,975 | ) | 9,824 | 283,699 | ||||||||
| Others(*1) |
(63,506 | ) | (21,467 | ) | (43,708 | ) | ||||||
| |
|
|
|
|
|
|||||||
| Ending |
￦ |
717,365 | 730,513 | 952,719 | ||||||||
| |
|
|
|
|
|
|||||||
| |
(*1) | Others for the years ended December 31, 2021, 2022 and 2023, included decreases mainly due to write-off amounting to ￦
86,111 million, ￦
20,855 million and ￦
51,831 million, respectively. |
| (c) | Liquidity risk |
| 1) | Contractual maturities of non-derivative financial liabilities are as follows: |
(in millions of Won) |
Book value |
Contractual cash flow |
Within 1 year |
1 year - 5 years |
After 5 years |
|||||||||||||||
| Trade accounts and notes payable |
￦ |
5,782,825 | 5,782,825 | 5,782,825 | — | — | ||||||||||||||
| Borrowings(*1) |
25,970,379 | 28,112,630 | 11,535,464 | 14,940,495 | 1,636,671 | |||||||||||||||
| Financial guarantee liabilities(*2) |
12,972 | 3,939,463 | 3,939,463 | — | — | |||||||||||||||
| Lease liabilities |
924,320 | 1,107,761 | 163,952 | 506,381 | 437,428 | |||||||||||||||
| Other financial liabilities |
2,317,139 | 2,317,510 | 2,204,034 | 113,476 | — | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
￦ |
35,007,635 | 41,260,189 | 23,625,738 | 15,560,352 | 2,074,099 | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| (*1) | For exchangeable bonds, c ash flow is allocated to the period in which the investor’s right to claim early redemption could be exercised. |
| (*2) | For issued financial guarantee contracts, the maximum amount of the guarantee is allocated to the earliest period in which the guarantee could be called. |
| 2) | Contractual maturities of derivative financial liabilities are as follows: |
(in millions of Won) |
Within 1 year |
1 year - 5 years |
After 5 years |
Total |
||||||||||||
| Currency forward |
￦ |
33,367 | 4,984 | — | 38,351 | |||||||||||
| Currency swap |
1,983 | 5,074 | 10,651 | 17,708 | ||||||||||||
| Interest rate swap |
— | 16,278 | — | 16,278 | ||||||||||||
| Others |
3,281 | 44,304 | — | 47,585 | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
￦ |
38,631 | 70,640 | 10,651 | 119,922 | ||||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| (d) | Currency risk |
| 1) | The Company has exposure to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of the changes in foreign exchange rates. The exposure to currency risk as of December 31, 2022 and 2023 is as follows: |
(in millions of Won) |
2022 |
2023 |
||||||||||||||
Assets |
Liabilities |
Assets |
Liabilities |
|||||||||||||
| USD |
￦ |
5,553,742 | 8,996,494 | 4,979,817 | 11,146,695 | |||||||||||
| EUR |
574,739 | 2,438,031 | 538,330 | 2,882,376 | ||||||||||||
| JPY |
525,815 | 384,535 | 343,321 | 264,563 | ||||||||||||
| Others |
1,614,928 | 807,876 | 1,108,650 | 461,634 | ||||||||||||
| 2) | As of December 31, 2022 and 2023, provided that functional currency against foreign currencies other than functional currency hypothetically strengthens or weakens by 10%, the changes in gain or loss for the years ended December 31, 2022 and 2023 were as follows: |
(in millions of Won) |
2022 |
2023 |
||||||||||||||
10% increase |
10% decrease |
10% increase |
10% decrease |
|||||||||||||
| USD |
￦ |
(344,275) | 344,275 | (616,688 | ) | 616,688 | ||||||||||
| EUR |
(186,329 | ) | 186,329 | (234,405 | ) | 234,405 | ||||||||||
| JPY |
14,128 | (14,128 | ) | 7,876 | (7,876 | ) | ||||||||||
| (e) | Interest rate risk |
| 1) | The carrying amount of interest-bearing financial instruments as of December 31, 2022 and 2023 are as follows: |
(in millions of Won) |
2022 |
2023 |
||||||
| Fixed rate |
||||||||
| Financial assets |
￦ |
21,394,764 | 19,118,092 | |||||
| Financial liabilities |
(16,932,079 | ) | (19,237,434 | ) | ||||
| |
|
|
|
|||||
￦ |
4,462,685 | (119,342 | ) | |||||
| |
|
|
|
|||||
| Variable rate |
||||||||
| Financial liabilities |
￦ |
(8,197,066 | ) | (7,657,266 | ) | |||
| 2) | Sensitivity analysis on the cash flows of financial instruments with variable interest rate |
(in millions of Won) |
2022 |
2023 |
||||||||||||||
1% increase |
1% decrease |
1% increase |
1% decrease |
|||||||||||||
| Variable rate financial instruments |
￦ |
(81,971) | 81,971 | (76,573 | ) | 76,573 | ||||||||||
24. |
Share Capital and Capital Surplus |
| (a) | Share capital as of December 31, 2022 and 2023 are as follows: |
(Share, in Won) |
2022 |
2023 |
||||||
| Authorized shares |
200,000,000 | 200,000,000 | ||||||
| Par value |
￦ |
5,000 | 5,000 | |||||
| Issued shares(*1) |
84,571,230 | 84,571,230 | ||||||
| Shared capital(*2) |
￦ |
482,403,125,000 | 482,403,125,000 | |||||
| (*1) | As of December 31, 2023, total number of ADRs of 20,430,296 outstanding in overseas stock market are equivalent to 5,107,574 shares of common stock. |
| (*2) | As of December 31, 2023, the difference between the ending balance of common stock and the aggregate par value of issued common stock is ￦ 59,547 million due to retirement of 11,909,395 treasury stocks. |
| (b) | The changes in issued common stock for the years ended December 31, 2022 and 2023 were as follows: |
(share) |
2022 |
2023 |
||||||||||||||||||||||
|
Issued shares |
Treasury shares |
Number of outstanding shares |
Issued shares |
Treasury shares |
Number of outstanding shares |
|||||||||||||||||||
| Beginning |
87,186,835 | (11,561,263 | ) | 75,625,572 | 84,571,230 | (8,722,053 | ) | 75,849,177 | ||||||||||||||||
| Disposal of treasury shares |
— | 223,605 | 223,605 | — | 27,030 | 27,030 | ||||||||||||||||||
| Retirement of treasury shares |
(2,615,605 | ) | 2,615,605 | — | — | — | — | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ending |
84,571,230 | (8,722,053 | ) | 75,849,177 | 84,571,230 | (8,695,023 | ) | 75,876,207 | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (c) | Capital surplus as of December 31, 2022 and 2023 are as follows: |
(in millions of Won) |
2022 |
2023 |
||||||
| Share premium |
￦ |
463,825 | 463,825 | |||||
| Gain on disposal of treasury shares |
806,114 | 808,994 | ||||||
| Other capital surplus |
140,349 | 399,971 | ||||||
| |
|
|
|
|||||
￦ |
1,410,288 | 1,672,790 | ||||||
| |
|
|
|
|||||
25. |
Hybrid Bonds |
| (a) | As of December 31, 2022, POSCO, a subsidiary of the Company, held hybrid bonds, which were classified as non-controlling interests in the consolidated financial statements. During the year ended December 31, 2023, the call option on the hybrid bonds was exercised and redeemed. Hybrid bonds as of December 31, 2022 and December 31, 2023 are as follows: |
(in millions of Won) |
Date of issue |
Date of maturity |
Interest rate (%) |
2022 |
2023 |
|||||||||||||||
| Hybrid bond 1-2(*1,2)
|
2013-06-13 |
2043-06-13 |
4.60 | ￦ |
200,000 | — | ||||||||||||||
| Issuance cost |
(616 | ) | — | |||||||||||||||||
| |
|
|
|
|||||||||||||||||
￦ |
199,384 | — | ||||||||||||||||||
| |
|
|
|
|||||||||||||||||
| (*1) | During the year ended December 31, 2023, call option on the hybrid bonds was exercised and redeemed by POSCO, a subsidiary of the Company. |
| (*2) | Details of issuance of hybrid bonds as of December 31, 2023 are as follows: |
| Hybrid bond 1-2
| ||
| Maturity date | 30 years (The issuer has a right to extend the maturity date) | |
| Interest rate | Issue date ~ 2023-06-12 Reset every 10 years as follows; · After 10 years : return on government bond of the Republic of Korea (10 years) + 1.40% · After 10 years : additionally +0.25% according to Step-up clauses· After 30 years : additionally +0.75% | |
| Interest payments condition | Quarterly (Optional deferral of interest payment is available to the Company) | |
| Others | The issuer can call the hybrid bond at year 10th anniversary of issuance and interest payment date afterwards | |
(b) |
As of December 31, 2022, POSCO INTERNATIONAL Corporation, a subsidiary of the Company, held hybrid bonds, which were classified as non-controlling interests in the consolidated financial statements. During the year ended December 31, 2023, the call option on the hybrid bonds was exercised and redeemed. POSCO ENERGY CO., LTD., which issued hybrid bonds, was merged with POSCO INTERNATIONAL Corporation during the year ended December 31, 2023. Hybrid bonds as of December 31, 2022 and December 31, 2023 are as follows: |
(in millions of Won) |
Date of issue |
Date of maturity |
Interest rate (%) |
2022 |
2023 |
|||||||||||||||
| Hybrid bond 1-4(*1,2)
|
2013-08-29 |
2043-08-29 |
5.21 | ￦ |
140,000 | — | ||||||||||||||
| Issuance cost |
(429 | ) | — | |||||||||||||||||
| |
|
|
|
|||||||||||||||||
￦ |
139,571 | — | ||||||||||||||||||
| |
|
|
|
|||||||||||||||||
| (*1) | During the year ended December 31, 2023, call option on the hybrid bonds was exercised and redeemed by POSCO INTERNATIONAL Corporation, a subsidiary of the Company. |
| (*2) | Details of issuance of hybrid bonds are as follows: |
| Hybrid bond 1-4
| ||
| Maturity date | 30 years (The issuer has a right to extend the maturity date) | |
| Interest rate | Issue date ~ 2023-08-29 Reset every 10 years as follows; · After 10 years : return on government bond (10 years) + 1.55% · After 10 years : additionally +0.25% according to Step-up clauses· After 30 years : additionally +0.75% | |
| Interest payments condition | Quarterly (Optional deferral of interest payment is available to the Company) | |
| Others | The issuer can call the hybrid bond at year 10th anniversary of issuance and interest payment date afterwards | |
26. |
Reserves |
| (a) | Reserves as of December 31, 2022 and 2023 are as follows: |
(in millions of Won) |
2022 |
2023 |
||||||
| Accumulated comprehensive loss of investments in associates and joint ventures |
￦ |
(406,555 | ) | (180,964 | ) | |||
| Changes in fair value of equity investments at fair value through other comprehensive income |
(103,843 | ) | 153,279 | |||||
| Foreign currency translation differences |
60,487 | 94,605 | ||||||
| Gain or losses on valuation of derivatives |
(3 | ) | (644 | ) | ||||
| Others |
5,924 | 980 | ||||||
| |
|
|
|
|||||
￦ |
(443,990 | ) | 67,256 | |||||
| |
|
|
|
|||||
| (b) | Changes in fair value of equity investments at fair value through other comprehensive income for the years ended December 31, 2022 and 2023 were as follows: |
(in millions of Won) |
2022 |
2023 |
||||||
| Beginning balance |
￦ |
(153,359 | ) | (103,843 | ) | |||
| Changes in unrealized fair value of equity investments |
37,068 | 260,603 | ||||||
| Reclassification upon disposal |
20,729 | — | ||||||
| Others |
(8,281 | ) | (3,481 | ) | ||||
| |
|
|
|
|||||
| Ending balance |
￦ |
(103,843 | ) | 153,279 | ||||
| |
|
|
|
|||||
27. |
Treasury Shares |
(shares, in millions of Won) |
2022 |
2023 |
||||||||||||||
Number of shares |
Amount |
Number of shares |
Amount |
|||||||||||||
| Beginning |
11,561,263 | ￦ |
2,508,294 | 8,722,053 | ￦ |
1,892,308 | ||||||||||
| Disposal of treasury shares |
(223,605 | ) | (48,513 | ) | (27,030 | ) | (2,650 | ) | ||||||||
| Retirement of treasury shares |
(2,615,605 | ) | (567,473 | ) | — | — | ||||||||||
| |
|
|
|
|
|
|
|
|||||||||
| Ending |
8,722,053 | ￦ |
1,892,308 | 8,695,023 | ￦ |
1,889,658 | ||||||||||
| |
|
|
|
|
|
|
|
|||||||||
28. |
Share-Based Payments |
29. |
Revenue |
(a) |
Disaggregation of revenue |
1) |
For the year ended December 31, 2021 |
(in millions of Won) |
Green Infrastructure |
|||||||||||||||||||||||||||
Steel |
Trading |
Construction |
Logistics and Others |
Green Materials and energy |
Others |
Total |
||||||||||||||||||||||
Types of revenue |
||||||||||||||||||||||||||||
Revenue from sales of goods |
￦ |
40,305,393 | 24,233,531 | — | 7,751 | 1,210,874 | 219,425 | 65,976,974 | ||||||||||||||||||||
Revenue from services |
680,513 | 547,369 | 58,807 | 2,027,133 | 3,150 | 102,881 | 3,419,853 | |||||||||||||||||||||
Revenue from construction contract |
— | — | 6,014,050 | — | 27,933 | 34 | 6,042,017 | |||||||||||||||||||||
Others |
107,499 | 284,708 | 2,365 | 26,393 | — | 149,392 | 570,357 | |||||||||||||||||||||
￦ |
41,093,405 | 25,065,608 | 6,075,222 | 2,061,277 | 1,241,957 | 471,732 | 76,009,201 | |||||||||||||||||||||
Timing of revenue recognition |
||||||||||||||||||||||||||||
Revenue recognized at a point in time |
￦ |
40,412,892 | 24,518,239 | 491,313 | 34,144 | 1,210,874 | 368,817 | 67,036,279 | ||||||||||||||||||||
Revenue recognized over time |
680,513 | 547,369 | 5,583,909 | 2,027,133 | 31,083 | 102,915 | 8,972,922 | |||||||||||||||||||||
￦ |
41,093,405 | 25,065,608 | 6,075,222 | 2,061,277 | 1,241,957 | 471,732 | 76,009,201 | |||||||||||||||||||||
2) |
For the year ended December 31, 2022 |
(in millions of Won) |
Green Infrastructure |
|||||||||||||||||||||||||||
Steel |
Trading |
Construction |
Logistics and Others |
Green Materials and energy |
Others |
Total |
||||||||||||||||||||||
Types of revenue |
||||||||||||||||||||||||||||
Revenue from sales of goods |
￦ |
43,508,308 | 24,824,117 | — | 84,168 | 2,418,796 | — | 70,835,389 | ||||||||||||||||||||
Revenue from services |
919,391 | 586,047 | 142,708 | 3,849,390 | 4,501 | 8,017 | 5,510,054 | |||||||||||||||||||||
Revenue from construction contract |
— | — | 7,769,863 | — | 28,488 | — | 7,798,351 | |||||||||||||||||||||
Others |
119,267 | 545,294 | 8,537 | 65,401 | — | 121,323 | 859,822 | |||||||||||||||||||||
￦ |
44,546,966 | 25,955,458 | 7,921,108 | 3,998,959 | 2,451,785 | 129,340 | 85,003,616 | |||||||||||||||||||||
Timing of revenue recognition |
||||||||||||||||||||||||||||
Revenue recognized at a point in time |
￦ |
43,627,575 | 25,369,411 | 837,363 | 149,569 | 2,418,796 | 121,323 | 72,524,037 | ||||||||||||||||||||
Revenue recognized over time |
919,391 | 586,047 | 7,083,745 | 3,849,390 | 32,989 | 8,017 | 12,479,579 | |||||||||||||||||||||
￦ |
44,546,966 | 25,955,458 | 7,921,108 | 3,998,959 | 2,451,785 | 129,340 | 85,003,616 | |||||||||||||||||||||
3) |
For the year ended December 31, 2023 |
(in millions of Won) |
Green Infrastructure |
|||||||||||||||||||||||||||
Steel |
Trading |
Construction |
Logistics and Others |
Green Materials and energy |
Others |
Total |
||||||||||||||||||||||
Types of revenue |
||||||||||||||||||||||||||||
Revenue from sales of goods |
￦ |
39,435,236 | 20,973,059 | — | 17,923 | 3,775,215 | — | 64,201,433 | ||||||||||||||||||||
Revenue from services |
807,142 | 3,056,272 | 142,902 | 397,421 | 4,415 | 13,082 | 4,421,234 | |||||||||||||||||||||
Revenue from construction contract |
— | — | 8,070,120 | — | 36,404 | — | 8,106,524 | |||||||||||||||||||||
Others |
150,895 | 4,175 | 17,460 | 55,269 | 8 | 99,551 | 327,358 | |||||||||||||||||||||
￦ |
40,393,273 | 24,033,506 | 8,230,482 | 470,613 | 3,816,042 | 112,633 | 77,056,549 | |||||||||||||||||||||
Timing of revenue recognition |
||||||||||||||||||||||||||||
Revenue recognized at a point in time |
￦ |
39,586,131 | 20,977,234 | 375,118 | 73,192 | 3,775,223 | 99,551 | 64,886,449 | ||||||||||||||||||||
Revenue recognized over time |
807,142 | 3,056,272 | 7,855,364 | 397,421 | 40,819 | 13,082 | 12,170,100 | |||||||||||||||||||||
￦ |
40,393,273 | 24,033,506 | 8,230,482 | 470,613 | 3,816,042 | 112,633 | 77,056,549 | |||||||||||||||||||||
(b) |
Details of contract assets and liabilities from contracts with customers as of December 31, 2022 and 2023 are as follows: |
(in millions of Won) |
2022 |
2023 |
||||||
Receivables |
||||||||
Account receivables |
￦ |
8,414,667 | |
9,155,521 | ||||
Contract assets |
||||||||
Due from customers for contract work |
1,311,508 | 1,689,984 | ||||||
Contract liabilities |
||||||||
Advance received |
1,233,424 | 915,659 | ||||||
Due to customers for contract work |
756,316 | 624,632 | ||||||
Unearned revenue |
84,195 | 77,908 | ||||||
30. |
Revenue – Contract Balances |
| (a) | Details of outstanding contracts as of December 31, 2022 and 2023 are as follows: |
(in millions of Won) |
2022 |
2023 |
||||||
| Accumulated cost |
￦ |
27,940,760 | |
26,101,964 | ||||
| Accumulated contract profit |
1,759,843 | 1,752,184 | ||||||
| Accumulated contract loss |
(885,148 | ) | (697,878 | ) | ||||
| Accumulated contract revenue |
28,815,455 | 27,156,270 | ||||||
| (b) | Details of due from customers for contract work and due to customers for contract work as of December 31, 2022 and 2023 are as follows: |
(in millions of Won) |
2022 |
2023 |
||||||
| Unbilled due from customers for contract Work |
￦ |
1,340,146 | 1,704,256 | |||||
| Due to customers for contract work |
(756,316 | ) | (624,632 | ) | ||||
| |
|
|
|
|||||
￦ |
583,830 | |
1,079,624 | |||||
| |
|
|
|
|||||
(c) |
During the years ended December 31, 2022 and 2023, the total contract revenues and the estimated total contract costs have changed. The impact of these changes on profit before income tax for the years ended December 31, 2022 and 2023 and future periods are as follows: |
(in millions of Won) |
2022 |
2023 |
||||||
| Changes in total contract revenues |
￦ |
1,222,558 | 1,362,828 | |||||
| Changes in estimated total contract costs |
1,622,429 | 1,419,726 | ||||||
| Changes in profit before income taxes of construction contract : |
||||||||
| - Current period |
(165,623 | ) | (91,397 | ) | ||||
| - Future periods |
(234,248 | ) | |
34,499 | ||||
| (d) | Uncertainty of estimates |
| 1) | Total contract revenues |
| 2) | Total contract costs |
| Method of significant assumption | ||
| Material cost | Assumption based on recent purchasing price and quoted market price | |
| Labor cost | Assumption based on standard monthly and daily labor cost | |
| Outsourcing cost | Assumption based on the past experience rate of similar project and market price |
| (e) | As of December 31, 2023, revenue expected to be recognized in the future in relation to performance obligations that have not been fulfilled (or partially fulfilled) is as follows: |
(in millions of Won) |
2024 |
2025 |
2026 |
After 2027 |
Total |
|||||||||||||||
| Expected Revenue |
￦ |
6,625,315 | |
4,612,492 | |
2,577,621 | |
1,081,838 | |
14,897,266 | ||||||||||
31. |
Selling and Administrative Expenses |
| (a) | Other administrative expenses |
(in millions of Won) |
2021 |
2022 |
2023 |
|||||||||
| Wages and salaries |
￦ |
941,824 | 1,075,873 | 1,156,456 | ||||||||
| Expenses related to post-employment benefit s
|
142,606 | 84,582 | 92,667 | |||||||||
| Other employee benefits |
207,074 | 230,909 | 273,482 | |||||||||
| Travel |
18,916 | 39,661 | 47,945 | |||||||||
| Depreciation |
144,037 | 148,639 | 159,836 | |||||||||
| Amortization |
87,232 | 90,069 | 96,004 | |||||||||
| Communication |
9,898 | 10,890 | 11,956 | |||||||||
| Electricity |
7,398 | 9,563 | 12,242 | |||||||||
| Taxes and public dues |
85,808 | 95,976 | 100,639 | |||||||||
| Rental |
28,682 | 36,732 | 48,243 | |||||||||
| Repairs |
12,604 | 17,343 | 17,787 | |||||||||
| Entertainment |
10,186 | 13,741 | 15,490 | |||||||||
| Advertising |
89,218 | 103,551 | 107,223 | |||||||||
| Research & development |
123,092 | 179,714 | 175,167 | |||||||||
| Service fees |
187,271 | 225,072 | 234,815 | |||||||||
| Vehicles maintenance |
5,336 | 7,102 | 7,660 | |||||||||
| Industry association fee |
9,691 | 11,624 | 11,096 | |||||||||
| Conference |
14,479 | 20,259 | 19,876 | |||||||||
| Others |
84,457 | 78,666 | 81,103 | |||||||||
| |
|
|
|
|
|
|||||||
￦ |
2,209,809 | 2,479,966 | 2,669,687 | |||||||||
| |
|
|
|
|
|
|||||||
| (b) | Selling expenses |
(in millions of Won) |
2021 |
2022 |
2023 |
|||||||||
| Freight and custody |
￦ |
192,973 | 77,427 | 55,531 | ||||||||
| Operating expenses for distribution center |
7,382 | 2,507 | 4,534 | |||||||||
| Sales commissions |
65,404 | 75,012 | 68,138 | |||||||||
| Sales advertising |
3,620 | 5,782 | 4,083 | |||||||||
| Sales promotion |
6,264 | 19,388 | 9,503 | |||||||||
| Sample |
2,164 | 2,052 | 2,234 | |||||||||
| Sales insurance premium |
41,069 | 39,018 | 31,622 | |||||||||
| Contract cost |
61,450 | 57,661 | 46,140 | |||||||||
| Others |
12,749 | 15,635 | 11,794 | |||||||||
| |
|
|
|
|
|
|||||||
￦ |
393,075 | 294,482 | 233,579 | |||||||||
| |
|
|
|
|
|
|||||||
32. |
Research and Development Expenditures Recognized as Expenses |
(in millions of Won) |
2021 |
2022 |
2023 |
|||||||||
| Administrative expenses |
￦ |
123,092 | 179,714 | 175,167 | ||||||||
| Cost of sales |
345,457 | 356,560 | 343,242 | |||||||||
| |
|
|
|
|
|
|||||||
￦ |
468,549 | 536,274 | 518,409 | |||||||||
| |
|
|
|
|
|
|||||||
33. |
Finance Income and Costs |
(in millions of Won) |
2021 |
2022 |
2023 |
|||||||||
| Finance income |
||||||||||||
| Interest income(*1) |
￦ |
292,243 | 247,005 | 502,147 | ||||||||
| Dividend income |
74,451 | 39,383 | 50,146 | |||||||||
| Gain on foreign currency transactions |
1,079,939 | 2,284,126 | 1,660,713 | |||||||||
| Gain on foreign currency translations |
298,452 | 703,627 | 292,581 | |||||||||
| Gain on derivatives transactions |
402,171 | 840,265 | 333,197 | |||||||||
| Gain on valuations of derivatives |
370,780 | 262,723 | 201,133 | |||||||||
| Gain on disposals of financial assets at fair value through profit of loss |
20,070 | 256,016 | 203,795 | |||||||||
| Gain on valuations of financial assets at fair value through profit or loss |
101,717 | 98,359 | 572,154 | |||||||||
| Gain on valuations of financial liabilities at fair value through profit or loss |
54,057 | 85,790 | — | |||||||||
| Others |
36,230 | 16,717 | 14,880 | |||||||||
| |
|
|
|
|
|
|||||||
￦ |
2,730,110 | 4,834,011 | 3,830,746 | |||||||||
| |
|
|
|
|
|
|||||||
| Finance costs |
||||||||||||
| Interest expenses |
￦ |
(439,826) | (607,458 | ) | (1,001,290) | |||||||
| Loss on foreign currency transactions |
(985,179 | ) | (2,505,862) | (1,595,430) | ||||||||
| Loss on foreign currency translations |
(554,910 | ) | (969,215 | ) | (705,866 | ) | ||||||
| Loss on derivatives transactions |
(496,798 | ) | (690,471 | ) | (320,374 | ) | ||||||
| Loss on valuations of derivatives |
(101,198 | ) | (193,127 | ) | (77,459 | ) | ||||||
| Loss on disposals of trade accounts and notes receivable |
(17,769 | ) | (64,244 | ) | (84,649 | ) | ||||||
| Loss on disposals of financial assets at fair value through profit or loss |
(7,951 | ) | (18,245 | ) | (13,264 | ) | ||||||
| Loss on valuations of financial assets at fair value through profit or loss |
(113,810 | ) | (698,136 | ) | (51,270 | ) | ||||||
| Loss on valuations of financial liabilities at fair value through profit or loss |
— | — | (305,562 | ) | ||||||||
| Others |
(47,734 | ) | (57,708 | ) | (47,832 | ) | ||||||
| |
|
|
|
|
|
|||||||
￦ |
(2,765,175) | (5,804,466) | (4,202,996) | |||||||||
| |
|
|
|
|
|
|||||||
| (*1) | Interest income calculated using the effective interest method for the years ended December 31, 2021, 2022 and 2023 were ￦ 134,121 million, ￦ 226,584 million and ￦ 502,147 million, respectively. |
34. |
Other Operating Income and Expenses |
(in millions of Won) |
2021 |
2022 |
2023 |
|||||||||
| Other operating income |
||||||||||||
| Gain on disposals of assets held for sale |
￦ |
60,208 | 55,262 | 1,312 | ||||||||
| Gain on disposals of investment in subsidiaries, associates and joint ventures |
85,981 | 13,904 | 197,088 | |||||||||
| Gain on disposals of property, plant and equipment |
12,016 | 18,502 | 9,387 | |||||||||
| Gain on valuation of firm commitment |
169,485 | 181,645 | 11,499 | |||||||||
| Reversal of other provisions |
33,887 | 5,245 | 8,578 | |||||||||
| Compensation for insured losses(*1) |
38,115 | 237,565 | 13,117 | |||||||||
| Gain on bargain purchase(* 2 ) |
— | — | 41,072 | |||||||||
| Gain on disposals of emission rights |
567 | 5,181 | 25,998 | |||||||||
| Miscellaneous Income(*3) |
157,703 | 64,235 | 77,946 | |||||||||
| Others |
20,035 | 10,478 | 8,348 | |||||||||
| |
|
|
|
|
|
|||||||
￦ |
577,997 | 592,017 | 394,345 | |||||||||
| |
|
|
|
|
|
|||||||
| Other operating expenses |
||||||||||||
| Loss on disposals of assets held for sale(* 4 ) |
￦ |
— | (3,964 | ) | (103,366 | ) | ||||||
| Loss on disposals of investments in subsidiaries, associates and joint ventures |
(12,882 | ) | (12,400 | ) | (18,843 | ) | ||||||
| Loss on disposals of property, plant and equipment |
(95,720 | ) | (111,082 | ) | (125,823 | ) | ||||||
| Impairment loss on property, plant and equipment |
(311,520 | ) | (213,183 | ) | (275,846 | ) | ||||||
| Impairment loss on intangible assets |
(224,328 | ) | (370,663 | ) | (129,907 | ) | ||||||
| Loss on valuation of firm commitment |
(111,542 | ) | (156,183 | ) | (47,448 | ) | ||||||
| Idle tangible asset expenses |
(23,843 | ) | (18,184 | ) | (3,703 | ) | ||||||
| Increase to provisions |
(37,962 | ) | (88,857 | ) | (38,395 | ) | ||||||
| Donations |
(101,258 | ) | (80,558 | ) | (67,393 | ) | ||||||
| Miscellaneous losses |
(69,972 | ) | (63,812 | ) | (92,870 | ) | ||||||
| Others |
(38,465 | ) | (4,799 | ) | (749 | ) | ||||||
| |
|
|
|
|
|
|||||||
￦ |
(1,027,492 | ) | (1,123,685 | ) | (904,343 | ) | ||||||
| |
|
|
|
|
|
|||||||
| (*1) | During the year ended December 31, 2022, POSCO, a subsidiary, received insurance payments of ￦ 234,000 million related to damage due to the flooding of the Naengcheon stream in Pohang, and additional compensation is under discussion with the insurance company. |
| (*2) | During the year ended December 31, 2023, QSONE Co.,Ltd., which had been previously classified as an investment in associates was reclassified as consolidated subsidiaries. As a result, the Company recognized ￦ 184,556 million of gain on disposals of investment in associates and ￦ 41,072 million of gain on bargain purchase. |
| (*3) | During the year ended December 31, 2021, the Company recognized ￦ 46,283 million of other operating income for refund of other than corporate tax as a result of administrative litigation for tax audits. |
| (*4) | During the year ended December 31, 2023, the Company dispose of CSP-Compania Siderurgica do Pecem, which was classified as assets held for sale during the year ended December 31, 2022, and recognized ￦ 103,366 million of loss on disposals of assets held for sale. The loss on disposal of assets held for sale recognized as profit or loss includes ￦ 102,470 million, which was reclassified from accumulated other comprehensive loss arising from translating the financial statements of foreign operation. |
35. |
Expenses by Nature |
(in millions of Won) |
2021 |
2022 |
2023 |
|||||||||
| Raw material used, changes in inventories and others |
￦ |
44,466,766 | 54,670,367 | 46,179,075 | ||||||||
| Employee benefits (*2) |
4,023,167 | 4,330,946 | 4,660,771 | |||||||||
| Outsourced processing cost |
7,690,334 | 8,641,448 | 10,377,087 | |||||||||
| Electricity expenses |
744,207 | 936,360 | 1,099,970 | |||||||||
| Depreciation(*1) |
3,135,345 | 3,204,744 | 3,325,088 | |||||||||
| Amortization |
444,100 | 488,835 | 498,193 | |||||||||
| Freight and custody expenses |
1,580,200 | 3,077,044 | 2,297,544 | |||||||||
| Sales commissions |
65,404 | 75,012 | 68,138 | |||||||||
| Loss on disposal of property, plant and equipment |
95,720 | 111,082 | 125,823 | |||||||||
| Impairment loss on property, plant and equipment |
311,520 | 213,183 | 275,846 | |||||||||
| Impairment loss on goodwill and intangible assets |
224,328 | 370,663 | 129,907 | |||||||||
| Donations |
101,258 | 80,558 | 67,393 | |||||||||
| Other |
4,962,224 | 5,058,849 | 5,615,703 | |||||||||
| |
|
|
|
|
|
|||||||
￦ |
67,844,573 | 81,259,091 | 74,720,538 | |||||||||
| |
|
|
|
|
|
|||||||
| (*1) | Includes depreciation of investment property. |
| (*2) | The details of employee benefits expenses for the years ended December 31, 2021, 2022 and 2023 were as follows: |
(in millions of Won) |
2021 |
2022 |
2023 |
|||||||||
| Wages and salaries |
￦ |
3,684,894 | 4,024,805 | 4,375,123 | ||||||||
| Expenses related to post-employment benefits |
338,273 | 306,141 | 285,648 | |||||||||
| |
|
|
|
|
|
|||||||
￦ |
4,023,167 | 4,330,946 | 4,660,771 | |||||||||
| |
|
|
|
|
|
|||||||
| (a) | Income tax expense for the years ended December 31, 2021, 2022 and 2023 were as follows: |
(in millions of Won) |
2021 |
2022 |
2023 |
|||||||||
Current income taxes(*1) |
￦ |
2,470,416 | 932,085 | 802,997 | ||||||||
Deferred income tax due to temporary differences |
(153,919 | ) | (407,958 | ) | 3,631 | |||||||
Items recognized directly in equity |
(102,670 | ) | (62,593 | ) | (17,261 | ) | ||||||
Income tax expense |
￦ |
2,213,827 | 461,534 | 789,367 | ||||||||
| (*1) | Refund (additional payment) of income taxes when filing a final corporation tax return is credited (charged) directly to current income taxes. |
| (b) | The income taxes credited (charged) directly to equity for the years ended December 31, 2021, 2022 and 2023 were as follows: |
(in millions of Won) |
2021 |
2022 |
2023 |
|||||||||
Net changes in fair value of equity investments at fair value through other comprehensive income |
￦ |
(83,532 | ) | (37,431 | ) | (71,600 | ) | |||||
Remeasurements of defined benefit plans |
(17,685 | ) | (16,971 | ) | 34,406 | |||||||
Others |
(1,453 | ) | (8,191) | 19,933 | ||||||||
￦ |
(102,670 | ) | (62,593) | (17,261 | ) | |||||||
| (c) | The following table reconciles the calculated income tax expense based on POSCO’s statutory rate (27.5% for 2021, and 26.4% for 2022 and 2023) to the actual amount of taxes recorded by the Company for the years ended December 31, 2021, 2022 and 2023. |
(in millions of Won) |
2021 |
2022 |
2023 |
|||||||||
Profit before income tax expense |
￦ |
9,389,809 | 4,047,491 | 2,635,426 | ||||||||
Income tax expense computed at statutory rate |
2,572,702 | 1,101,240 | 685,381 | |||||||||
Adjustments: |
||||||||||||
Tax credits |
(313,205 | ) | (133,727 | ) | (82,233 | ) | ||||||
Additional income tax expense for prior years (Refund of taxes for prior years) |
(42,667 | ) | 22,929 | 152,656 | ||||||||
Investment in subsidiaries, associates and joint ventures(*1) |
(111,938 | ) | (413,349 | ) | 146,498 | |||||||
Tax effects due to permanent differences |
17,811 | 19,350 | (3,011 | ) | ||||||||
Carryforward of unused tax losses(*2) |
(3,770 | ) | (3,167 | ) | (126,110 | ) | ||||||
Effect of tax rate change |
— | (180,533 | ) | 4,998 | ||||||||
Others |
94,894 | 48,791 | 11,188 | |||||||||
| (358,875 | ) | (639,706) | 103,986 | |||||||||
Income tax expense |
￦ |
2,213,827 | 461,534 | 789,367 | ||||||||
Effective tax rate (%) |
23.58 | % | 11.40 | % | % | |||||||
| (*1) | During the year ended December 31, 2022, POSCO HOLDINGS INC. sold certain of its subsidiaries and associates to POSCO, a subsidiary of POSCO Holdings, and classified CSP-Compania Siderurgica do Pecem, an investment in joint venture as assets held for sale. This amount includes ￦ 451,352 million related to recognition of deferred tax assets which were previously not recognized. |
(*2) |
During the year ended December 31, 2023, POSCO HOLDINGS INC. recognized tax benefits of ￦ 122,922 million from utilizing tax losses carryforwards of a joint venture upon disposal of the joint venture. |
| (d) | The movements in deferred tax assets (liabilities) for the years ended December 31, 2022 and 2023 were as follows: |
(in millions of Won) |
2022 |
2023 |
||||||||||||||||||||||
Beginning |
Inc. (Dec.) |
Ending |
Beginning |
Inc. (Dec.) |
Ending |
|||||||||||||||||||
| Deferred income tax due to temporary differences |
||||||||||||||||||||||||
| Allowance for doubtful accounts |
￦ |
143,358 | (12,857 | ) | 130,501 | 130,501 | 26,107 | 156,608 | ||||||||||||||||
| PP&E and Intangible asset |
(1,118,806 | ) | 1,501,644 | 382,838 | 382,838 | (143,136 | ) | 239,702 | ||||||||||||||||
| Share of profit or loss of equity-accounted investees |
224,566 | 45,072 | 269,638 | 269,638 | 21,281 | 290,919 | ||||||||||||||||||
| Allowance for inventories valuation |
22,983 | 24,582 | 47,565 | 47,565 | 15,622 | 63,187 | ||||||||||||||||||
| Prepaid expenses |
19,530 | (2,607 | ) | 16,923 | 16,923 | (3,370 | ) | 13,553 | ||||||||||||||||
| Gain or loss on foreign currency translation |
(1,105 | ) | (12,601 | ) | (13,706 | ) | (13,706 | ) | 156,945 | 143,239 | ||||||||||||||
| Defined benefit liabilities |
(148,341 | ) | 107,924 | (40,417 | ) | (40,417 | ) | 36,883 | (3,534 | ) | ||||||||||||||
| Provision for construction losses |
10,190 | 7,759 | 17,949 | 17,949 | (6,280 | ) | 11,669 | |||||||||||||||||
| Provision for construction warranty |
74,360 | (4,089 | ) | 70,271 | 70,271 | (24,548 | ) | 45,723 | ||||||||||||||||
| Accrued income |
(50,452 | ) | 10,690 | (39,762 | ) | (39,762 | ) | 18,491 | (21,271 | ) | ||||||||||||||
| Provision for accelerated depreciation |
(8,510 | ) | (2,728,164 | ) | (2,736,674 | ) | (2,736,674 | ) | 75,944 | (2,660,730 | ) | |||||||||||||
| Spin-off |
— | 1,543,628 | 1,543,628 | 1,543,628 | (7,451 | ) | 1,536,177 | |||||||||||||||||
| Impairment loss on AFS |
118,149 | (23,607 | ) | 94,542 | 94,542 | (225 | ) | 94,317 | ||||||||||||||||
| Difference in acquisition costs of treasury shares |
69,408 | (25,516 | ) | 43,892 | 43,892 | (151 | ) | 43,741 | ||||||||||||||||
| Others |
309,618 | 177,826 | 487,444 | 487,444 | (328,342 | ) | 159,102 | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (335,052 | ) | 609,684 | 274,632 | 274,632 | (162,230 | ) | 112,402 | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Deferred income taxes recognized directly to equity |
||||||||||||||||||||||||
| Net changes in fair value of equity investments at fair value through other comprehensive income |
73,459 | (37,431 | ) | 36,028 | 36,028 | (71,600 | ) | (35,572 | ) | |||||||||||||||
| Others |
134,737 | (141,788 | ) | (7,051 | ) | (7,051 | ) | 54,339 | 47,288 | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 208,196 | (179,219 | ) | 28,977 | 28,977 | (17,261 | ) | 11,716 | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Deferred tax from tax credit |
||||||||||||||||||||||||
| Tax credit carry-forward and others |
72,864 | (1,500 | ) | 71,364 | 71,364 | 182,195 | 253,559 | |||||||||||||||||
| Investments in subsidiaries, associates and joint ventures |
||||||||||||||||||||||||
| Investments in subsidiaries, associates and joint ventures |
245,029 | (21,008 | ) | 224,021 | 224,021 | (6,335 | ) | 217,686 | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
￦ |
191,037 | 407,957 | 598,994 | 598,994 | (3,631 | ) | 595,363 | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (e) | Deferred tax assets and liabilities as of December 31, 2022 and 2023 are as follows: |
(in millions of Won) |
2022 |
2023 |
||||||||||||||||||||||
Assets |
Liabilities |
Net |
Assets |
Liabilities |
Net |
|||||||||||||||||||
| Deferred income tax due to temporary differences |
||||||||||||||||||||||||
| Allowance for doubtful accounts |
￦ |
130,700 | (199 | ) | 130,501 | 156,681 | (73 | ) | 156,608 | |||||||||||||||
| PP&E and Intangible asset |
437,245 | (54,407 | ) | 382,838 | 337,094 | (97,392 | ) | 239,702 | ||||||||||||||||
| Share of profit or loss of equity-accounted investees |
284,568 | (14,930 | ) | 269,638 | 304,225 | (13,306 | ) | 290,919 | ||||||||||||||||
| Allowance for inventories valuation |
47,565 | — | 47,565 | 63,187 | — | 63,187 | ||||||||||||||||||
| Prepaid expenses |
17,003 | (80 | ) | 16,923 | 13,659 | (106 | ) | 13,553 | ||||||||||||||||
| Gain or loss on foreign currency translation |
75,235 | (88,941 | ) | (13,706 | ) | 205,170 | (61,931 | ) | 143,239 | |||||||||||||||
| Defined benefit liabilities |
550,140 | (590,557 | ) | (40,417 | ) | 598,177 | (601,711 | ) | (3,534 | ) | ||||||||||||||
| Provision for construction losses |
17,949 | — | 17,949 | 11,669 | — | 11,669 | ||||||||||||||||||
| Provision for construction warranty |
70,271 | — | 70,271 | 45,723 | — | 45,723 | ||||||||||||||||||
| Accrued income |
— | (39,762 | ) | (39,762 | ) | — | (21,271 | ) | (21,271 | ) | ||||||||||||||
| Provision for accelerated depreciation |
— | (2,736,674 | ) | (2,736,674 | ) | — | (2,660,730 | ) | (2,660,730 | ) | ||||||||||||||
| Spin-off |
1,543,628 | — | 1,543,628 | 1,536,177 | — | 1,536,177 | ||||||||||||||||||
| Impairment loss on AFS |
94,542 | — | 94,542 | 94,317 | — | 94,317 | ||||||||||||||||||
| Difference in acquisition costs of treasury shares |
43,892 | — | 43,892 | 43,741 | — | 43,741 | ||||||||||||||||||
| Others |
547,189 | (59,745 | ) | 487,444 | 193,833 | (34,731 | ) | 159,102 | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 3,859,927 | (3,585,295 | ) | 274,632 | 3,603,653 | (3,491,251 | ) | 112,402 | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Deferred income taxes recognized directly to equity |
||||||||||||||||||||||||
| Net changes in fair value of equity investments at fair value through other comprehensive income |
105,125 | (69,097 | ) | 36,028 | 50,134 | (85,706 | ) | (35,572 | ) | |||||||||||||||
| Others |
30,370 | (37,421 | ) | (7,051 | ) | 76,604 | (29,316 | ) | 47,288 | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 135,495 | (106,518 | ) | 28,977 | 126,738 | (115,022 | ) | 11,716 | |||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Deferred tax from tax credit |
||||||||||||||||||||||||
| Tax credit carry-forward and others |
71,364 | — | 71,364 | 253,559 | — | 253,559 | ||||||||||||||||||
| Investments in subsidiaries, associates and joint ventures |
||||||||||||||||||||||||
| Investments in subsidiaries, associates and joint ventures |
463,133 | (239,112 | ) | 224,021 | 499,326 | (281,640 | ) | 217,686 | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
￦ |
4,529,919 | (3,930,925 | ) | 598,994 | 4,483,276 | (3,887,913 | ) | 595,363 | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (f) | As of December 31, 2023, deductible temporary differences of ￦ 6,282,636 million and taxable temporary differences of ￦ 11,603,746 million related to investments in subsidiaries and associates were not recognized as deferred tax assets or liabilities, because it is not probable they will reverse in the foreseeable future. |
| (g) | The Company recognized current tax payable or receivable at the amount expected to be paid or received that reflects uncertainty related to income taxes. |
| (h) | Global minimum top-up tax is a system in which multinational corporations with annual revenue of the consolidated financial statements over € 750 million in at least two of the preceding four fiscal years. If the effective tax rate of the multinational corporation is less than 15%, the corresponding amount needs to be paid to the tax authorities of the country where the controlling company that meets specific requirement is located. |
37. |
Earnings per Share |
| (a) | Basic earnings per share for the years ended December 31, 2021, 2022 and 2023 were as follows: |
(in Won, except share information) |
2021 |
2022 |
2023 |
|||||||||
| Profit attribute to controlling interest |
￦ 6,606,727,454,113 |
3,157,536,155,264 |
1,698,202,436,726 |
|||||||||
| Interests of hybrid bonds, net of tax |
(6,669,999,999) |
(1,078,164,383 |
) |
— |
||||||||
| Weighted-average number of common shares outstanding(*1) |
75,696,150 |
75,814,870 |
75,869,542 |
|||||||||
| |
|
|
|
|
|
|||||||
| Basic earnings per share |
￦ 87,191 |
41,634 |
22,383 |
|||||||||
| |
|
|
|
|
|
|||||||
(*1) |
The weighted-average number of common shares used to calculate basic earnings per share are as follows: |
(shares) |
2021 |
2022 |
2023 |
|||||||||
| Total number of common shares issued |
87,186,835 |
84,571,230 |
84,571,230 |
|||||||||
| Weighted-average number of treasury shares |
(11,490,685 |
) |
(8,756,360 |
) |
(8,701,688 |
) | ||||||
| |
|
|
|
|
|
|||||||
| Weighted-average number of common shares outstanding |
75,696,150 |
75,814,870 |
75,869,542 |
|||||||||
| |
|
|
|
|
|
|||||||
(b) |
Diluted earnings per share for the years ended December 31, 2021, 2022 and 2023 were as follows: |
(in Won, except share information) |
2021 |
2022 |
2023 |
|||||||||
| Profit attribute to controlling interest |
￦ |
6,606,727,454,113 | 3,157,536,155,264 | 1,698,202,436,726 | ||||||||
| Interests of hybrid bonds, net of tax |
(6,669,999,999 | ) | (1,078,164,383 | ) | — | |||||||
| Gain or loss from exchange rate on and revaluation of exchangeable bonds |
(63,166,690,813 | ) | (55,751,463,819 | ) | — | |||||||
| Adjusted weighted-average number of common shares(*1) |
76,688,340 | 78,906,375 | 75,869,542 | |||||||||
| |
|
|
|
|
|
|||||||
| Diluted earnings per share |
￦ |
85,240 | 39,296 | 22,383 | ||||||||
| |
|
|
|
|
|
|||||||
| (*1) | The weighted-average number of common shares used to calculate diluted earnings per share are as follows: |
(shares) |
2021 |
2022 |
2023 |
|||||||||
| Weighted-average number of common shares outstanding |
75,696,150 | 75,814,870 | 75,869,542 | |||||||||
| Weighted-average number of potential common share |
992,190 | 3,091,505 | — | |||||||||
| |
|
|
|
|
|
|||||||
| Adjusted weighted-average number of common shares |
76,688,340 | 78,906,375 | 75,869,542 | |||||||||
| |
|
|
|
|
|
|||||||
38. |
Related Party Transactions |
| (a) | Significant transactions between the controlling company and related companies for the years ended December 31, 2021, 2022 and 2023 were as follows: |
| 1) | For the year ended December 31, 2021 |
(in millions of Won) |
Sales and others(*1) |
Purchase and others(*2) |
||||||||||||||||||||||
Sales |
Others |
Purchase of material |
Purchase of fixed assets |
Outsourced processing cost |
Others |
|||||||||||||||||||
| Subsidiaries(*3) |
||||||||||||||||||||||||
| POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,LTD.) |
￦ |
5,859 | 11,113 | — | 491,624 | 158 | 32,328 | |||||||||||||||||
| POSCO STEELEON Co., Ltd. |
695,451 | 2,602 | — | — | 39,014 | 627 | ||||||||||||||||||
| POSCO DX(formerly, POSCO ICT)(*4) |
1,605 | 4,996 | — | 324,275 | 46,037 | 181,221 | ||||||||||||||||||
| eNtoB Corporation |
14 | — | 381,633 | 65,254 | 115 | 25,242 | ||||||||||||||||||
| POSCO FUTURE M CO., LTD. (formerly, POSCO CHEMICAL CO., LTD) |
318,808 | 31,917 | 462,013 | 14,358 | 298,431 | 3,724 | ||||||||||||||||||
| POSCO ENERGY CO., LTD. |
5,207 | 1,450 | 11,271 | — | — | 26,137 | ||||||||||||||||||
| POSCO MOBILITY SOLUTION |
807,925 | — | — | — | 45,758 | 914 | ||||||||||||||||||
| POSCO INTERNATIONAL Corporation |
9,750,636 | 54,331 | 1,299,561 | — | 988 | 8,968 | ||||||||||||||||||
| POSCO Thainox Public Company Limited |
309,295 | — | — | — | — | 69 | ||||||||||||||||||
| POSCO Canada Ltd. |
— | 1,372 | 202,523 | — | — | — | ||||||||||||||||||
| POSCO Asia Co., Ltd. |
19,142 | 426 | 417 | — | — | 1,648 | ||||||||||||||||||
| Qingdao Pohang Stainless Steel Co., Ltd. |
188,470 | 8 | — | — | — | 83 | ||||||||||||||||||
| POSCO JAPAN Co., Ltd. |
1,613,634 | 1 | 27,937 | 1,726 | — | 4,894 | ||||||||||||||||||
| POSCO-VIETNAM Co., Ltd. |
441,758 | 975 | — | — | — | 46 | ||||||||||||||||||
| POSCO MEXICO S.A. DE C.V. |
460,773 | 548 | — | — | — | 1,494 | ||||||||||||||||||
| POSCO Maharashtra Steel Private Limited |
899,675 | 903 | — | — | — | 229 | ||||||||||||||||||
| POSCO(Suzhou) Automotive Processing Center Co., Ltd. |
161,808 | — | — | — | — | 2 | ||||||||||||||||||
| POSCO VST CO., LTD. |
201,517 | — | — | — | — | 20 | ||||||||||||||||||
| POSCO INTERNATIONAL SINGAPORE PTE LTD. |
— | 1,453 | 1,704,193 | — | — | — | ||||||||||||||||||
| POSCO ASSAN TST STEEL INDUSTRY Inc. |
278,749 | 734 | 8 | — | — | 24 | ||||||||||||||||||
| Others |
1,337,458 | 56,161 | 220,000 | 63,116 | 276,202 | 153,677 | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 17,497,784 | 168,990 | 4,309,556 | 960,353 | 706,703 | 441,347 | |||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Associates and joint ventures(*3) |
||||||||||||||||||||||||
| SNNC |
72,797 | 2,514 | 736,441 | — | — | 107 | ||||||||||||||||||
| POSCO-SAMSUNG-Slovakia Processing Center |
72,342 | — | — | — | — | — | ||||||||||||||||||
| Roy Hill Holdings Pty Ltd |
— | 418,044 | 2,338,625 | — | — | — | ||||||||||||||||||
| Others |
37,410 | 63,298 | 107,637 | — | — | 49,741 | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 182,549 | 483,856 | 3,182,703 | — | — | 49,848 | |||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
￦ |
17,680,333 | 652,846 | 7,492,259 | 960,353 | 706,703 | 491,195 | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (*1) | Sales and others mainly consist of sales of steel products to subsidiaries, associates and joint ventures. |
| (*2) | Purchases and others mainly consist of subsidiaries’ purchases of construction services and purchases of raw materials to manufacture steel products. |
| (*3) | As of December 31, 2021, the company provided guarantees to related parties. |
| (*4) | Others (purchase) mainly consist of service fees related to maintenance and repair of ERP System. |
| 2) | For the year ended December 31, 2022 |
(in millions of Won) |
Sales and others(*1) |
Purchase and others(*2) |
||||||||||||||||||||||||||
Sales |
Dividends |
Others |
Purchase of material |
Purchase of fixed assets |
Outsourced processing cost |
Others |
||||||||||||||||||||||
| Subsidiaries(*3) |
||||||||||||||||||||||||||||
| POSCO |
￦ |
87,165 | — | 2 | — | — | — | 10,446 | ||||||||||||||||||||
| POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,LTD.) |
7,502 | 16,555 | 7 | — | 80,306 | — | 13,086 | |||||||||||||||||||||
| POSCO STEELEON Co., Ltd. |
133,743 | — | 215 | — | — | 7,656 | 18 | |||||||||||||||||||||
| POSCO DX(formerly, POSCO ICT)(*4) |
1,760 | 4,970 | 18 | — | 39,932 | 10,190 | 34,724 | |||||||||||||||||||||
| eNtoB Corporation |
3 | 24 | — | 60,649 | 9,706 | 32 | 3,453 | |||||||||||||||||||||
| POSCO FUTURE M CO., LTD. (formerly, POSCO CHEMICAL CO., LTD) |
89,535 | 13,878 | 44 | 84,301 | 4,757 | 56,325 | 908 | |||||||||||||||||||||
| POSCO ENERGY CO., LTD. |
4,331 | — | — | 6,682 | — | — | 3,925 | |||||||||||||||||||||
| POSCO MOBILITY SOLUTION |
176,534 | — | — | — | — | 8,802 | 28 | |||||||||||||||||||||
| POSCO INTERNATIONAL Corporation |
2,102,356 | 62,093 | — | 244,230 | — | 768 | 1,049 | |||||||||||||||||||||
| POSCO Thainox Public Company Limited |
49,359 | 22,867 | — | — | — | — | 1 | |||||||||||||||||||||
| POSCO Canada Ltd. |
— | — | — | 77,225 | — | — | — | |||||||||||||||||||||
| Qingdao Pohang Stainless Steel Co., Ltd. |
32,584 | — | — | — | — | — | — | |||||||||||||||||||||
| POSCO JAPAN Co., Ltd. |
28,790 | — | — | 835 | — | — | 16 | |||||||||||||||||||||
| POSCO-VIETNAM Co., Ltd. |
44,840 | — | 513 | — | — | — | — | |||||||||||||||||||||
| POSCO MEXICO S.A. DE C.V. |
102,776 | — | 562 | — | — | — | — | |||||||||||||||||||||
| POSCO Maharashtra Steel Private Limited |
171,806 | — | 1,130 | — | — | — | 120 | |||||||||||||||||||||
| POSCO(Suzhou) Automotive Processing Center Co., Ltd. |
42,320 | — | — | — | — | — | 15 | |||||||||||||||||||||
| POSCO VST CO., LTD. |
28,475 | — | — | — | — | — | — | |||||||||||||||||||||
| POSCO INTERNATIONAL SINGAPORE PTE LTD. |
— | — | 179 | 379,823 | — | — | — | |||||||||||||||||||||
| POSCO ASSAN TST STEEL INDUSTRY Inc. |
47,335 | — | 537 | — | — | — | 8 | |||||||||||||||||||||
| Others |
203,869 | 2,452 | 6,574 | 61,457 | 18,844 | 53,139 | 223,222 | |||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 3,355,083 | 122,839 | 9,781 | 915,202 | 153,545 | 136,912 | 291,019 | ||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Associates and joint ventures(*3) |
||||||||||||||||||||||||||||
| SNNC |
3,242 | 5,348 | 8 | 148,239 | — | — | — | |||||||||||||||||||||
| POSCO-SAMSUNG-Slovakia Processing Center |
25,614 |
— | — |
— |
— |
— |
— |
|||||||||||||||||||||
| Roy Hill Holdings Pty Ltd |
— | 186,813 | — | 210,455 | — | — | — | |||||||||||||||||||||
| Others |
78,048 | 209,457 | 14,704 | 14,015 | — | — | 197 | |||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| 106,904 | 401,618 | 14,712 | 372,709 | — | — | 197 | ||||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
￦ |
3,461,987 | 524,457 | 24,493 | 1,287,911 | 153,545 | 136,912 | 291,216 | |||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| (*1) | Sales and others mainly consist of sales of steel products to subsidiaries, associates and joint ventures. |
| (*2) | Purchases and others mainly consist of subsidiaries’ purchases of construction services and purchases of raw materials to manufacture steel products. |
| (*3) | As of December 31, 2022, the company provided guarantees to related parties. |
| (*4) | Others (purchase) mainly consist of service fees related to maintenance and repair of ERP System. |
| 3) | For the year ended December 31, 2023 |
(in millions of Won) |
Sales and others(*1) |
Purchase and others |
||||||||||||||||||
Sales |
Dividends |
Others |
Purchase of fixed assets |
Others |
||||||||||||||||
| Subsidiaries(*2) |
||||||||||||||||||||
| POSCO |
￦ |
146,745 | 325,043 | — | — | 15,440 | ||||||||||||||
| POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,LTD.) |
9,354 | 11,037 | 440 | 23,007 | 5,875 | |||||||||||||||
| POSCO STEELEON CO., Ltd |
1,772 | — | — | — | 105 | |||||||||||||||
| POSCO DX(formerly, POSCO ICT) |
3,040 | 7,455 | — | 4,017 | 9,037 | |||||||||||||||
| eNtoB Corporation |
— | — | 40 | 158 | 3,326 | |||||||||||||||
| POSCO FUTURE M CO., LTD. (formerly, POSCO CHEMICAL CO., LTD) |
8,902 | 13,878 | — | — | — | |||||||||||||||
| POSCO Mobility Solution Corporation |
1,035 | — | 55 | — | — | |||||||||||||||
| POSCO INTERNATIONAL Corporation |
9,278 | 77,616 | — | — | 48 | |||||||||||||||
| POSCO Maharashtra Steel Private Limited |
692 | — | 353 | — | — | |||||||||||||||
| POSCO ASSAN TST STEEL INDUSTRY Inc. |
17 | — | 430 | — | — | |||||||||||||||
| Others |
12,021 | 6,084 | 5,347 | 9,634 | 46,596 | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| 192,856 | 441,113 | 6,665 | 36,816 | 80,427 | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Associates and joint ventures(*2) |
||||||||||||||||||||
| SNNC |
629 | — | 55 | — | — | |||||||||||||||
| Roy Hill Holdings Pty Ltd |
— | 293,956 | — | — | — | |||||||||||||||
| Others |
240 | 92,149 | 11,617 | — | 158 | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| 869 | 386,105 | 11,672 | — | 158 | ||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
￦ |
193,725 | 827,218 | 18,337 | 36,816 | 80,585 | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| (*1) | Sales and others mainly consist of trademark usage income, rental income and dividend income to subsidiaries, associates and joint ventures. |
| (*2) | As of December 31, 2023, the Company provided guarantees to related parties (Note 39) . |
| (b) | The related account balances of receivables and payables resulting from significant transactions between the controlling company and related companies as of December 31, 2022 and 2023 are as follows: |
| 1) | December 31, 2022 |
(in millions of Won) |
Receivables |
Payables |
||||||||||||||||||||||
|
Trade accounts and notes receivable |
Others |
Total |
Accounts payable |
Others |
Total |
|||||||||||||||||||
| Subsidiaries |
||||||||||||||||||||||||
| POSCO |
￦ |
75,343 | 6,600 | 81,943 | 5,678 | 14,663 | 20,341 | |||||||||||||||||
| POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,LTD.) |
3,808 | 660 | 4,468 | — | — | — | ||||||||||||||||||
| POSCO STEELEON Co., Ltd. |
818 | — | 818 | — | — | — | ||||||||||||||||||
| POSCO DX(formerly, POSCO ICT) |
687 | — | 687 | 859 | 705 | 1,564 | ||||||||||||||||||
| eNtoB Corporation |
— | — | — | — | — | — | ||||||||||||||||||
| POSCO FUTURE M CO., LTD. (formerly, POSCO CHEMCAL CO., LTD) |
8,550 | — | 8,550 | — | 5,086 | 5,086 | ||||||||||||||||||
| POSCO ENERGY CO., LTD. |
3,400 | 462 | 3,862 | — | 1,593 | 1,593 | ||||||||||||||||||
| POSCO MOBILITY SOLUTION |
489 | — | 489 | — | — | — | ||||||||||||||||||
| POSCO INTERNATIONAL Corporation |
2,002 | — | 2,002 | — | 502 | 502 | ||||||||||||||||||
| Qingdao Pohang Stainless Steel Co., Ltd. |
— | — | — | 122 | — | 122 | ||||||||||||||||||
| POSCO Maharashtra Steel Private Limited |
— | 466 | 466 | 486 | — | 486 | ||||||||||||||||||
| POSCO ASSAN TST STEEL INDUSTRY Inc. |
— | 513 | 513 | 104 | — | 104 | ||||||||||||||||||
| PT. KRAKATAU POSCO |
— | 8,967 | 8,967 | 391 | — | 391 | ||||||||||||||||||
| Others |
1,918 | 5,618 | 7,536 | 11,874 | 3,335 | 15,209 | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 97,015 | 23,286 | 120,301 | 19,514 | 25,884 | 45,398 | |||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Associates and joint ventures |
||||||||||||||||||||||||
| SNNC |
94 | — | 94 | — | — | — | ||||||||||||||||||
| Roy Hill Holdings Pty Ltd |
23,400 | — | 23,400 | — | — | — | ||||||||||||||||||
| FQM Australia Holdings Pty Ltd(*1) |
— | 202,562 | 202,562 | — | — | — | ||||||||||||||||||
| Others |
190 | 761 | 951 | 74 | — | 74 | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 23,684 | 203,323 | 227,007 | 74 | — | 74 | |||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
￦ |
120,699 | 226,609 | 347,308 | 19,588 | 25,884 | 45,472 | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (*1) | FQM Australia Holdings Pty Ltd’s other receivable consists of long-term loans. During the year ended December 31, 2022, the company provided additional loan ￦ 12,166 million to FQM Australia Holdings Pty Ltd. |
| 2) | December 31, 2023 |
(in millions of Won) |
Receivables |
Payables |
||||||||||||||||||||||
|
Trade accounts and notes receivable |
Others |
Total |
Accounts payable |
Others |
Total |
|||||||||||||||||||
| Subsidiaries |
||||||||||||||||||||||||
| POSCO |
￦ |
110,913 | 19,666 | 130,579 | 3,937 | 32,901 | 36,838 | |||||||||||||||||
| POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,LTD.) |
9,262 | 1,714 | 10,976 | — | 170 | 170 | ||||||||||||||||||
| POSCO STEELEON CO., Ltd |
1,063 | — | 1,063 | — | — | — | ||||||||||||||||||
| POSCO DX(formerly, POSCO ICT) |
1,574 | — | 1,574 | 1,434 | 423 | 1,857 | ||||||||||||||||||
| eNtoB Corporation |
— | — | — | 1,391 | 3 | 1,394 | ||||||||||||||||||
| POSCO FUTURE M CO., LTD. (formerly, POSCO CHEMICAL CO., LTD) |
14,299 | 463 | 14,762 | — | 31 | 31 | ||||||||||||||||||
| POSCO Mobility Solution Corporation |
981 | — | 981 | — | — | — | ||||||||||||||||||
| POSCO INTERNATIONAL Corporation |
6,449 | 25 | 6,474 | — | 163 | 163 | ||||||||||||||||||
| PT. KRAKATAU POSCO |
— | 3,582 | 3,582 | — | — | — | ||||||||||||||||||
| Others |
3,345 | 11,152 | 14,497 | 9,022 | 151 | 9,173 | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 147,886 | 36,602 | 184,488 | 15,784 | 33,842 | 49,626 | |||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Associates and joint ventures |
||||||||||||||||||||||||
| SNNC |
334 | — | 334 | — | — | — | ||||||||||||||||||
| Roy Hill Holdings Pty Ltd |
— | 88,008 | 88,008 | — | — | — | ||||||||||||||||||
| FQM Australia Holdings Pty Ltd(*1) |
— | 218,900 | 218,900 | — | — | — | ||||||||||||||||||
| Others |
195 | 560 | 755 | — | — | — | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| 529 | 307,468 | 307,997 | — | — | — | |||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
￦ |
148,415 | 344,070 | 492,485 | 15,784 | 33,842 | 49,626 | ||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (*1) | FQM Australia Holdings Pty Ltd’s other receivable consists of long-term loans and accrued interest. During the year ended December 31, 2023, the Company provided additional loan to its associates by ￦ 6,448 million. Meanwhile, the Company has recognized allowance for doubtful accounts for all of other receivables amounting to ￦ 218,900 million during the year ended December 31, 2023. |
(c) |
Significant transactions between the Company, excluding the controlling company, and related companies for the years ended December 31, 2021, 2022 and 2023 were as follows: |
| 1) | For the year ended December 31, 2021 |
(in millions of Won) |
Sales and others |
Purchase and others |
||||||||||||||||||
Sales |
Dividends |
Others |
Purchase of material |
Others |
||||||||||||||||
| Associates and joint ventures |
||||||||||||||||||||
| New Songdo International City Development, LLC |
￦ |
286,731 | — | 266 | — | 165 | ||||||||||||||
| SNNC |
75,129 | — | 743 | 19,720 | 40,090 | |||||||||||||||
| Noeul Green Energy Co., Ltd. |
6,127 | — | — | — | 1,896 | |||||||||||||||
| CSP - Compania Siderurgica do Pecem |
4,660 | — | — | 96,179 | — | |||||||||||||||
| Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd |
46,323 | — | — | 33,316 | 5,686 | |||||||||||||||
| POS-SEAH STEEL WIRE (TIANJIN) CO., Ltd. |
14,673 | — | — | — | — | |||||||||||||||
| POSCO SeAH Steel Wire (Nantong) Co., Ltd. |
39,887 | — | — | 164 | — | |||||||||||||||
| DMSA/AMSA |
— | — | — | 9,875 | — | |||||||||||||||
| South-East Asia Gas Pipeline Company Ltd. |
— | 27,828 | 7,564 | — | — | |||||||||||||||
| POSCO MC MATERIALS (formerly, POSCO MITSUBISHI CARBON TECHNOLOGY) |
65,746 | — | 10 | 4,347 | 180 | |||||||||||||||
| Samcheok Blue Power Co., Ltd. |
263,730 | 405 | — | — | 4 | |||||||||||||||
| TK CHEMICAL CORPORATION |
14,906 | — | — | 2,292 | — | |||||||||||||||
| Pocheon-Hwado Highway Corp. |
62,829 | — | — | — | — | |||||||||||||||
| UITrans LRT Co., Ltd. |
10,736 | — | — | — | — | |||||||||||||||
| Roy Hill Holdings Pty Ltd |
— | 104,903 | — | — | — | |||||||||||||||
| Others |
184,606 | 49,031 | 15,449 | 31,379 | 18,505 | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
￦ |
1,076,083 | 182,167 | 24,032 | 197,272 | 66,526 | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| 2) | For the year ended December 31, 2022 |
(in millions of Won) |
Sales and others |
Purchase and others |
||||||||||||||||||
Sales |
Dividends |
Others |
Purchase of material |
Others |
||||||||||||||||
| Associates and joint ventures |
||||||||||||||||||||
| New Songdo International City Development, LLC |
￦ |
270,465 | — | — | — | 148 | ||||||||||||||
| SNNC |
161,565 | — | 412 | 613,514 | 1,755 | |||||||||||||||
| Noeul Green Energy Co., Ltd. |
5,531 | — | — | — | 1,716 | |||||||||||||||
| CSP - Compania Siderurgica do Pecem(*1) |
7,173 | — | — | 126,123 | 22,663 | |||||||||||||||
| Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd(*2) |
17,824 | — | — | 24,190 | — | |||||||||||||||
| POS-SEAH STEEL WIRE (TIANJIN) CO., Ltd. |
14,863 | — | — | — | — | |||||||||||||||
| POSCO SeAH Steel Wire (Nantong) Co., Ltd. |
32,007 | — | — | 357 | — | |||||||||||||||
| South-East Asia Gas Pipeline Company Ltd. |
— | 14,541 | 2,974 | — | — | |||||||||||||||
| POSCO MC MATERIALS (formerly, POSCO MITSUBISHI CARBON TECHNOLOGY) |
134,498 | 24,000 | — | 5,446 | — | |||||||||||||||
| Samcheok Blue Power Co., Ltd. |
502,259 | 9,992 | 26 | — | — | |||||||||||||||
| Pocheon-Hwado Highway Corp. |
93,428 | — | — | — | — | |||||||||||||||
| UITrans LRT Co., Ltd. |
— | — | — | — | — | |||||||||||||||
| Roy Hill Holdings Pty Ltd |
— | 46,780 | — | 1,463,383 | — | |||||||||||||||
| Others |
547,627 | 137,733 | 3,026 | 507,705 | 122,092 | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
￦ |
1,787,240 | 233,046 | 6,438 | 2,740,718 | 148,374 | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
(*1) |
CSP - Compania Siderurgica do Pecem was excluded from the association due to the sale of its shares during the year ended December 31, 2023. |
| (*2) | Zhongyue POSCO (Qinhuangdao) Tinplate Industrial Co., Ltd was excluded from the association due to the sale of its shares during the year ended December 31, 2022. |
| 3) | For the year ended December 31, 2023 |
(in millions of Won) |
Sales and others |
Purchase and others |
||||||||||||||||||
Sales |
Dividends |
Others |
Purchase of material |
Others |
||||||||||||||||
| Associates and joint ventures |
||||||||||||||||||||
| New Songdo International City Development, LLC |
￦ |
208,536 | — | 1,484 | — | 279 | ||||||||||||||
| SNNC |
164,198 | — | 32 | 637,638 | 1,749 | |||||||||||||||
| Noeul Green Energy Co., Ltd. |
6,499 | — | 28 | — | 10,320 | |||||||||||||||
| POS-SEAH STEEL WIRE(TIANJIN)CO.,Ltd |
14,477 | — | — | — | — | |||||||||||||||
| POS SeAH Steel Wire(Nantong) Co., Ltd. |
43,811 | — | — | 73 | — | |||||||||||||||
| South-East Asia Gas Pipeline Company Ltd. |
— | 59,295 | — | — | — | |||||||||||||||
| POSCO MC MATERIALS (formerly, POSCO MITSUBISHI CARBON TECHNOLOGY) |
113,542 | 9,000 | — | 6,861 | 1,564 | |||||||||||||||
| Samcheok Blue Power Co., Ltd. |
503,283 | 10,020 | — | — | — | |||||||||||||||
| Pocheon-Hwado Highway Corp. |
160,233 | — | — | — | — | |||||||||||||||
| Roy Hill Holdings Pty Ltd |
— | 73,489 | — | 1,611,073 | — | |||||||||||||||
| UITrans LRT Co., Ltd. |
554 | — | — | — | — | |||||||||||||||
| Others |
474,052 | 120,429 | 3,353 | 590,717 | 101,909 | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
￦ |
1,689,185 | 272,233 | 4,897 | 2,846,362 | 115,821 | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| (d) | The related account balances of receivables and payables resulting from significant transactions between the Company, excluding the controlling company, and related companies as of December 31, 2022 and December 31, 2023 are as follows: |
| 1) | December 31, 202 2
|
(in millions of Won) |
Receivables(*1) |
Payables |
||||||||||||||||||||||||||
|
Trade accounts and notes receivable |
Loan |
Others |
Total |
Trade accounts and notes payable |
Others |
Total |
||||||||||||||||||||||
| Associates and joint ventures |
||||||||||||||||||||||||||||
| New Songdo International City Development, LLC |
￦ |
63,413 | — | 16,858 | 80,271 | — | 39,664 | 39,664 | ||||||||||||||||||||
| Chuncheon Energy Co., Ltd. |
— | — | — | — | — | 50 | 50 | |||||||||||||||||||||
| Samcheok Blue Power Co., Ltd. |
107,119 | — | — | 107,119 | — | 18,224 | 18,224 | |||||||||||||||||||||
| Nickel Mining Company SAS |
— | 63,024 | 263 | 63,287 | — | 358 | 358 | |||||||||||||||||||||
| CSP - Compania Siderurgica do Pecem |
3 | — | — | 3 | — | — | — | |||||||||||||||||||||
| POSCO SeAH Steel Wire(Nantong) Co., Ltd. |
7,096 | — | — | 7,096 | — | — | — | |||||||||||||||||||||
| POSCO MC MATERIALS (formerly, POSCO MITSUBISHI CARBON TECHNOLOGY) |
12,589 | — | 52 | 12,641 | 1,198 | 4 | 1,202 | |||||||||||||||||||||
| Pocheon-Hwado Highway Corp. |
16,297 | — | — | 16,297 | — | — | — | |||||||||||||||||||||
| UITrans LRT Co., Ltd. |
— | 36,510 | — | 36,510 | — | 1,999 | 1,999 | |||||||||||||||||||||
| Roy Hill Holdings Pty Ltd |
— | — | 7,110 | 7,110 | 571,084 | — | 571,084 | |||||||||||||||||||||
| SNNC |
7,827 | — | 51 | 7,878 | 44,124 | 198 | 44,322 | |||||||||||||||||||||
| POSCO(Guangdong) Automotive Steel Co., Ltd. |
— | 35,131 | — | 35,131 | — | — | — | |||||||||||||||||||||
| Others |
98,920 | 185,022 | 112,538 | 396,480 | 54,708 | 25,241 | 79,949 | |||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
￦ |
313,264 | 319,687 | 136,872 | 769,823 | 671,114 | 85,738 | 756,852 | |||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| (*1) | As of December 31, 2022, the Company recognizes allowance for credit losses related to receivables amounting to ￦ 131,588 million. |
| 2) | December 31, 2023 |
(in millions of Won) |
Receivables(*1) |
Payables |
||||||||||||||||||||||||||
|
Trade accounts and notes receivable |
Loan |
Others |
Total |
Trade accounts and notes payable |
Others |
Total |
||||||||||||||||||||||
| Associates and joint ventures |
||||||||||||||||||||||||||||
| New Songdo International City Development, LLC |
￦ |
15,260 | — | 1,497 | 16,757 | — | 39,089 | 39,089 | ||||||||||||||||||||
| Samcheok Blue Power Co., Ltd. |
162,759 | — | 213 | 162,972 | — | 9,605 | 9,605 | |||||||||||||||||||||
| Nickel Mining Company SAS |
— | 64,197 | 34 | 64,231 | — | 358 | 358 | |||||||||||||||||||||
| POS-SeAH Steel Wire(Nantong) Co., Ltd. |
14,162 | — | — | 14,162 | — | — | — | |||||||||||||||||||||
| POSCO MC MATERIALS (formerly, POSCO MITSUBISHI CARBON TECHNOLOGY) |
13,641 | — | 82 | 13,723 | 1,156 | — | 1,156 | |||||||||||||||||||||
| Pocheon-Hwado Highway Corp. |
33,944 | — | — | 33,944 | — | 7,712 | 7,712 | |||||||||||||||||||||
| UITrans LRT Co., Ltd. |
— | 46,335 | 8,395 | 54,730 | — | 2,398 | 2,398 | |||||||||||||||||||||
| Roy Hill Holdings Pty Ltd |
— | — | 22,002 | 22,002 | 263,440 | — | 263,440 | |||||||||||||||||||||
| SNNC |
14,738 | — | 60 | 14,798 | 25,482 | 1,731 | 27,213 | |||||||||||||||||||||
| POSCO(Guangdong) Automotive Steel Co., Ltd. |
59,913 | — | — | 59,913 | 52,961 | — | 52,961 | |||||||||||||||||||||
| Others |
54,211 | 167,368 | 134,795 | 356,374 | 6,642 | 14,585 | 21,227 | |||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
￦ |
368,628 | 277,900 | 167,078 | 813,606 | 349,681 | 75,478 | 425,159 | |||||||||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| (*1) | As of December 31, 2023, the Company recognizes allowance for credit losses related to receivables amounting to ￦ 185,972 million. |
| (e) | Significant financial transactions between the Company, excluding the controlling company, and related companies for the years ended December 31, 2022 and 2023 were as follows: |
| 1) | December 31, 2022 |
(in millions of Won) |
Beginning |
Lend |
Collect |
Others(*1) |
Ending |
|||||||||||||||
| Associates and joint ventures |
||||||||||||||||||||
| UITrans LRT Co., Ltd. |
￦ |
29,099 | 7,460 | (5 | ) | (44 | ) | 36,510 | ||||||||||||
| South-East Asia Gas Pipeline Company Ltd. |
47,423 | — | (45,639 | ) | (1,784 | ) | — | |||||||||||||
| PT. Tanggamus Electric Power |
4,690 | — | — | 324 | 5,014 | |||||||||||||||
| PT. Wampu Electric Power |
5,651 | — | (1,876 | ) | 213 | 3,988 | ||||||||||||||
| PT. POSMI Steel Indonesia |
2,371 | — | (2,371 | ) | — | — | ||||||||||||||
| Nickel Mining Company SAS |
62,611 | — | — | 413 | 63,024 | |||||||||||||||
| KRAKATAU POS-CHEM DONG-SUH CHEMICAL |
4,742 | — | (1,264 | ) | 324 | 3,802 | ||||||||||||||
| POS-SeAH Steel Wire (Thailand) Co., Ltd. |
7,113 | — | — | 491 | 7,604 | |||||||||||||||
| AMCI (WA) PTY LTD |
91,665 | 6,975 | — | 5,641 | 104,281 | |||||||||||||||
| POS-AUSTEM YANTAI AUTOMOTIVE CO.,LTD |
5,928 | — | (6,548 | ) | 620 | — | ||||||||||||||
| POS-AUSTEM WUHAN AUTOMOTIVE CO.,LTD |
9,484 | — | — | 654 | 10,138 | |||||||||||||||
| Hyo-chun Co., Ltd. |
2,382 | — | — | — | 2,382 | |||||||||||||||
| POS-AUSTEM Suzhou Automotive Co., Ltd |
17,783 | — | (6,069 | ) | 959 | 12,673 | ||||||||||||||
| FQM Australia Holdings PTY Ltd |
27,227 | 7,935 | — | (122 | ) | 35,040 | ||||||||||||||
| POHANG E&E Coi., LTD |
— | 100 | — | — | 100 | |||||||||||||||
| POSCO(Guangdong) Automotive Steel Co., Ltd. |
— | 35,131 | — | — | 35,131 | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
￦ |
318,169 | 57,601 | (63,772 | ) | 7,689 | 319,687 | ||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| (*1) | Includes adjustments of foreign currency translation differences and others. |
| 2) | December 31, 2023 |
(in millions of Won) |
Beginning |
Lend |
Collect |
Others(*1) |
Ending |
|||||||||||||||
| Associates and joint ventures |
||||||||||||||||||||
| UITrans LRT Co., Ltd. |
￦ |
36,510 | 9,825 | — | — | 46,335 | ||||||||||||||
| PT. Tanggamus Electric Power |
5,014 | — | (270 | ) | 82 | 4,826 | ||||||||||||||
| PT. Wampu Electric Power |
3,988 | — | (4,063 | ) | 75 | — | ||||||||||||||
| Nickel Mining Company SAS |
63,024 | — | (2,322 | ) | 3,495 | 64,197 | ||||||||||||||
| KRAKATAU POS-CHEM DONG-SUH CHEMICAL |
3,802 | — | (1,323 | ) | 100 | 2,579 | ||||||||||||||
| POS-SeAH Steel Wire (Thailand) Co., Ltd. |
7,604 | — | (7,828 | ) | 224 | — | ||||||||||||||
| AMCI (WA) PTY LTD |
104,281 | 6,620 | — | 1,276 | 112,177 | |||||||||||||||
| POS-AUSTEM WUHAN AUTOMOTIVE CO.,LTD |
10,138 | — | (5,321 | ) | 341 | 5,158 | ||||||||||||||
| Hyo-chun Co., Ltd. |
2,382 | — | — | — | 2,382 | |||||||||||||||
| POS-AUSTEM Suzhou Automotive Co., Ltd |
12,673 | — | (13,219 | ) | 546 | — | ||||||||||||||
| FQM Australia Holdings Pty Ltd |
35,040 | 2,637 | — | 923 | 38,600 | |||||||||||||||
| POHANG E&E Co. , LTD |
100 | 1,546 | — | — | 1,646 | |||||||||||||||
| POSCO(Guangdong) Automotive Steel Co., Ltd. |
35,131 | — | (35,131 | ) | — | — | ||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
￦ |
319,687 | 20,628 | (69,477 | ) | 7,062 | 277,900 | ||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| (*1) | Includes adjustments of foreign currency translation differences and others. |
| (f) | For the years ended December 31, 2021, 2022 and 2023, details of compensation to key management officers were as follows: |
(in millions of Won) |
2021 |
2022 |
2023 |
|||||||||
| Short-term benefits |
￦ |
111,900 | 174,629 | 199,608 | ||||||||
| Long-term benefits |
18,115 | 9,182 | 9,641 | |||||||||
| Retirement benefits |
22,239 | 22,106 | 38,934 | |||||||||
| |
|
|
|
|
|
|||||||
￦ |
152,254 | 205,917 | 248,183 | |||||||||
| |
|
|
|
|
|
|||||||
39. |
Commitments and Contingencies |
| (a) | Contingent liabilities |
| (b) | Details of guarantees |
(in millions of Won) |
Guarantee limit |
Guarantee amount |
||||||||||||||||||
| Guarantor |
Guarantee beneficiary |
Financial institution |
Foreign currency |
Won equivalent |
Foreign currency |
Won equivalent |
||||||||||||||
| [The Company] |
||||||||||||||||||||
| POSCO HOLDINGS INC. |
POSCO Asia Co., Ltd. | Credit Agricole and others | USD | 205,000,000 | 264,327 | — | — | |||||||||||||
| POSCO Argentina S.A.U | HSBC and others | USD | 411,900,000 | 531,104 | 319,895,483 | 412,472 | ||||||||||||||
| POSCO |
POSCO MEXICO S.A. DE C.V. | BOA and others | USD | 60,000,000 | 77,364 | 60,000,000 | 77,364 | |||||||||||||
| POSCO-VIETNAM Co., Ltd. | SMBC and others | USD | 110,000,000 | 141,834 | 80,000,000 | 103,152 | ||||||||||||||
| PT. KRAKATAU POSCO | Export-Import Bank of Korea and others | USD | 2,060,300,000 | 2,656,550 | 1,023,496,118 | 1,319,696 | ||||||||||||||
| POSCO COATED STEEL (THAILAND) CO., LTD. | SMBC and others | THB | 4,800,000,000 | 180,576 | 3,936,000,000 | 148,072 | ||||||||||||||
| POSCO Maharashtra Steel Private Limited | SMBC and others | USD | 40,000,000 | 51,576 | 40,000,000 | 51,576 | ||||||||||||||
| POSCO ASSAN TST STEEL INDUSTRY Inc | SOCIETE GENERALE and others | USD | 122,850,000 | 158,403 | 122,850,000 | 158,403 | ||||||||||||||
| POSCO INTERNATIONAL Corporation |
POSCO INTERNATIONAL GLOBAL DEVELOPMENT PTE. LTD. | POSCO Asia Co., Ltd. | USD | 180,000,000 | 232,092 | 150,000,000 | 193,410 | |||||||||||||
| POSCO INTERNATIONAL POWER (PNGLAE) LIMITED | KDB bank | USD | 20,880,000 | 26,923 | 13,400,000 | 17,278 | ||||||||||||||
| GOLDEN LACE POSCO INTERNATIONAL CO., LTD. | POSCO Asia Co., Ltd. | USD | 13,200,000 | 17,020 | 11,000,000 | 14,183 | ||||||||||||||
| PT. Bio Inti Agrindo | BTPN and others | IDR | 1,232,000,000,000 | 102,995 | 1,160,000,000,000 | 96,976 | ||||||||||||||
(in millions of Won) |
Guarantee limit |
Guarantee amount |
||||||||||||||||||
| Guarantor |
Guarantee beneficiary |
Financial institution |
Foreign currency |
Won equivalent |
Foreign currency |
Won equivalent |
||||||||||||||
| POSCO ASSAN TST STEEL INDUSTRY Inc | ING | USD | 13,700,000 | 17,665 | 13,700,000 | 17,665 | ||||||||||||||
| POSCO INTERNATIONAL Deutschland GmbH | Bank Mendes Gans Amsterdam | USD | 50,000,000 | 64,470 | 20,005,200 | 25,795 | ||||||||||||||
| POSCO INTERNATIONAL AMERICA Corp. | — | — | ||||||||||||||||||
| POSCO INTERNATIONAL JAPAN Corp. | 7,106,727 | 9,163 | ||||||||||||||||||
| POSCO INTERNATIONAL SINGAPORE PTE. LTD. | — | — | ||||||||||||||||||
| POSCO INTERNATIONAL Malaysia SDN BHD | — | — | ||||||||||||||||||
| POSCO INTERNATIONAL Italia S.R.L. | — | — | ||||||||||||||||||
| POSCO INTERNATIONAL MEXICO S.A. de C.V. | 17,250,570 | 22,243 | ||||||||||||||||||
| GRAIN TERMINAL HOLDING PTE. LTD. | Export-Import Bank of Korea and others | USD | 27,000,000 | 34,814 | 27,000,000 | 34,814 | ||||||||||||||
| POSCO INTERNATIONAL E&P MALAYSIA SDN. BHD. | SC MALAYSIA | USD | 6,000,000 | 7,736 | 6,000,000 | 7,736 | ||||||||||||||
| PT. KRAKATAU POSCO ENERGY | POSCO Asia Co., Ltd. and others | USD | 88,903,407 | 114,632 | 53,201,703 | 68,598 | ||||||||||||||
| Posco International Mexico e-Mobility S.A DE C.V. | Export-Import Bank of Korea and others | USD | 27,000,000 | 34,814 | 27,000,000 | 34,814 | ||||||||||||||
| PT POSCO INTERNATIONAL ENP INDONESIA | PT Bank Negara Indonesia | USD | 750,000 | 967 | 750,000 | 967 | ||||||||||||||
| POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,LTD.) |
POSCO E&C Vietnam Co., Ltd. | POSCO Asia Co., Ltd. and others | USD | 36,000,000 | 46,418 | 31,000,000 | 39,971 | |||||||||||||
| PT. POSCO E&C INDONESIA | POSCO Asia Co., Ltd. and others | USD | 25,900,000 | 33,395 | 25,900,000 | 33,395 | ||||||||||||||
| POSCO STEELEON CO.,LTD. |
Myanmar POSCO C&C Company, Limited. | POSCO Asia Co., Ltd. | USD | 13,986,947 | 18,035 | 11,952,170 | 15,411 | |||||||||||||
| POSCO FUTURE M CO., LTD. (formerly, POSCO CHEMICAL CO., LTD) |
ULTIUM CAM GP INC. | Investissement Quebec, Strategic Innovation Fund | CAD | 299,562,500 | 291,966 | — | — | |||||||||||||
| [Associates and joint ventures] |
||||||||||||||||||||
| POSCO HOLDINGS INC. |
Nickel Mining Company SAS | SMBC | EUR | 46,000,000 | 65,623 | 46,000,000 | 65,623 | |||||||||||||
| POSCO |
LLP POSUK Titanium | SMBC | USD | 13,250,000 | 17,085 | 13,250,000 | 17,085 | |||||||||||||
| POSCO INTERNATIONAL Corporation |
GLOBAL KOMSCO Daewoo LLC | Hana Bank | USD | 6,650,000 | 8,575 | 6,300,000 | 8,123 | |||||||||||||
(in millions of Won) |
Guarantee limit |
Guarantee amount |
||||||||||||||||||
| Guarantor |
Guarantee beneficiary |
Financial institution |
Foreign currency |
Won equivalent |
Foreign currency |
Won equivalent |
||||||||||||||
| POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,LTD.)(*1) |
Chun-cheon Energy Co., Ltd | Kookmin Bank and others | KRW | 149,200 | 149,200 | 137,500 | 137,500 | |||||||||||||
| [Others] |
||||||||||||||||||||
| POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,LTD.)(*2) |
Subcontractors for maintenance projects, etc. | Kookmin Bank and others | KRW | 1,535,263 | 1,535,263 | 674,016 | 674,016 | |||||||||||||
| POSCO DX(formerly, POSCO ICT)(*1) |
Busan Sanseong Tunnel | Kookmin Bank | KRW | 7,621 | 7,621 | 6,394 | 6,394 | |||||||||||||
| POSCO WIDE Co., Ltd. (formerly, POSCO O&M Co., Ltd.) |
Korea Electric Power Corporation and others | Seoul Guarantee Insurance | KRW | 4,527 | 4,527 | 4,527 | 4,527 | |||||||||||||
| POSCO AUSTRALIA PTY LTD |
Department of Trade and Investment (NSW Government) and others | Woori Bank and others | AUD | 16,754,695 | 14,745 | 16,754,695 | 14,745 | |||||||||||||
| PT. Bio lnti Agrindo |
KSU Mandob | Bank Muamalat | IDR | 80,000,000,000 | 6,688 | 80,000,000,000 | 6,688 | |||||||||||||
| POSCO Maharashtra Steel Private Limited |
Gail India and others | HSBC and others | INR | 808,823,105 | 12,537 | 808,823,105 | 12,537 | |||||||||||||
| |
|
|
|
|
|
|
|
|||||||||||||
| USD | 3,533,270,354 | 4,555,799 | 2,081,057,971 | 2,683,314 | ||||||||||||||||
| KRW | 1,696,611 | 1,696,611 | 822,437 | 822,437 | ||||||||||||||||
| IDR | 1,312,000,000,000 | 109,683 | 1,240,000,000,000 | 103,664 | ||||||||||||||||
| INR | 808,823,105 | 12,537 | 808,823,105 | 12,537 | ||||||||||||||||
| THB | 4,800,000,000 | 180,576 | 3,936,000,000 | 148,072 | ||||||||||||||||
| EUR | 46,000,000 | 65,623 | 46,000,000 | 65,623 | ||||||||||||||||
| AUD | 16,754,695 | 14,745 | 16,754,695 | 14,745 | ||||||||||||||||
| CAD | 299,562,500 | 291,966 | — | — | ||||||||||||||||
| |
|
|
|
|
|
|
|
|||||||||||||
(*1) |
The contingencies include Project Financing (PF) contracts, which provide credit enhancement through payment guarantee in relation to the SOC projects as of December 31, 2023. |
(*2) |
The contingencies include PF contracts, which guarantee the subcontractors progress payment loans in relation to the maintenance projects and others, as of December 31, 2023 |
| 2) | The details of credit enhancements by types of the Company’s PF business as of December 31, 2023 are as follows: |
① |
Maintenance projects and others |
a. |
Details of PF credit enhancements including debt assumption and supplemental funding agreement and maturity of the related loans as follows: |
(in millions of Won) |
||||||||||||||||
Provider |
Borrower |
Credit enhancement measures |
Agreed amount |
Executed amount |
Balance of loans |
|||||||||||
[The Company] |
||||||||||||||||
POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,LTD.) |
JB CLARK HILLS |
Debt assumption |
￦ |
42,550 |
35,459 |
35,459 |
||||||||||
[Associates and joint ventures] |
||||||||||||||||
POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,LTD.) |
New Songdo International City Development, LLC |
Debt assumption |
676,000 |
520,000 |
467,500 |
|||||||||||
[Others] |
||||||||||||||||
POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,LTD.) |
Bangbae Shindonga Apartment Reconstruction and Maintenance Project Association, etc. |
Debt assumption |
922,476 |
730,020 |
404,799 |
|||||||||||
Mastern 123 Yeoju Samgyo PFV co., Ltd. |
Debt assumption |
175,500 |
135,000 |
133,700 |
||||||||||||
Civic Center PFV |
Debt assumption |
45,000 |
45,000 |
45,000 |
||||||||||||
POSCO DX (formerly, POSCO ICT) |
Jeonnong school keeper co. and others | Supplemental funding agreement |
1,122,320 |
123,309 |
474,888 |
|||||||||||
2,265,296 |
1,033,329 |
1,058,387 |
||||||||||||||
￦ |
2,983,846 |
1,588,788 |
1,561,346 |
|||||||||||||
b. |
The details of conditional debt assumption and principal repayment contracts in the event of construction default as of December 31, 2023 are as follows: |
(in millions of Won) |
Contract amount |
Contingency amount(*1,2) |
Balance of loans |
|||||||||
Maintenance projects and Other projects |
6,438,048 |
3,513,950 |
1,856,719 |
|||||||||
(*1) |
The overlapping amount with other credit enhancements such as the debt assumption agreement at the time of loan origination amounted to ￦ 132,300 million for maintenance projects. |
(*2) |
In the case of joint subcontracting projects, the total joint guarantee amount of the project participants is disclosed. The final execution amount of completion may vary depending on reasons attributable to project participants upon actual completion. |
c. |
The details of contingencies of claim for damages in the event of construction default as of December 31, 2023 are as follows: |
(in millions of Won) |
Contract amount |
Contingency amount(*1,2) |
Balance of loans |
|||||||||
Maintenance projects and Other projects |
11,261,667 | 8,972,087 | 6,347,888 | |||||||||
| (*1) | The overlapping amount with other credit enhancements such as the debt assumption agreement at the time of loan amounted to
￦ 122,200 million for the maintenance projects. |
(*2) |
In the case of joint subcontracting projects, the total joint guarantee amount of the project participants is disclosed. The final execution amount of completion may vary depending on reasons attributable to the project participants upon actual completion. |
② |
SOC projects |
|
(in millions of Won) |
||||||||||||
| Provider |
Recipient |
Credit enhancement measures |
Approved amount |
Remaining balance after repayment |
||||||||
| [Associates and joint ventures] |
||||||||||||
| POSCO DX |
UITrans LRT Co., Ltd(*1) | Providing funds and Debt assumption |
￦ |
81,883 | 32,952 | |||||||
| Pocheon-Hwado Highway Corp.(*2) | Providing funds | 24,923 | 16,941 | |||||||||
| POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,LTD.) |
UITrans LRT Co., Ltd(*1) | Providing funds and Debt assumption | 205,051 | 165,045 | ||||||||
| Pocheon-Hwado Highway Corp.(*2) | Providing funds | 319,526 | 217,171 | |||||||||
| POHANG E&E Co., LTD(*3) | Providing funds and Supplemental funding agreement | 71,930 | 50,946 | |||||||||
| Pureun Tongyeong Enviro Co., Ltd.(*3) | Providing funds | 22,714 | 12,251 | |||||||||
| Pure Gimpo.Co.,Ltd(*3) | Providing funds | 51,559 | 25,189 | |||||||||
| Clean Iksan Co.,Ltd(*3) | Providing funds | 44,054 | 25,650 | |||||||||
| |
|
|
|
|||||||||
| 821,640 | 546,145 | |||||||||||
| |
|
|
|
|||||||||
| [Others] |
||||||||||||
| POSCO DX |
Western Inland highway CO.,LTD. | Providing funds | 47,348 | 15,678 | ||||||||
| SK Solar Energy Co., Ltd. | Debt assumption | 5,850 | 3,114 | |||||||||
| POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,LTD.) |
Western Seoul highway CO.,LTD. and others |
Supplemental funding agreement | 62,720 | 30,646 | ||||||||
| Western Inland highway CO.,LTD. and others |
Providing funds | 2,884,686 | 1,266,872 | |||||||||
| Pohang Youngil Bay New Port | Debt assumption | 2,250 | 1,440 | |||||||||
| Busan Sanseong Tunnel | Refinancing | 35,296 | 26,750 | |||||||||
| |
|
|
|
|||||||||
| 3,038,150 | 1,344,500 | |||||||||||
| |
|
|
|
|||||||||
￦ |
3,859,790 | 1,890,645 | ||||||||||
| |
|
|
|
|||||||||
| (*1) | The Company provides a funding obligation agreement of ￦ 153,260 million (including other shares: ￦ 385,000 million) equivalent to the Company’s share of the loan balance for the private investment project. |
| (*2) | The Company provides a funding obligation agreement of ￦ 344,449 million (including other shares: ￦ 623,079 million) equivalent to the Company’s share of the loan balance for the private investment project. |
| (*3) | The Company provides a funding obligation agreement of ￦ 183,756 million (including other shares: ￦ 354,092 million) equivalent to the Company’s share of the loan balance for the private investment project. |
| 3) | Other guarantees |
① |
As of December 31, 2023, the payment guarantees that the Company provides to clients, such as contract performance guarantees, installment guarantees, and defect guarantees, by subscribing to insurance policies with insurance companies or issuing guarantee certificates are as follows: |
|
(in millions of Won) |
||||||||||||||
| Provider of credit enhancement |
Recipient of credit enhancement |
Types of guarantees |
Agreed amount |
Executed amount |
Guarantor | |||||||||
| [Subsidiaries] |
||||||||||||||
| POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & |
Ventanas Philippines Construction Inc |
Guarantee on performance for contracts and others |
￦ |
14,601 | 14,601 | Credit Agricole and others | ||||||||
| CONSTRUCTION CO.,LTD.) |
PT POSCO E&C INDONESIA | Guarantee on defects | 1,805 | 1,805 | Woori Bank and others | |||||||||
| |
|
|
|
|||||||||||
| 16,406 | 16,406 | |||||||||||||
| |
|
|
|
|||||||||||
| [Associates and joint ventures] |
||||||||||||||
| POSCO Eco & Challenge Co., Ltd. |
PT.Tanggamus Electric Power | Letter of credit | 2,615 | 2,615 | Hana Bank | |||||||||
| (formerly, POSCO ENGINEERING & |
PT. Wampu Electric Power | Letter of credit | 2,837 | 2,837 | Hana Bank | |||||||||
| CONSTRUCTION CO.,LTD.) |
Pocheon-Hwado Highway Corp. | Guarantee on performance for projects |
23,315 | 23,315 | Construction Guarantee Cooperative | |||||||||
| |
|
|
|
|||||||||||
| 28,767 | 28,767 | |||||||||||||
| |
|
|
|
|||||||||||
| [Others] |
||||||||||||||
| POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,LTD.) |
DAEWOO ENGINEERING & CONSTRUCTION Co., Ltd |
Guarantee on performance for construction |
8,381,876 | 6,686,305 | Construction Guarantee Cooperative | |||||||||
| |
|
|
|
|||||||||||
|
￦ 8,427,049 |
6,731,478 | |||||||||||||
| |
|
|
|
|||||||||||
② |
As of December 31, 2023, the primary payment guarantees and others, that the Company were provided from the guarantee institution are as follows: |
|
(in millions of Won) |
||||||||||
| Provider |
Types of guarantees |
Agreed amount |
Executed amount |
|||||||
| Construction Guarantee Cooperative |
Subcontractor Payment Guarantee and others | ￦ |
6,806,423 | 6,793,235 | ||||||
| Engineering guarantee insurance |
Guarantee on performance for EPC contracts and others |
896,888 | 540,075 | |||||||
| Seoul Guarantee Insurance |
Construction performance guarantee and others | 571,775 | 571,775 | |||||||
| Korea Housing & Urban Guarantee Corporation |
Housing Guarantee and others | 4,933,080 | 4,927,830 | |||||||
| Korea software financial cooperative |
Guarantee on performance for contracts | 107,868 | 105,076 | |||||||
| Woori Bank and others |
Foreign currency guarantee | 2,042,804 | 786,129 | |||||||
| |
|
|
|
|||||||
|
￦ 15,358,838 |
13,724,120 | |||||||||
| |
|
|
|
|||||||
| (c) | Other commitments |
| Company |
Description | |
| POSCO HOLDINGS INC. | As of December 31, 2023, POSCO HOLDINGS INC. entered into a commitment with KOREA ENERGY AGENCY for long-term foreign currency borrowings, which are limited up to the amount of USD 1.05 million. The borrowing is related to the exploration of gas hydrates in Western Fergana-Chinabad. The repayment of the borrowings depends on the success of the projects. POSCO HOLDINGS INC. is not liable for the repayment of full or part of the amount borrowed if the respective projects fail. POSCO HOLDINGS INC. has agreed to pay a certain portion of its profits under certain conditions, as defined by the borrowing agreements. As of December 31, 2023, the ending balance of the borrowing amounts to USD 1.02 million. POSCO HOLDINGS INC. has deposited 3,211,795 treasury shares for exchange with the Korea Securities Depository in relation to foreign currency exchangeable bonds as of December 31, 2023. | |
| POSCO | POSCO entered into long-term contracts to purchase iron ore, coal, nickel and others. The long-term purchase contract period is more than two years for iron ore, three years for coal, and one year for nickel. These contracts provide for periodic price adjustments based on the market price. As of December 31, 2023, 43 million tons of iron ore and 15 million tons of coal remained to be purchased under such long-term contracts. POSCO entered into an agreement with Tangguh Liquefied Natural Gas (LNG) Consortium in Indonesia to purchase 550 thousand tons of LNG annually for 20 years commencing in August 2005. Due to decrease of purchase volume in 2023, the purchase volume will be 190 thousand tons from September 2025 to December 2026. The purchase price is subject to change, based on changes of the monthly standard oil price (JCC) and with a price ceiling. POSCO has a long-term service contract for the transportation of raw material. As of December 31, 2023, there are 36 vessels under contract, and the average remaining contract period is about 7 years. POSCO entered into an agreement (LNG SPA) with POSCO INTERNATIONAL SINGAPORE PTE LTD. to purchase 370 thousand tons of LNG annually for 15 years commencing in November 2026. The purchase price is subject to change based on changes of U.S. Henry Hub Natural Gas Spot Price. POSCO has extension option of extending the purchase contract by five years. Meanwhile, POSCO INTERNATIONAL Corporation has signed an LNG SPA with Cheniere Marketing, LLC for the purpose of supplying LNG to POSCO. As an actual buyer of LNG, POSCO provides performance guarantee for POSCO INTERNATIONAL Corporation’s SPA to producer, Cheniere Marketing, LLC. The performance guarantee contract period is from September 30, 2022 to the date of expiration of SPA contract which is September 30, 2046, or the date of termination of payment obligation under the guarantee contract. | |
| Company |
Description | |
| POSCO INTERNATIONAL Corporation | POSCO INTERNATIONAL Corporation operates a ship-to-ship The Company invested in the Ambatovy Nickel Project (DMSA/AMSA) in Madagascar through the Korea Ambatovy Consortium (KAC) formed with Korea Mine Rehabilitation and Mineral Resources Corporation (KOMIR) and STX Corporation. SHERRITT INTERNATIONAL CORP., the operator, transferred a portion of the project’s interests to Sumitomo and AHL (Ambatovy Holdings Limited) in November 2017, and transferred the remaining interests of the project to Sumitomo and AHL2 (Ambatovy Holdings II Limited) in August 2020. KAC has the rights and obligations to the 15.33% stake held by AHL and AHL2. | |
| POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,LTD.) |
As of December 31, 2023, according to the investor agreement for the construction of Samcheok Thermal Power Plant, POSCO Eco & Challenge Co., Ltd. is obligated to make contributions for core capital, unqualified investment, excess expenses occurred for business, and acceleration of payment. Among them, the remaining amount of the core capital investment obligation is ￦ 43,189 million. Meanwhile, the Company invested ￦ 25,700 million in January, 2024 and plans to invest ￦ 17,489 million in March, 2024. | |
| POSCO FUTURE MATERIALS CANADA INC. (formerly, POSCO CHEMICAL CANADA INC.) |
In accordance with the GP Shareholders Agreement between POSCO FUTURE MATERIALS CANADA INC. and GM Battery Raw Materials Corporation (hereinafter referred to as GM), if, POSCO FUTURE M Co., LTD. (POSCO FUTURE MATERIALS CANADA INC’s shareholders) fails to obtain approval for the export of national core technology under the ‘Act On Prevention Of Divulgence And Protection Of Industrial Technology’ in Korea within two years from the date of signing the agreement, GM may sell its shares of ULTIUM CAM GP INC. and ULTIUM CAM LIMITED PARTNERSHIP held by Posco Future Materials Canada Inc.. GM has the right to exercise this put option until the 27th month from the date of signing the agreement. When GM exercises the put option, Posco Future Materials Canada Inc. is required to immediately purchase GM’s shares at a price of the fair market value of GM’s shares or 125% of the total amount of capital contributions made by GM before the closing of the sale, whichever amount is greater. As of December 31, 2023, the Company recognized ￦ 119,258 million as other financial liabilities related to the terms of this agreement. | |
| (d) | Litigation in progress |
(in millions of Won, in thousands of foreign currencies) |
||||||||||||||||||
| Company |
Legal actions |
Claim amount |
Won equivalent |
Description | ||||||||||||||
| POSCO HOLDINGS INC. |
4 | KRW | 9,945 | 9,945 | Lawsuit on claim for damages and others | |||||||||||||
| POSCO |
35 | KRW | 205,234 | 205,234 | Lawsuit on claim for employee right and others | |||||||||||||
| POSCO INTERNATIONAL Corporation |
2 | INR | 4,469,396 | 69,276 | Lawsuit on claim for payment on guarantees and others(*1) | |||||||||||||
| 6 | KRW | 75,458 | 75,458 | Lawsuit on claim for damages and others | ||||||||||||||
| 1 | PKR | 124,775 | 570 | Lawsuit on claim for damages | ||||||||||||||
| 6 | USD | 75,389 | 97,207 | Lawsuit on claim for damages and others(*1) | ||||||||||||||
| POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,LTD.) |
106 | KRW | 428,767 | 428,767 | Lawsuit on claim for damages and others(*1) | |||||||||||||
| POSCO DX(formerly, POSCO ICT) |
1 | BRL | 14,819 | 3,938 | Lawsuit on claim for damages | |||||||||||||
| 11 | KRW | 6,789 | 6,789 | Lawsuit on claim for damages and others | ||||||||||||||
| POSCO FUTURE M CO., LTD. (formerly, POSCO CHEMICAL CO., LTD) |
3 | KRW | 5,789 | 5,789 | Lawsuit on claim for damages and others | |||||||||||||
| POSCO M-TECH
|
1 | KRW | 67 | 67 | Lawsuit on claim for damages | |||||||||||||
| POSCO A&C |
3 | KRW | 2,181 | 2,181 | Lawsuit on claim for payment on construction and others(*1) | |||||||||||||
| POSCO WIDE Co., Ltd. |
2 | KRW | 563 | 563 | Lawsuit on claim for damages and others | |||||||||||||
| eNtoB Corporation |
1 | KRW | 14 | 14 | Lawsuit on claim for damages | |||||||||||||
| POSCO ASIA COMPANY LIMITED |
1 | USD | 80 | 103 | Lawsuit on claim for damages(*1) | |||||||||||||
| POSCO-China Holding Corp. |
1 | USD | 1,290 | 1,663 | Lawsuit on claim for damages | |||||||||||||
| POSCO-INDIA STEEL DISTRIBUTION CENTER PRIVATE LIMITED |
1 | INR | 525,000 | 8,138 | Lawsuit on claim for damages | |||||||||||||
| POSCO(Suzhou) Automotive Processing Center Co., LTD. |
2 | CNY | 31 | 6 | Lawsuit on claim for invalidation of dismissal | |||||||||||||
| Shinan Green Energy Co., LTD |
1 | KRW | — | — | Lawsuit on claim for land delivery | |||||||||||||
| POSCO INTERNATIONAL TEXTILE LLC. |
1 | USD | 2,389 | 3,081 | Lawsuit on claim for payment on contract(*1) | |||||||||||||
| Qingdao Pohang Stainless Steel Co., Ltd. |
1 | CNY | 13,260 | 2,398 | Lawsuit on claim for contract termination | |||||||||||||
| POSCO Center Beijing |
1 | CNY | 80 | 15 | Lawsuit on claim for contract termination | |||||||||||||
| POSCO Engineering and Construction India Private Limited |
2 | INR | 493,968 | 7,657 | Lawsuit on claim for payment and others(*1) | |||||||||||||
| POSCO ENGINEERING & CONSTRUCTION DO BRAZIL LTDA. |
78 | BRL | 185,366 | 49,257 | Lawsuit on claim for payment on construction and others(*1) | |||||||||||||
| POSCO INDIA PROCESSING CENTER PRIVATE LIMITED |
1 | INR | 54,420 | 844 | Lawsuit on claim for damages | |||||||||||||
| POSCO E&C CHINA Co., Ltd. |
1 | CNY | 765 | 138 | Lawsuit over contract dispute | |||||||||||||
| Pos-Sea Pte Ltd |
1 | USD | 3,200 | 4,126 | Lawsuit over contract dispute | |||||||||||||
| Brazil Sao Paulo Steel Processing Center |
7 | BRL | 6,729 | 1,788 | Lawsuit on claim for labor and others | |||||||||||||
| POSCO Thainox Public Company Limited |
1 | THB | 3,000 | 113 | Lawsuit on invalidation of a check | |||||||||||||
| POSCO ASSAN TST STEEL INDUSTRY Inc |
13 | USD | 80 | 103 | Lawsuit on claim for labor and others(*1) | |||||||||||||
| POSCO TNPC Otomotiv Celik San. Ve Tic. A.S |
4 | TRY | 1,132 | 49 | Lawsuit over industrial accidents and others(*1) | |||||||||||||
| POSCO-India Private Limited |
1 | INR | 2,466 | 38 | Lawsuit on claim for wages | |||||||||||||
| (*1) | The Company made a reliable estimate in 66 lawsuits by considering the possibility and amount of expected outflow of resources and recognized ￦ 45,712 million as provision for legal contingencies and claims. |
| (e) | Other contingent circumstances |
| Company |
Description | |
| POSCO HOLDINGS INC. |
POSCO HOLDINGS INC. has provided 3 blank checks to Korea Energy Agency as collateral for long-term foreign currency borrowings. | |
| The Company has a joint obligation with the company newly established through spin-off, POSCO, to discharge all liabilities (including financial guarantee contracts) incurred prior to the spin-off date. | ||
| POSCO INTERNATIONAL Corporation |
As of December 31, 2023, POSCO INTERNATIONAL Corporation has provided 29 blank promissory notes and 18 blank checks to Korea Energy Agency and others as collateral for the guarantee on performance for contracts and others. | |
| POSCO Eco & Challenge Co., Ltd. (formerly, POSCO ENGINEERING & CONSTRUCTION CO.,LTD.) |
As of December 31, 2023, POSCO Eco & Challenge Co., Ltd. has provided 41 blank checks and 4 blank promissory notes as collateral for agreements and outstanding loans. | |
| POSCO DX (formerly, POSCO ICT) |
As of December 31, 2023, POSCO DX has provided 7 blank checks to financial institutions as collateral for the guarantee on performance for contracts and others. | |
40. |
Additional Information of Statement of Cash Flows |
| (a) | Changes in operating assets and liabilities for the years ended December 31, 2021, 2022 and 2023 were as follows: |
(in millions of Won) |
2021 |
2022 |
2023 |
|||||||||
| Trade accounts and notes receivable |
￦ |
(1,492,664 | ) | 531,848 | (982,726 | ) | ||||||
| Other receivables |
(441,412 | ) | (96,141 | ) | 32,827 | |||||||
| Inventories |
(6,346,717 | ) | (195,309 | ) | 1,312,800 | |||||||
| Other current assets |
(210,614 | ) | (230,084 | ) | 265,296 | |||||||
| Other non-current assets |
(246,066 | ) | 42,767 | (214,331 | ) | |||||||
| Trade accounts and notes payable |
1,401,942 | 141,925 | (118,796 | ) | ||||||||
| Other payables |
170,209 | 611,932 | (301,561 | ) | ||||||||
| Other current liabilities |
241,998 | (213,738 | ) | 15,213 | ||||||||
| Provisions |
(154,471 | ) | (295,624 | ) | (318,955 | ) | ||||||
| Payments of severance benefits |
(253,207 | ) | (300,353 | ) | (263,548 | ) | ||||||
| Plan assets |
(186,548 | ) | (59,461 | ) | (45,535 | ) | ||||||
| Other non-current liabilities |
473,240 | (306,251 | ) | (468,213 | ) | |||||||
| |
|
|
|
|
|
|||||||
￦ |
(7,044,310 | ) | (368,489 | ) | (1,087,529 | ) | ||||||
| |
|
|
|
|
|
|||||||
| (b) | Changes in liabilities arising from financial activities for the years ended December 31, 2022 and 2023 were as follows: |
| 1) | December 31, 2022 |
(in millions of Won) |
Liabilities |
Derivatives that hedge borrowings |
||||||||||||||||||
|
Short-term borrowings |
Long-term borrowings |
Dividend payable |
Finance lease liabilities |
|||||||||||||||||
| Beginning |
￦ |
5,110,424 | 16,630,792 | 4,046 | 778,014 | (107,982 | ) | |||||||||||||
| Changes from financing cash flows |
1,764,569 | 415,692 | (1,234,899 | ) | (268,082 | ) | 102,973 | |||||||||||||
| Changes arising from obtaining or losing control of subsidiaries or other business |
— | 142,290 | — | 193,572 | — | |||||||||||||||
| The effect of changes in foreign exchange rates |
(41,873 | ) | 355,540 | — | (96,771 | ) | — | |||||||||||||
| Changes in fair values |
— | (85,790 | ) | — | — | (186,488 | ) | |||||||||||||
| Other changes: |
||||||||||||||||||||
| Decrease in retained earnings |
— | — | 1,138,107 | — | — | |||||||||||||||
| Decrease in non-controlling interest |
— | — | 97,117 | — | — | |||||||||||||||
| Interest expenses |
— | 14,018 | — | 34,935 | — | |||||||||||||||
| Increase in lease assets |
— | — | — | 181,814 | — | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Ending |
￦ |
6,833,120 | 17,472,542 | 4,371 | 823,482 | (191,497 | ) | |||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| 2) | December 31, 2023 |
(in millions of Won) |
Liabilities |
Derivatives that hedge borrowings |
||||||||||||||||||
|
Short-term borrowings |
Long-term borrowings |
Dividend payable |
Finance lease liabilities |
|||||||||||||||||
| Beginning |
￦ |
6,833,120 | 17,472,542 | 4,371 | 823,482 | (191,497 | ) | |||||||||||||
| Changes from financing cash flows |
(2,524,077 | ) | 3,356,103 | (825,495 | ) | (222,829 | ) | 102,707 | ||||||||||||
| The effect of changes in foreign exchange rates |
650,237 | (139,863 | ) | — | 38,909 | — | ||||||||||||||
| Changes in fair values |
— | 305,562 | — | — | (41,201 | ) | ||||||||||||||
| Other changes: |
||||||||||||||||||||
| Decrease in retained earnings |
— | — | 720,770 | — | — | |||||||||||||||
| Decrease in non-controlling interest |
— | — | 103,615 | — | — | |||||||||||||||
| Interest expenses |
— | 16,755 | — | 41,109 | — | |||||||||||||||
| Increase in lease assets |
— | — | — | 243,649 | — | |||||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| Ending |
￦ |
4,959,280 | 21,011,099 | 3,261 | 924,320 | (129,991 | ) | |||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
(a) |
The Company’s operating businesses are organized based on the nature of markets and customers. During the year ended December 31, 2023, the Company changed its internal organization and internal reporting structures. As a result, operating segments were re-categorized according to the revised reporting materials provided to the management for decision-making. The Company restated the reportable segment information as of December 31, 2022 and for the years ended December 31, 2021 and 2022 to conform to the 2023 segment classifications. |
| Operating segments |
Main Business | |||
| Steel | Manufacture and sales of steel products | |||
| Green infrastructure |
Trading | Supply and purchase transactions between domestic and foreign companies, power generation, and resource development | ||
| Construction | Design, production and construction of steel mills and their facilities, commercial and residential facilities, etc. | |||
| Logistics and others | Logistics, network and system integration business | |||
| Green Materials and energy | EV battery materials such as lithium, nickel, anode/cathode materials, and hydrogen business | |||
| Others | POSCO HOLDINGS. INC., Controlling company and Investment business | |||
| (b) | Information about reportable segments as of and for the years ended December 31, 2021, 2022 and 2023 were as follows: |
| 1) | As of and for the year ended December 31, 2021 |
① |
The segment results as previously disclosed are as follows : |
Green infrastructure |
||||||||||||||||||||||||||||
(in millions of Won) |
Steel |
Trading |
Construction |
Energy and Others |
Green materials and Energy |
Others |
Total |
|||||||||||||||||||||
| External revenues |
￦ |
41,093,405 | 25,065,608 | 6,398,366 | 2,061,277 | 1,241,957 | 471,732 | 76,332,345 | ||||||||||||||||||||
| Internal revenues |
22,455,511 | 20,224,841 | 1,014,148 | 854,982 | 847,205 | 1,310,730 | 46,707,417 | |||||||||||||||||||||
| Including inter segment revenue |
14,940,813 | 10,653,742 | 940,408 | 828,635 | 843,576 | 1,284,320 | 29,491,494 | |||||||||||||||||||||
| Total revenues |
63,548,916 | 45,290,449 | 7,412,514 | 2,916,259 | 2,089,162 | 1,782,462 | 123,039,762 | |||||||||||||||||||||
| Interest income |
179,841 | 30,265 | 72,830 | 12,905 | 19,073 | 3,327 | 318,241 | |||||||||||||||||||||
| Interest expenses |
(313,769 | ) | (100,419 | ) | (39,134 | ) | (47,827 | ) | (9,373 | ) | (3,952 | ) | (514,474 | ) | ||||||||||||||
| Depreciation and amortization |
(3,000,179 | ) | (343,489 | ) | (69,777 | ) | (142,426 | ) | (84,390 | ) | (45,082 | ) | (3,685,343 | ) | ||||||||||||||
| Impairment loss on property, plant and equipment and others |
(249,645 | ) | (66,157 | ) | (10 | ) | (25,270 | ) | (11,504 | ) | — | (352,586 | ) | |||||||||||||||
| Share of loss of equity-accounted investees, net |
(261,363 | ) | (70,321 | ) | (45,778 | ) | (11,874 | ) | — | — | (389,336 | ) | ||||||||||||||||
| Income tax expense |
(2,045,079 | ) | (101,622 | ) | (116,799 | ) | (37,970 | ) | (10,698 | ) | (18,259 | ) | (2,330,427 | ) | ||||||||||||||
| Segment profit |
6,587,903 | 324,888 | 164,276 | 182,739 | 111,756 | 66,388 | 7,437,950 | |||||||||||||||||||||
| Segment total assets |
80,953,507 | 16,373,409 | 8,136,549 | 5,459,441 | 4,692,597 | 1,771,702 | 117,387,205 | |||||||||||||||||||||
| Investment in subsidiaries, associates and joint ventures |
16,567,555 | 2,066,688 | 538,484 | 886,318 | 188,532 | 120,750 | 20,368,327 | |||||||||||||||||||||
| Acquisition of non-current assets |
2,194,346 | 478,278 | 10,233 | 152,445 | 661,376 | 115,126 | 3,611,804 | |||||||||||||||||||||
| Segment liabilities |
25,714,577 | 11,049,017 | 4,451,055 | 3,124,777 | 1,519,026 | 735,407 | 46,593,859 | |||||||||||||||||||||
② |
The restated segment results due to the change of operating segments are as follows : |
Green infrastructure |
||||||||||||||||||||||||||||
(in millions of Won) |
Steel |
Trading |
Construction |
Logistics and others |
Green materials and Energy |
Others |
Total |
|||||||||||||||||||||
| External revenues |
￦ |
41,093,405 | 26,909,221 | 6,398,366 | 217,664 | 1,241,957 | 471,732 | 76,332,345 | ||||||||||||||||||||
| Internal revenues |
22,455,511 | 20,276,805 | 1,014,148 | 803,018 | 847,205 | 1,310,730 | 46,707,417 | |||||||||||||||||||||
| Including inter segment revenue |
14,940,813 | 10,359,407 | 940,408 | 791,873 | 843,576 | 1,284,320 | 29,160,397 | |||||||||||||||||||||
| Total revenues |
63,548,916 | 47,186,026 | 7,412,514 | 1,020,682 | 2,089,162 | 1,782,462 | 123,039,762 | |||||||||||||||||||||
| Interest income |
179,841 | 38,454 | 72,830 | 4,716 | 19,073 | 3,327 | 318,241 | |||||||||||||||||||||
| Interest expenses |
(313,769 | ) | (144,470 | ) | (39,134 | ) | (3,776 | ) | (9,373 | ) | (3,952 | ) | (514,474 | ) | ||||||||||||||
| Depreciation and amortization |
(3,000,179 | ) | (450,962 | ) | (69,777 | ) | (34,953 | ) | (84,390 | ) | (45,082 | ) | (3,685,343 | ) | ||||||||||||||
| Impairment loss on property, plant and equipment and others |
(249,645 | ) | (80,318 | ) | (10 | ) | (11,109 | ) | (11,504 | ) | — | (352,586 | ) | |||||||||||||||
| Share of loss of equity-accounted investees, net |
(261,363 | ) | (70,321 | ) | (45,778 | ) | (11,874 | ) | — | — | (389,336 | ) | ||||||||||||||||
| Income tax expense |
(2,045,079 | ) | (131,534 | ) | (116,799 | ) | (8,058 | ) | (10,698 | ) | (18,259 | ) | (2,330,427 | ) | ||||||||||||||
| Segment profit |
6,587,903 | 497,384 | 164,276 | 10,243 | 111,756 | 66,388 | 7,437,950 | |||||||||||||||||||||
| Segment total assets |
80,953,507 | 20,307,856 | 8,136,549 | 1,524,994 | 4,692,597 | 1,771,702 | 117,387,205 | |||||||||||||||||||||
| Investment in subsidiaries, associates and joint ventures |
16,567,555 | 2,950,751 | 538,484 | 2,255 | 188,532 | 120,750 | 20,368,327 | |||||||||||||||||||||
| Acquisition of non-current assets |
2,194,346 | 613,472 | 10,233 | 17,251 | 661,376 | 115,126 | 3,611,804 | |||||||||||||||||||||
| Segment liabilities |
25,714,577 | 13,524,868 | 4,451,055 | 648,926 | 1,519,026 | 735,407 | 46,593,859 | |||||||||||||||||||||
| 2) | As of and for the year ended December 31, 2022 |
① |
The segment results as previously disclosed are as follows : |
Green infrastructure |
||||||||||||||||||||||||||||
(in millions of Won) |
Steel |
Trading |
Construction |
Energy and Others |
Green materials and Energy |
Others |
Total |
|||||||||||||||||||||
| External revenues |
￦ |
44,546,966 | 25,955,458 | 7,667,696 | 3,998,959 | 2,451,785 | 129,340 | 84,750,204 | ||||||||||||||||||||
| Internal revenues |
26,102,681 | 23,634,302 | 1,217,795 | 3,426,549 | 936,975 | 1,040,196 | 56,358,498 | |||||||||||||||||||||
| Including inter segment revenue |
18,226,727 | 11,853,034 | 1,074,088 | 3,442,447 | 923,552 | 1,818,578 | 37,338,426 | |||||||||||||||||||||
| Total revenues |
70,649,647 | 49,589,760 | 8,885,491 | 7,425,508 | 3,388,760 | 1,169,536 | 141,108,702 | |||||||||||||||||||||
| Interest income |
141,047 | 37,603 | 68,774 | 23,928 | 22,708 | (13,319 | ) | 280,741 | ||||||||||||||||||||
| Interest expenses |
(446,058 | ) | (156,663 | ) | (44,309 | ) | (56,799 | ) | (11,770 | ) | (84 | ) | (715,683 | ) | ||||||||||||||
| Depreciation and amortization |
(3,036,041 | ) | (392,969 | ) | (64,813 | ) | (149,754 | ) | (94,416 | ) | (20,811 | ) | (3,758,804 | ) | ||||||||||||||
| Impairment loss on property, plant and equipment and others |
(234,904 | ) | (23,035 | ) | (32 | ) | (292 | ) | (1,053 | ) | — | (259,316 | ) | |||||||||||||||
| Share of loss of equity-accounted investees, net |
(6,239 | ) | (29,541 | ) | (2,792 | ) | (8,552 | ) | — | (263,264 | ) | (310,388 | ) | |||||||||||||||
| Income tax expense |
(565,353 | ) | (189,535 | ) | (92,715 | ) | (93,210 | ) | (14,120 | ) | (1,785,487 | ) | (2,740,420 | ) | ||||||||||||||
| Segment profit (losses) |
1,711,940 | 525,500 | 137,911 | 293,859 | 109,209 | (1,087,428 | ) | 1,690,991 | ||||||||||||||||||||
| Segment total assets |
66,143,103 | 15,693,605 | 8,878,530 | 6,612,825 | 6,652,469 | 51,421,190 | 155,401,722 | |||||||||||||||||||||
| Investment in subsidiaries, associates and joint ventures |
2,659,443 | 1,821,243 | 565,873 | 957,168 | 600,277 | 44,951,810 | 51,555,814 | |||||||||||||||||||||
| Acquisition of non-current assets |
3,287,878 | 622,678 | 53,708 | 125,942 | 1,169,725 | 370,837 | 5,630,768 | |||||||||||||||||||||
| Segment liabilities |
25,111,665 | 10,097,503 | 4,937,907 | 3,683,068 | 2,127,424 | 4,156,863 | 50,114,430 | |||||||||||||||||||||
② |
The restated segment results due to the change of operating segments are as follows : |
Green infrastructure |
||||||||||||||||||||||||||||
(in millions of Won) |
Steel |
Trading |
Construction |
Logistics and others |
Green materials and Energy |
Others |
Total |
|||||||||||||||||||||
| External revenues |
￦ |
44,546,966 | 29,517,938 | 7,667,696 | 436,479 | 2,451,785 | 129,340 | 84,750,204 | ||||||||||||||||||||
| Internal revenues |
26,102,681 | 23,677,786 | 1,217,795 | 3,383,065 | 936,975 | 1,040,196 | 56,358,498 | |||||||||||||||||||||
| Including inter segment revenue |
18,226,727 | 11,148,030 | 1,074,088 | 3,414,385 | 923,552 | 1,818,578 | 36,605,360 | |||||||||||||||||||||
| Total revenues |
70,649,647 | 53,195,724 | 8,885,491 | 3,819,544 | 3,388,760 | 1,169,536 | 141,108,702 | |||||||||||||||||||||
| Interest income |
141,047 | 51,869 | 68,774 | 9,662 | 22,708 | (13,319 | ) | 280,741 | ||||||||||||||||||||
| Interest expenses |
(446,058 | ) | (202,000 | ) | (44,309 | ) | (11,462 | ) | (11,770 | ) | (84 | ) | (715,683 | ) | ||||||||||||||
| Depreciation and amortization |
(3,036,041 | ) | (495,524 | ) | (64,813 | ) | (47,199 | ) | (94,416 | ) | (20,811 | ) | (3,758,804 | ) | ||||||||||||||
| Impairment loss on property, plant and equipment and others |
(234,904 | ) | (23,096 | ) | (32 | ) | (231 | ) | (1,053 | ) | — | (259,316 | ) | |||||||||||||||
| Share of loss of equity-accounted investees, net |
(6,239 | ) | (38,093 | ) | (2,792 | ) | — | — | (263,264 | ) | (310,388 | ) | ||||||||||||||||
| Income tax expense |
(565,353 | ) | (249,395 | ) | (92,715 | ) | (33,350 | ) | (14,120 | ) | (1,785,487 | ) | (2,740,420 | ) | ||||||||||||||
| Segment profit (losses) |
1,711,940 | 716,204 | 137,911 | 103,155 | 109,209 | (1,087,428 | ) | 1,690,991 | ||||||||||||||||||||
| Segment total assets |
66,143,103 | 20,014,447 | 8,878,530 | 2,291,983 | 6,652,469 | 51,421,190 | 155,401,722 | |||||||||||||||||||||
| Investment in subsidiaries, associates and joint ventures |
2,659,443 | 2,771,602 | 565,873 | 6,809 | 600,277 | 44,951,810 | 51,555,814 | |||||||||||||||||||||
| Acquisition of non-current assets |
3,287,878 | 700,425 | 53,708 | 48,195 | 1,169,725 | 370,837 | 5,630,768 | |||||||||||||||||||||
| Segment liabilities |
25,111,665 | 12,736,310 | 4,937,907 | 1,044,261 | 2,127,424 | 4,156,863 | 50,114,430 | |||||||||||||||||||||
| 3) | As of and for the year ended December 31, 2023 |
Green infrastructure |
||||||||||||||||||||||||||||
(in millions of Won) |
Steel |
Trading |
Construction |
Logistics and others |
Green materials and Energy |
Others |
Total |
|||||||||||||||||||||
| External revenues |
￦ |
40,393,273 | 24,033,506 | 8,301,130 | 470,613 | 3,816,042 | 112,633 | 77,127,197 | ||||||||||||||||||||
| Internal revenues |
23,145,425 | 18,910,246 | 1,966,373 | 3,475,340 | 1,005,844 | 1,449,581 | 49,952,809 | |||||||||||||||||||||
| Inter segment revenues |
15,293,780 | 8,906,571 | 1,864,723 | 3,431,594 | 972,511 | 1,422,313 | 31,891,492 | |||||||||||||||||||||
| Total revenues |
63,538,698 | 42,943,752 | 10,267,503 | 3,945,953 | 4,821,886 | 1,562,214 | 127,080,006 | |||||||||||||||||||||
| Interest income |
281,530 | 66,398 | 100,682 | 15,837 | 39,339 | 73,550 | 577,336 | |||||||||||||||||||||
| Interest expenses |
(718,937 | ) | (284,056 | ) | (105,102 | ) | (14,091 | ) | (57,638 | ) | (272 | ) | (1,180,096 | ) | ||||||||||||||
| Depreciation and amortization |
(3,044,565 | ) | (508,161 | ) | (66,854 | ) | (54,219 | ) | (155,567 | ) | (16,126 | ) | (3,845,492 | ) | ||||||||||||||
| Impairment loss on property, plant and equipment and others |
(305,437 | ) | (9,826 | ) | (28,031 | ) | — | (55,601 | ) | (10,657 | ) | (409,552 | ) | |||||||||||||||
| Share of income (loss) of equity-accounted investees, net |
(182,668 | ) | (37,368 | ) | 13,632 | — | (67,248 | ) | (109,568 | ) | (383,220 | ) | ||||||||||||||||
| Income tax expense |
(595,457 | ) | (239,164 | ) | (95,364 | ) | (39,250 | ) | 13,281 | 113,895 | (842,059 | ) | ||||||||||||||||
| Segment profits (losses) |
1,241,211 | 723,929 | 183,453 | 170,959 | (235,603 | ) | 827,298 | 2,911,247 | ||||||||||||||||||||
| Segment total assets |
66,224,069 | 19,650,557 | 9,631,691 | 2,476,842 | 10,909,515 | 51,957,529 | 160,850,203 | |||||||||||||||||||||
| Investment in subsidiaries, associates and joint ventures |
3,855,038 | 2,933,140 | 481,672 | 9,999 | 1,550,524 | 45,084,972 | 53,915,345 | |||||||||||||||||||||
| Acquisition of non-current assets |
3,748,163 | 553,955 | 119,438 | 137,237 | 2,795,447 | 162,639 | 7,516,879 | |||||||||||||||||||||
| Segment total liabilities |
24,154,043 | 11,842,508 | 5,589,827 | 993,071 | 4,972,568 | 4,301,310 | 51,853,327 | |||||||||||||||||||||
| (c) | Reconciliations of total segment revenues, profit or loss, assets and liabilities, and other significant items to their respective consolidated financial statement line items are as follows: |
| 1) | Revenues |
(in millions of Won) |
2021 |
2022 |
2023 |
|||||||||
| Total revenue for reportable segments |
￦ |
123,039,762 | 141,108,702 | 127,080,006 | ||||||||
| Elimination of inter-segment revenue |
(46,707,417 | ) | (56,358,498 | ) | (49,952,809 | ) | ||||||
| Basis difference(*2) |
(323,144 | ) | 253,412 | (70,648 | ) | |||||||
| |
|
|
|
|
|
|||||||
￦ |
76,009,201 | 85,003,616 | 77,056,549 | |||||||||
| |
|
|
|
|
|
|||||||
| 2) | Profit |
(in millions of Won) |
2021 |
2022 |
2023 |
|||||||||
| Total profit for reportable segments |
￦ |
7,437,950 | 1,690,991 | 2,911,247 | ||||||||
| Goodwill and corporate FV adjustments |
(62,500 | ) | (68,771 | ) | 172,493 | |||||||
| Elimination of inter-segment losses (profits) |
(179,560 | ) | 1,938,263 | (1,237,891 | ) | |||||||
| Income tax expense |
2,220,183 | 453,883 | 789,305 | |||||||||
| Basis difference(*2) |
(26,264 | ) | 33,125 | 272 | ||||||||
| |
|
|
|
|
|
|||||||
| Profit before income tax expense |
￦ |
9,389,809 | 4,047,491 | 2,635,426 | ||||||||
| |
|
|
|
|
|
|||||||
| 3) | Assets |
(in millions of Won) |
2022 |
2023 |
||||||
| Total assets for reportable segments(*1) |
￦ |
155,401,722 | 160,850,203 | |||||
| Equity-accounted investees |
(46,559,264 | ) | (48,895,081 | ) | ||||
| Goodwill and corporate FV adjustments |
2,366,408 | 2,630,009 | ||||||
| Elimination of inter-segment assets |
(12,802,085 | ) | (13,639,737 | ) | ||||
| Basis difference(*2) |
614,969 | 540,922 | ||||||
| |
|
|
|
|||||
￦ |
99,021,750 | 101,486,316 | ||||||
| |
|
|
|
|||||
(*1) |
As segment assets and liabilities are determined based on separate financial statements, the carrying amount of assets of subsidiaries, which are in a different segment from that of their immediate parent company, in the separate financial statements the immediate parent company is eliminated upon consolidation. In addition, the amount of investment in associates and joint ventures are adjusted from the amount reflected in segment assets to that determined using equity method in consolidated financial statements . |
| 4) | Liabilities |
(in millions of Won) |
2022 |
2023 |
||||||
| Total liabilities for reportable segments |
￦ |
50,114,430 | 51,853,327 | |||||
| Corporate FV adjustments |
215,760 | 242,251 | ||||||
| Elimination of inter-segment liabilities |
(10,180,810 | ) | (10,814,081 | ) | ||||
| Basis difference(*2) |
680,473 | 606,219 | ||||||
| |
|
|
|
|||||
￦ |
40,829,853 | 41,887,716 | ||||||
| |
|
|
|
|||||
| 5) | Other significant items |
| a) | December 31, 2021 |
(in millions of Won) |
Total segment |
Goodwill and corporate FV adjustments |
Elimination of inter-segment transactions |
Basis difference(*2) |
Consolidated |
|||||||||||||||
| Interest income |
￦ |
318,241 | — | (25,998 | ) | — | 292,243 | |||||||||||||
| Interest expenses |
(514,474 | ) | 605 | 74,043 | — | (439,826 | ) | |||||||||||||
| Depreciation and amortization |
(3,685,343 | ) | (88,927 | ) | 194,824 | — | (3,579,446 | ) | ||||||||||||
| Share of profit of equity-accounted investees, net |
(389,336 | ) | — | 1,038,905 | — | 649,569 | ||||||||||||||
| Income tax expense |
(2,330,427 | ) | 25,719 | 84,525 | 6,356 | (2,213,827 | ) | |||||||||||||
| Impairment loss on property, plant and equipment and others |
(352,586 | ) | — | (183,262 | ) | — | (535,848 | ) | ||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
￦ |
(6,953,925 | ) | (62,603 | ) | 1,183,037 | 6,356 | (5,827,135 | ) | ||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| b) | December 31, 2022 |
(in millions of Won) |
Total segment |
Goodwill and corporate FV adjustments |
Elimination of inter-segment transactions |
Basis difference(*2) |
Consolidated |
|||||||||||||||
| Interest income |
￦ |
280,741 | — | (33,736 | ) | — | 247,005 | |||||||||||||
| Interest expenses |
(715,683 | ) | — | 108,225 | — | (607,458 | ) | |||||||||||||
| Depreciation and amortization |
(3,758,804 | ) | (95,195 | ) | 166,378 | — | (3,687,621 | ) | ||||||||||||
| Share of profit of equity-accounted investees, net |
(310,388 | ) | — | 986,648 | — | 676,260 | ||||||||||||||
| Income tax expense |
(2,740,420 | ) | 25,803 | 2,260,734 | (7,651 | ) | (461,534 | ) | ||||||||||||
| Impairment loss on property, plant and equipment and others |
(259,316 | ) | — | (324,529 | ) | — | (583,845 | ) | ||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
￦ |
(7,503,870 | ) | (69,392 | ) | 3,163,720 | (7,651 | ) | (4,417,193 | ) | |||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| c) | December 31, 2023 |
(in millions of Won) |
Total segment |
Goodwill and corporate FV adjustments |
Elimination of inter-segment transactions |
Basis difference(*2) |
Consolidated |
|||||||||||||||
| Interest income |
￦ |
577,336 | — | (75,189 | ) | — | 502,147 | |||||||||||||
| Interest expenses |
(1,180,096 | ) | — | 178,806 | — | (1,001,290 | ) | |||||||||||||
| Depreciation and amortization |
(3,845,492 | ) | (99,347 | ) | 121,559 | — | (3,823,280 | ) | ||||||||||||
| Share of profit of equity-accounted investees, net |
(383,220 | ) | — | 652,898 | — | 269,678 | ||||||||||||||
| Income tax expense |
(842,059 | ) | 46,116 | 6,638 | (62 | ) | (789,367 | ) | ||||||||||||
| Impairment loss on property, plant and equipment and others |
(409,552 | ) | — | 3,799 | — | (405,753 | ) | |||||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
￦ |
(6,083,083 | ) | (53,231 | ) | 888,511 | (62 | ) | (5,247,865 | ) | |||||||||||
| |
|
|
|
|
|
|
|
|
|
|||||||||||
| (*2) | Basis difference is related to the differences in recorded revenue and expenses for development and sale of certain residential real estates between the report reviewed by management and the consolidated financial statements. |
| (d) | Revenue by geographic area for the years ended December 31, 2021, 2022 and 2023 was as follows: |
(in millions of Won) |
2021 |
2022 |
2023 |
|||||||||
| Domestic |
￦ |
49,732,699 | 54,519,647 | 50,658,510 | ||||||||
| Japan |
2,200,855 | 2,651,584 | 2,691,788 | |||||||||
| China |
7,146,695 | 7,430,619 | 6,152,191 | |||||||||
| Asia-other |
11,425,513 | 12,614,612 | 10,710,029 | |||||||||
| North America |
2,083,309 | 2,413,054 | 2,095,705 | |||||||||
| Others |
3,743,274 | 5,120,688 | 4,818,974 | |||||||||
| |
|
|
|
|
|
|||||||
| 76,332,345 | 84,750,204 | 77,127,197 | ||||||||||
| Basis difference |
(323,144 | ) | 253,412 | (70,648 | ) | |||||||
| |
|
|
|
|
|
|||||||
|
￦ 76,009,201 |
85,003,616 | 77,056,549 | ||||||||||
| |
|
|
|
|
|
|||||||
| (e) | Non-current assets by geographic area as of December 31, 2022 and 2023 are as follows: |
(in millions of Won) |
2022 |
2023 |
||||||
| Domestic |
￦ |
28,623,582 | 31,585,233 | |||||
| Japan |
139,636 | 132,229 | ||||||
| China |
1,199,461 | 1,222,358 | ||||||
| Asia-other |
4,768,410 | 4,521,857 | ||||||
| North America |
323,543 | 526,654 | ||||||
| Others |
2,639,045 | 3,548,995 | ||||||
| |
|
|
|
|||||
￦ |
37,693,677 | 41,537,326 | ||||||
| |
|
|
|
|||||
| (f) | There are no customers whose revenue is 10% or more of the consolidated revenue. |
42. |
Business combination |
| (a) | General Information |
| (b) | Consideration transferred |
(in millions of Won) |
March 30, 2023 |
|||
| Cash |
￦ |
152,749 | ||
| Investments in associates(* 1) |
268,951 | |||
| (c) | Identifiable assets acquired and liabilities assumed |
(in millions of Won) |
March 30, 2023 |
|||
| Assets |
||||
| Cash and cash equivalents |
￦ |
2,220 | ||
| Trade accounts, notes receivable and other receivables, net |
205 | |||
| Other financial assets |
12,000 | |||
| Other current assets |
132 | |||
| |
|
|||
| Total current assets |
14,557 | |||
| |
|
|||
| Other receivables, net |
41 | |||
| Investment property, net |
557,040 | |||
| Property, plant and equipment, net |
42,641 | |||
| Deferred tax assets |
10 | |||
| |
|
|||
| Total non-current assets |
599,732 | |||
| |
|
|||
| Total assets |
￦ |
614,289 | ||
| |
|
|||
| Liabilities |
||||
| Short-term borrowings |
￦ |
10,000 | ||
| Other payables |
5,612 | |||
| Current income tax liabilities |
401 | |||
| Other current liabilities |
812 | |||
| |
|
|||
| Total current liabilities |
16,825 | |||
| |
|
|||
| Long-term borrowings |
48,000 | |||
| Other payables |
6,546 | |||
| Other non-current liabilities |
967 | |||
| Deferred tax liabilities |
77,019 | |||
| |
|
|||
| Total non-current liabilities |
132,532 | |||
| |
|
|||
| Total liabilities |
￦ |
149,357 | ||
| |
|
|||
| Net assets |
￦ |
464,932 | ||
| |
|
|||
| (d) | Gain on bargain purchase |
| (e) | Costs related to business combination |
43. |
Events after the reporting period |
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
| POSCO HOLDINGS INC. |
||
| (Registrant) |
||
| /s/ Chang, In-Hwa |
||
| Name: |
Chang, In-Hwa | |
| Title: |
Chief Executive Officer and Representative Director | |
| Date: |
April 29, 2024 | |
Exhibit 1.1
This English language translation of the Articles of Incorporation has been prepared solely for reference purposes. In the event of any conflict between the Korean language version and this English language version, the Korean language version shall prevail.
ARTICLES OF INCORPORATION
| Adopted on |
March 6, 1968 | |||||
| Amended on |
July 10, 1968 | February 20, 1969 | March 20, 1969 | |||
| June 16, 1969 | February 7, 1970 | February 6, 1971 | ||||
| November 23, 1971 | February 4, 1972 | November 29, 1972 | ||||
| February 12, 1973 | February 5, 1974 | February 8, 1975 | ||||
| February 6, 1976 | February 8, 1977 | February 25, 1978 | ||||
| February 24, 1979 | February 28, 1981 | February 23, 1982 | ||||
| February 18, 1984 | February 5, 1985 | February 26, 1986 | ||||
| March 7, 1987 | February 27, 1988 | March 15, 1989 | ||||
| March 6, 1990 | March 14, 1991 | March 7, 1992 | ||||
| October 13, 1992 | March 8, 1993 | April 15, 1994 | ||||
| March 15, 1995 | March 15, 1996 | March 14, 1997 | ||||
| March 17, 1998 | August 20, 1998 | March 16, 1999 | ||||
| March 17, 2000 | March 16, 2001 | March 15, 2002 | ||||
| March 14, 2003 | March 12, 2004 | February 24, 2006 | ||||
| February 23, 2007 | February 27, 2009 | February 26, 2010 | ||||
| February 25, 2011 | March 16, 2012 | March 11, 2016 | ||||
| March 9, 2018 | March 15, 2019 | March 12, 2021 | ||||
| January 28, 2022 | March 17, 2023 | March 21, 2024 | ||||
RECITALS
Companies achieve lasting growth and sustainability by pursuing harmony within the society where businesses operate.
As a member of the social community, companies who have benefited from resources provided by the society should look beyond profit, engage in addressing social issues and contribute to the prosperity of mankind and to making the world a better place.
We believe that this is the right way to move forward.
POSCO Holdings Inc, under its management philosophy of ‘Corporate Citizenship: Building a Better Future Together’, will engage and communicate with all stakeholders including customers, employees and shareholders, and continually seek changes and innovation in pursuit of sustainability by ultimately creating greater value for the company.
CHAPTER I. GENERAL PROVISIONS
Article 1. Company Name
The name of the Company in Korean shall be “POSCO Holdings Chusik Hoesa” and in English, “POSCO Holdings Inc.”
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Article 2. Purpose
The purpose of the Company is to engage in the following business activities:
| 1. | To engage in holding business of controlling the business of, and guiding, organizing and improving the management of, subsidiaries by acquiring and owning the shares or ownership interests in subsidiaries (including sub-subsidiaries and companies controlled by such sub-subsidiaries; collectively “subsidiaries”); |
| 2. | To engage in the management and licensing of intellectual property rights including brands and trademarks; |
| 3. | To engage in the investment related to start-up assistance and new technology; |
| 4. | To engage in market research, management advisory and consulting services; |
| 5. | To engage in technology research and commissioned services; |
| 6. | To engage in matters entrusted by subsidiaries to assist the subsidiaries’ businesses; |
| 7. | To engage in the supply of gas such as hydrogen and resources development business; |
| 8. | To engage in leasing of real estate and distribution businesses; and |
| 9. | To engage in all other conducts, activities or businesses which are related, directly or indirectly, to the attainment and continuation of the foregoing purposes. |
Article 3. Location of the Head Office and Branch Offices
The head office of the Company shall be located at Pohang, Gyeongsangbuk-do, the Republic of Korea (“Korea”). Branch offices may be established elsewhere by resolution of the Board of Directors of the Company.
Article 4. Notices
Public notices by the Company shall be disclosed on the website of the Company (http://www.posco-inc.com). When such online disclosure is made impracticable due to online system error or any other electronic technical failure, public notices by the Company shall be disclosed in the Seoul Shinmun, the Maeil Shinmun and the Kwangju Ilbo, daily newspapers published in Seoul, Daegu Metropolitan City and Kwangju Metropolitan City, respectively.
CHAPTER II. SHARES
Article 5. Total Number of Authorized Shares
The total number of shares which the Company is authorized to issue (“Authorized Shares”) is two hundred million (200,000,000) shares.
Article 6. Par Value per Share and Types of Shares
The types of shares to be issued by the Company shall be registered common shares and registered preferred shares, having a par value of KRW 5,000 per share.
2
Article 7. Number and Contents of Preferred Shares
(1) Preferred shares to be issued by the Company shall be non-voting, and the number thereof shall not exceed the limit prescribed in the mandatory provisions of the applicable laws or regulations.
(2) The dividends on non-voting preferred shares shall be no less than nine percent (9%) per annum of the par value and the rate thereof shall be determined by the Board of Directors at the time of issuance.
(3) Notwithstanding Paragraph (2), a dividend on preferred shares shall not be required to be declared in case the amount available for dividend is less than the aggregate amount of the minimum dividend.
Article 8. Shares to be Issued at the Time of Incorporation
The Company shall issue forty thousand (40,000) shares at the time of incorporation.
Article 9. Electronic Registration of Rights to be Indicated on Share Certificates and Certificates of Preemptive Right
The Company shall electronically register rights to be indicated on its share certificates and certificates of preemptive right on the electronic registrar of the electronic registration agency, in lieu of issuing share certificates and certificates of pre-emptive right.
Article 10. Pre-emptive Rights
(1) Except as otherwise provided by Paragraphs (2) through (4) of this Article 10 and the mandatory provisions of the applicable laws or regulations, in case of the issuance of new shares, the shareholders of the Company shall have the right to subscribe for such newly issued shares in proportion to the number of shares held by each of them; provided, however, that the Company may, by resolution of the Board of Directors, allocate preferred shares to holders of preferred shares in proportion to the number of shares held by each of them.
(2) The Board of Directors may allocate new shares to persons other than the shareholders by a resolution of the Board of Directors in the following cases.
| 1. | If the Company issues new shares by a public offering or has underwriters underwrite new shares by a public offering in accordance with the applicable legislation; |
| 2. | If the Company allocates new shares to the members of the Company’s Employee Stock Ownership Association in accordance with the applicable legislation; |
| 3. | If the Company issues new shares for the issuance of depositary receipts in accordance with the applicable legislation; |
| 4. | If the Company issues new shares through offering to the public investors by the resolutions of the Board of Directors in accordance with the applicable legislation; |
| 5. | If the Company issues new shares to the existing creditors in order to convert the debt into capital; |
| 6. | If the Company issues new shares to the domestic and/or foreign entities in accordance with a joint venture agreement, strategic affiliation or technology license and transfer agreement executed by and between the Company and such entities for the management purposes; and |
| 7. | If the Company issues new shares to the domestic and/or foreign financial institutions in order to finance the Company in the emergent cases. |
3
If the Company issues new shares to persons other than the shareholders of the Company pursuant to this Paragraph, the Company shall notify the shareholders or make public two (2) weeks in advance of the date of subscription of the new shares detailing the type, number, issue price, date of subscription and the manner of subscription of the newly issued shares in accordance with the Korean Commercial Code.
(3) Any shares unsubscribed after the exercise of pre-emptive rights by shareholders who are entitled to them or any fractional shares remaining after the allocation of new shares may be disposed of by a resolution of the Board of Directors according to the applicable laws or regulations.
(4) Notwithstanding the provisions of Paragraphs (2) through (3) of this Article 10, new shares may be allocated to persons other than the existing shareholders by a special resolution passed at a General Meeting of Shareholders when it is deemed necessary for attaining the purposes of the Company such as introduction of new technology and financial restructuring.
(5) In case the Company issues new shares by a rights offering, bonus issue or stock dividend, such shares will be deemed to have been issued at the end of the fiscal year immediately preceding the fiscal year during which the shares are issued.
Article 11. Offering to Public Investors, etc.
(1) The Company may issue new shares constituting not more than ten-hundredths (10/100) of the total issued shares of the Company through offering to public investors by the resolution of the Board of Directors in accordance with applicable legislations.
(2) In event that the Company issues new shares in accordance with the resolution of the Board of Directors due to the reasons set forth in Items 5 through 7 of Paragraph (2) of Article 10, the total face amount of new shares shall not exceed one hundred billion (100,000,000,000) Won.
(3) The type, number and the issue price of the shares to be issued by the manner as set forth in Paragraphs (1) and (2) shall be determined by the resolution of the Board of Directors; provided that the issue price of the new shares must be no less than the price as set forth in applicable legislations.
Article 12. (Deleted)
Article 13. Transfer Agent
Electronic registration of shares, management of the shareholder registry and other related businesses shall be entrusted to the transfer agent appointed by resolution of the Board of Directors. Specific procedures therefor shall be in accordance with the applicable laws and regulations and operational regulations determined by the transfer agent.
Article 13-2. Register of Shareholders by Electronic Means
In accordance with the Korean Commercial Code, the Company may make entries in the Register of Shareholders by electronic means.
Article 14. Fees
The Company may, by resolution of the Board of Directors, charge, or have the register agent charge, a fee for services it renders in connection with any of the matters set forth in Article 13 above, or for any services related to shareholder inspection of the Company’s financial statements or other documents, and for providing any copies thereof.
4
Article 15. Record Date and Suspension of Alterations of Entries in the Register of Shareholders
(1) The Company shall suspend entries of alterations, registration or cancellation of pledges over shares and indication of trust assets and cancellation thereof in the Register of Shareholders of a period commencing on January 1 and ending on January 15 of each year.
(2) The record date of the Register of Shareholders shall be December 31 of each year, and such shareholders listed on the Register of Shareholders as of the record date shall be entitled to exercise their rights thereof at the General Meetings of Shareholders.
(3) The Company may, by resolution of the Board of Directors or by resolution of a committee as authorized by the Board of Directors, suspend the entry of a change as to the matters contained in the Register of Shareholders for a specified period of time or set a record date when deemed necessary and for the purpose of convening an Extraordinary General Meeting of Shareholders; provided, however, that the period of suspension shall not exceed three (3) months and two (2) weeks prior notice of suspension or fixing of a record date has been given to the shareholders. The Board of Directors or such authorized committee may, when deemed necessary, both suspend the entry of a change in the Register of Shareholders and set a record date.
CHAPTER III. BONDS
Article 16. Issuance of Bonds
The Company may issue bonds by a resolution of the Board of Directors
Article 17. Issuance of Convertible Bonds
(1) The Company may issue convertible bonds in the aggregate fact amount not exceeding two trillion (2,000,000,000,000) Won to persons other than the shareholders in the following cases:
| 1. | If the Company issues convertible bonds by public offering. |
| 2. | If the Company enters into a joint venture agreement, strategic alliance or technical license and transfer agreement, when it is deemed necessary, and issues convertible bonds to any domestic or international corporation accordingly. |
| 3. | If the Company issues convertible bonds to a domestic or international financial institution to provide urgently needed funds. |
(2) Convertible bonds mentioned in Paragraph (1) may, by resolution of the Board of Directors, be issued with their conversion rights limited to a certain portion of their face amount.
(3) Upon conversion from the aggregate face amount of convertible bonds, common shares may be issued up to one trillion three hundred billion (1,300,000,000,000) Won and preferred shares may be issued up to seven hundred billion (700,000,000,000) Won, and the conversion price, which shall not be less than the par value of the shares, shall be determined by resolution of the Board of Directors at the time of issuance of the convertible bonds.
(4) The conversion period shall be the period commencing from the date of issuance of the convertible bonds and ending on the date immediately preceding the date of redemption of the convertible bonds. The conversion period may be adjusted by a resolution of the Board of Directors; provided, that the conversion period shall in any event fall within the period mentioned above.
(5) The provisions of Article 10, Paragraph (5) shall apply mutatis mutandis to the payment of dividends on the shares issued upon conversion and the payment of interest on the convertible bonds.
5
Article 17-2. Issuance of Bonds with Warrants
(1) The Company may issue bonds with warrants to persons other than its shareholders to the extent that the aggregate par value of the bonds with warrants do not exceed two trillion (2,000,000,000,000) Won, in case of the events prescribed in Paragraph (1) of Article 17 above.
(2) The amount with respect to which the pre-emptive rights may be exercised shall be determined by resolution of the Board of Directors; provided, that such amount shall not in any event exceed the aggregate face amount of bonds with warrants.
(3) Upon exercise of the warrants, from the aggregate face amount of bonds with warrants, common shares may be issued up to one trillion three hundred billion (1,300,000,000,000) Won and preferred shares may be issued up to seven hundred billion (700,000,000,000) Won, and the issue price, which shall not be less than the face value of the shares, shall be determined by resolution of the Board of Directors at the time of issuance of bonds with warrants.
(4) The period during which the pre-emptive rights may be exercised shall be the period commencing from the date of issuance of bonds with warrants and ending on the date immediately preceding the date of redemption of bonds with warrants. The period during which the pre-emptive rights may be exercised may be adjusted by resolution of the Board of Directors; provided, that such period shall in any event fall within the period mentioned above.
(5) The provisions of Article 10, Paragraph (5) shall apply, mutatis mutandis, to the payment of dividends on the new shares issued upon exercise of the pre-emptive rights.
Article 18. Electronic Registration of Rights to be Indicated on Bond and Securities from Pre-emptive Right
The Company shall electronically register rights to be indicated on bond and securities from pre-emptive right on the electronic registrar of the electronic registration agency, in lieu of issuing bond securities and securities from pre-emptive right.
Article 18-2. Provisions Applicable mutatis mutandis to the Issuance of Bonds
Articles 13 and 14 of these Articles of Incorporation shall apply mutatis mutandis to the issuance of bonds.
CHAPTER IV. GENERAL MEETING OF SHAREHOLDERS
Article 19. Convening of General Meeting of Shareholders
(1) An Ordinary General Meeting of Shareholders shall be held within three (3) months after the end of each fiscal year, and an Extraordinary General Meetings of Shareholders may be convened at any time in compliance with a resolution of the Board of Directors and applicable laws or regulations.
(2) Shareholders may act only with respect to matters set forth in a written notice at a General Meeting of Shareholders.
(3) General Meeting of Shareholders shall be held at the location of the Company’s head office or in Seoul but also may be held at a nearby place if necessary.
(4) A General Meeting of Shareholders shall be convened by the CEO of the Company or by the President or Vice President of the Company acting under the CEO’s authorization.
6
Article 20. Notices
(1) Written notice of each General Meeting of Shareholders of the Company shall state the date, time, venue and the agenda for which the meeting has been called. The written notice shall be delivered to all shareholders by postal mail or by e-mail transmission at least two weeks prior to the date set for such General Meeting of Shareholders.
(2) Written notice of a General Meeting of Shareholders to be given to shareholders holding one-hundredth (1/100) or less of the total number of issued shares entitled to vote may be substituted by notices made at least twice in each of the Seoul Shinmun published in Seoul, the Maeil Shinmun published in Daegu Metropolitan City and the Kwangju Ilbo published in Kwangju Metropolitan City two weeks prior to the date set for such Meeting, or by notices to be posted on an electronic disclosure database system maintained by the Financial Supervisory Service or the Korea Exchange two weeks prior to the date set for such General Meeting of Shareholders.
Article 21. Presiding Officer
The CEO and the Representative Director shall preside at the General Meetings of Shareholders. In the absence of the CEO, the President and the Vice President among Inside Directors shall act as presiding officer in accordance with their order of authority.
Article 22. Authority of the Presiding Officer
The presiding officer at a General Meeting of Shareholders may order any person to cease making any statements or to leave the meeting or that statements made by such person be stricken from the record if the presiding officer determines that such person is deliberately preventing deliberations or is disturbing the order of the proceedings at the meeting. A person so ordered shall comply with the presiding officer’s instructions.
Article 23. Vote by Proxy
(1) Any shareholder entitled to vote at a General Meeting of Shareholders shall have the right to vote by proxy.
(2) A proxy shall submit a document evidencing the power of representation to the Company before the opening of the General Meeting of Shareholders.
Article 24. Quorum and Requisite for Resolutions
(1) Except as otherwise provided in these Articles of Incorporation or by applicable laws or regulations, all resolutions passed at a General Meeting of Shareholders shall be adopted by the affirmative vote of a majority of the voting shares of the shareholders present, which shall represent at least one-fourth (1/4) of the voting shares of the Company then issued and outstanding.
(2) In the following cases, the resolutions of a General Meeting of Shareholders shall be adopted by the affirmative vote of at least two-thirds (2/3) of the voting shares of the shareholders present and by the affirmative vote of at least one-third (1/3) of the voting shares of the total issued and outstanding shares:
| 1. | Amendment of the Articles of Incorporation; |
| 2. | Transfer of all or any important part of the business; |
| 3. | Execution, amendment or rescission of a contract for leasing the whole of the business, for entrustment of management, or for sharing with another person all profits and losses in relation to the business or of a similar contract; |
7
| 4. | Acquisition of all or part of business of any other company, which may have a great influence upon the business of the Company; |
| 5. | Merger or consolidation of the Company (excluding a small scale merger or consolidation); |
| 6. | Matters required to be approved by the General Meeting of Shareholders, which have material effects on the company’s assets, as determined by the Board of Directors; and |
| 7. | Any other matter for which such vote is required by Korean laws and regulations. |
Article 25. (Deleted)
Article 26. Minutes of General Meeting of Shareholders
The substance of the course of the proceedings of a General Meeting of Shareholders and the results thereof shall be recorded in the minutes which shall bear the names and seals or signatures thereon of the presiding officer and of the Directors present at the meeting, and shall be preserved in the archives of the Company.
CHAPTER V. BOARD OF DIRECTORS
Article 27. Number of the Directors
The total number of Directors of the Company shall be at least three (3) but no more than thirteen (13) Directors, among which the Outside Directors shall be eight (8) persons or less and Inside Directors shall be five (5) persons or less. The Outside Directors shall constitute the majority of the total number of the Directors.
Article 28. Election of the Directors and Representative Directors
(1) The Directors shall be elected at the General Meeting of Shareholders.
(2) By resolution of the Board of Directors, a number of Representative Directors may be appointed from among Inside Directors. On recommendation of the CEO, the Board of Directors may grant an Inside Director the position of President, Executive Vice President, Senior Managing Director and Managing Director.
(3) If Directors are appointed by a cumulative voting, the Inside Directors and the Independent Outside Directors are separately considered, and then, the cumulative voting shall apply to each group.
Article 29. Appointment of the CEO and the Representative Director
(1) By resolution of the Board of Directors, the CEO and the Representative Director shall be elected from among the Inside Directors after his qualification is approved by the CEO Candidate Recommendation Committee.
(2) In the event a candidate for the position of Inside Director is nominated as the CEO and the Representative Director candidate and approved by the CEO Candidate Recommendation Committee, the Board of Directors shall recommend the name of one (1) CEO and the Representative Director candidate at the General Meetings of Shareholders. Where the CEO and the Representative Director candidate is appointed as an Inside Director at General Meetings of Shareholders, the Board of Directors shall appoint the CEO and the Representative Director candidate as the CEO and the Representative Director.
(3) Details concerning the composition and operation of the CEO Candidate Recommendation Committee shall be determined by the Board of Directors.
8
Article 29-2. Recommendation of Inside Director Candidate other than the CEO and the Representative Director
A candidate for Inside Director other than the CEO and the Representative Director shall be recommended by the Board of Directors after his qualification is approved by the Director Candidate Recommendation Committee as prescribed in Paragraph (1) of Article 45.
Article 29-3. Qualification for Inside Director Candidate
(1) An Inside Director shall be a person capable of managing the Company, who has working experience as an officer or employee of the Company or sufficient experience in the related business area.
(2) A person (i) who retired prior to the completion of the full term of office due to gross negligence or unsound management, (ii) who was sentenced to imprisonment or a heavier penalty and for whom five years have not passed since the termination thereof or exemption therefrom or (iii) who is serving a suspended sentence or who was sentenced to a stay of execution and for whom two years have not passed since the expiration of the period of stay of execution cannot be an Inside Director of the Company.
Article 30. Recommendation of Candidate for Outside Directors
(1) A candidate for Outside Director shall be recommended by the Director Candidate Recommendation Committee as prescribed in Paragraph (1) of Article 45. Such candidates shall be among those qualified persons as prescribed in Article 31.
(2) A shareholder holding voting shares of the Company may recommend a candidate for Outside Director to the Director Candidate Recommendation Committee by the exercise of the shareholder proposal right under the applicable legislation.
(3) The Director Candidate Recommendation Committee shall determine the details regarding recommendation for, and evaluation on qualification of, candidates for Outside Director.
Article 31. Qualification for Candidate for Outside Directors
An Outside Director must have sufficient and professional knowledge or experience in the areas of industry, finance, education, law, accounting and public administration and also must be qualified under the relevant laws.
Article 32. Duties of Representative Director
(1) Each Representative Director shall represent the Company, execute matters determined by the Board of Directors, control all affairs of the Company and provide all Directors with the updated information regarding the recent status of management and the Company.
(2) The Representative Directors and Directors shall carry on the administration of the affairs of the Company in accordance with the duties assigned to them by the CEO.
Article 33. Duties of Directors
(1) The Directors, as the prudent manager, shall faithfully perform their duties for the Company such as attending the meeting of the Board of Directors, etc. in accordance with the laws and the Articles of Incorporation.
9
(2) If a Director finds any matter that may inflict any material loss to the Company, he shall immediately report it to the Audit Committee.
Article 34. Term of Directors
The term of office of the Directors shall be within three (3) years; provided, however, that the term of office for Directors shall be extended until the close of an Ordinary General Meeting of Shareholders which is to be held with respect to the fiscal year which is the last to end during their terms in office.
Article 35. By-Election
(1) In the event of any of the absence or inability to perform the duties as a Director, an Extraordinary General Meeting of Shareholders shall be convened to fill the vacancy. However, in the case the number of remaining Directors satisfies the legal requirement and such vacancy does not cause any difficulties in the operation of the business, the appointment through by-election may be suspended, or postponed until the holding of the next Ordinary General Meeting of Shareholders.
(2) In the event that the number of Outside Directors is less than a majority of total number of Directors due to death or resignation of Outside Directors or for any other reason, Outside Directors shall be elected to fill the vacancy at the General Meeting of Shareholders to be held first after such cause so as for the number of Outside Directors to constitute a majority of total number of Directors.
Article 36. Remuneration of Directors
(1) The limit of the salaries and performance incentives of the Directors shall be determined by resolution of the General Meeting of Shareholders. The Board of Directors shall determine the detailed operation standards thereof.
(2) Any severance allowance paid to the Inside Directors shall be in accordance with Severance Allowance Regulations for Directors as approved by shareholders at the General Meeting of Shareholders.
(3) The Company may pay to Outside Directors for expenses incurred during performance of services as required of Outside Directors.
Article 37. Indemnification of Directors
The Company shall indemnify, to the extent permitted by the Korean Commercial Code, the Directors from and against all expenses, losses or liabilities incurred in connection with defending any action, claim or proceeding to protect the interest of the Company, except for in case of the Directors’ willful misconduct or negligence with respect to their duties.
Article 38. Authority of the Board of Directors
(1) The Board of Directors shall have the power to take actions in respect of all such acts and things put on the agenda by any of the Directors relating to important matters regarding the administration of the Company or as are required by laws or regulations or by these Articles of Incorporation.
(2) The Board of Directors may delegate its powers to the Special Committees as prescribed in Paragraph (1) of Article 45 in accordance with the Korean laws and regulations and these Articles of Incorporation.
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Article 39. Constitution and Convocation of Meeting of the Board of Directors
(1) The Board of Directors shall consist of all the Directors.
(2) The Chairman of the Board may convene all Meetings of the Board of Directors. Any other Director who wishes to convene a Meeting of the Board of Directors shall make his request to the Chairman of the Board and the Chairman shall convene the Meeting. If the Chairman of the Board fails to convene the Meeting without justifiable reasons, other Directors may convene such Meeting.
(3) Written or oral notice of each Meeting of the Board of Directors shall be given at least one day prior to the scheduled meeting date to each of the Directors. No notice shall, however, be required for a regular Meeting of the Board of Directors or if all of the Directors consent thereto.
(4) The Board of Directors may allow the Directors to attend, and vote at, the meeting of the Board of Directors by tele-conferencing, instead of attending and voting in person at such meeting. In such case, a Director participating in the Board Meeting by such arrangement shall be considered to be present at the Meeting of the Board of Directors.
Article 40. Chairman of the Board of Directors
(1) The Chairman of the Board shall be appointed by the resolution of the Board of Directors among Outside Directors.
(2) The term of office of the Chairman of the Board shall be one (1) year, and the Chairman of the Board shall not be reappointed to the office.
(3) In the event that the Chairman of the Board cannot preside at a Meeting of the Board of Directors, Outside Director in order of seniority (if the seniority is the same, the oldest has the priority) shall take his place as Chairman of the Board.
Article 41. Adoption of Resolutions of the Board of Directors
(1) The Majority of Directors shall constitute a quorum for a Meeting of the Board of Directors. All actions and resolutions taken at a Meeting of the Board of Directors shall be adopted by the affirmative vote of a majority of the Directors present. Notwithstanding the foregoing, the adoption of a resolution by the Board of Directors with respect to the election of the CEO and the Representative Director candidate may be separately decided by the Board of Directors whose quorum shall not exceed the affirmative vote of two-thirds (2/3) of all of the Directors.
(2) A Director having a special interest with respect to the resolution shall not exercise his voting right.
Article 42. Formalities of the Board of Directors
Directors shall set the agenda for each Meeting and make proposals for resolution thereat. If any Director plans to make proposals at the Meeting of the Board of Directors, he shall submit a written summary thereof to the Chairman of the Board and the CEO and Representative Director in advance.
Article 43. Matters of Urgency
The CEO and Representative Director may act upon matters of urgency without resolution of the Board of Directors by obtaining prior consent of more than two-thirds (2/3) of other Directors. A Meeting of the Board of Directors for the next term shall be convened to deliberate on and ratify the actions so taken.
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Article 44. Minutes of the Meeting of the Board of Directors
With respect to the proceedings of the Meetings of the Board of Directors, the minutes should be made. The agenda, the substances of course, and the results of the proceedings of the Meetings of the Board of Directors, the name of objecting director and the reasons of objection shall be recorded in the minutes which shall bear the names and seals or the signatures thereon of the Directors present at the Meeting.
Article 45. Special Committees
(1) The Company shall have special committees under the control of the Board of Directors as follows:
| 1. | ESG Committee; |
| 2. | Director Candidate Recommendation Committee; |
| 3. | Evaluation and Compensation Committee; |
| 4. | Finance Committee; |
| 5. | Audit Committee. |
| 6. | CEO Candidate Pool Management Committee |
(2) Except as otherwise provided by any relevant laws, authority, constitution and operation of the special committee shall be determined by a resolution of the Board of Directors.
(3) Matters regarding composition and duties of the Audit Committee shall be determined in accordance with Chapter VI.
Article 46. Unregistered Officers
(1) The Company shall have Unregistered Officers to execute the matters resolved by the Board of Directors and the matters important to the management of the Company.
(2) The Unregistered Officers shall be appointed by the CEO and the Representative Director and; provided, however, that the appointment of the Unregistered Officers to the important positions that the Board of Directors decides shall require the approval of the Board of Directors.
(3) The Unregistered Officers are President, Senior Executive Vice Presidents, Senior Managing Directors and Managing Directors, and the salaries and performance incentives payable to such Unregistered Officers shall be determined by the Board of Directors or by the CEO and the Representative Director, to the extent the CEO and the Representative Director has been delegated such authority by the Board of Directors. Any severance allowance shall be distributed in accordance with the standards for the President, Senior Executive Vice Presidents, Senior Managing Directors and Managing Directors pursuant to the Directors Severance Allowance Regulations as approved by the General Meeting of Shareholders.
(4) The allocation of work among the Unregistered Officers shall be decided by the CEO and the Representative Director.
(5) The term of office of the Unregistered Officers shall not be more than two (2) years; provided, however, that the proviso of Article 34 may apply mutatis mutandis to the Unregistered Officers.
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Article 47. Consultant and Part-time Officer
The Company may have consultants and part-time officers who will be treated as Officers of the Company if it is required for the business.
CHAPTER VI. Audit Committee
Article 48. Constitution and Appointment of Members of Audit Committee
(1) The Audit Committee of the Company shall consist of three (3) or more Directors. All of the members shall be elected from among the Outside Directors.
(2) A member of the Audit Committee shall be appointed or dismissed at the General Meeting of Shareholders. When appointing a member of the Audit Committee, a shareholder holding more than three percent (3%) of the Company’s issued and outstanding shares shall not be entitled to exercise his voting rights for that excess portion.
(3) In the event that the number of the Audit Committee does not satisfy the requirement referred to in Paragraph (1) due to the death or resignation of members or any other reasons, the members shall be elected to fill the vacancy at the General Meeting of Shareholders to be held first after such cause so as for the number of members to satisfy the requirement referred to in Paragraph (1).
(4) The chairman of the Audit Committee shall be elected by a resolution of the Audit Committee.
Article 49. Duties of Audit Committee
(1) The Audit Committee shall examine the accounting and financial records of the Company.
(2) The Audit Committee may request to convene an Extraordinary General Meeting of Shareholders by submitting a written request specifying the agenda of the meeting and the reason for the meeting.
(3) If deemed necessary, the Audit Committee may request to convene a Board Meeting by submitting a written request specifying the agenda of a meeting and the reason for a meeting to the Chairman of the Board.
(4) The Audit Committee may directly convene a Board Meeting if a meeting has not been convened immediately on the request of the Audit Committee in accordance with Paragraph (3) of this Article.
(5) If it is required for management purpose, the Audit Committee may demand a subsidiary to make a report on the business. In such case, if the subsidiary fails to make an immediate report, or it is required to confirm the contents of such report, the Audit Committee may investigate the business and assets of the subsidiary.
(6) The Audit Committee shall prepare an audit report on the Company’s financial statements and shall report thereof to the General Meeting of Shareholders.
(7) The Audit Committee shall record the course of the proceedings of their meetings and the results thereof in the minutes and shall record the procedure of the inspection and the results thereof in the inspection book, on which the name and seal of the members shall be affixed or which shall be signed by such members.
(8) The Audit Committee may receive advice from outside professionals when necessary, for which the Company shall cover any expenses therefrom.
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Article 50. Quorum and Adoption of Resolutions
Article 41 shall apply, mutatis mutandis, to the quorum and adoption of resolution of the Audit Committee.
Article 51. Appointment of External Auditor
The Company shall appoint an external auditor selected by the Audit Committee pursuant to the Act on External Audit of Stock Companies. The details of the aforesaid appointment shall be reported to the shareholders at the Ordinary General Meeting of Shareholders for the fiscal year during which such appointment was or shall be made known to the shareholders in accordance with relevant laws and regulations.
CHAPTER VII. ACCOUNTING
Article 52. Fiscal Year
The fiscal year of the Company shall commence on each January 1 and shall end on December 31 of the same year.
Article 53. Submission, Approval and Publication of Financial Statements
(1) After the end of each fiscal year, the Representative Directors shall prepare and submit, with the Board of Directors’ approval therefor, to the Audit Committee at least six (6) weeks before the date set for an Ordinary General Meeting of Shareholders, the following documents with its supplementary schedules:
| 1. | A balance sheet; |
| 2. | A profit and loss statement; |
| 3. | Documents designated by the Presidential Decree and decided by the Board of Directors; |
| 4. | A consolidated financial statement; and |
| 5. | A business report for the pertinent fiscal year: |
(2) Upon receiving the documents specified under Paragraph (1) above, the Audit Committee shall prepare and submit an auditor’s report to the Representative Director one (1) week before the date of each Ordinary General Meeting of Shareholders.
(3) The Representative Directors shall make available for inspection for five (5) years at the head office and copies thereof for three (3) years at branch offices, the documents prescribed under Items 1 through 4 of Paragraph (1) of this Article and the auditor’s report of the Company beginning from one (1) week before the date of each Ordinary General Meeting of Shareholders.
(4) The Representative Director shall submit and seek approval of the documents prescribed under Items 1 through 4 of Paragraph (1) of this Article at an Ordinary General Meeting of Shareholders. The Representative Directors shall report a business report to an Ordinary General Meeting of Shareholders.
(5) The Representative Director shall make public the balance sheet, without delay, after an Ordinary General Meeting of Shareholders has approved the documents described in Paragraph (4).
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Article 54. (Deleted)
Article 55. Disposition of Retained Earnings
Retained earnings for any fiscal year shall be disposed in the following order, but it may be appropriated for purposes other than those listed below if approved by a General Meeting of Shareholders:
| 1. | Legal reserves (required to be more than one-tenth of cash dividends paid for the pertinent fiscal year); |
| 2. | Other statutory reserves; |
| 3. | Dividends to shareholders; |
| 4. | Merits bonuses for retiring Directors; |
| 5. | Discretionary reserves; |
| 6. | Average dividend reserves and other dispositions; and |
| 7. | Retained earnings carried forward to next fiscal year. |
Article 56. Dividends
(1) Dividends may be paid in cash, shares, or any other form of property
(2) In the case of stock dividends, the Company may issue different types of shares to the shareholders by resolution of the General Meeting of Shareholders.
(3) Dividends referred to in Paragraph (1) shall be paid to the shareholders or registered pledgees whose names appear in the shareholders’ register of the Company as of the record date determined by the resolution of the Board of Directors. In case the Company sets forth the record date for dividends, the Company shall post a public notice at least two (2) weeks prior to the record date.
(4) (Deleted)
Article 56-2. Quarterly Dividends
(1) The Company may pay quarterly dividends in cash by a resolution of the Board of Directors each fiscal year. In such case, the record date for the distribution of quarterly dividends shall be the last day of March, June or September. The dividends shall be paid within 20 days from the resolution above.
(2) Dividends referred to in Paragraph (1) shall be paid to the shareholders or registered pledgees whose names appear in the shareholders’ register of the Company as of the record date for the distribution of quarterly dividends.
Article 57. Cancellation of Treasury Stocks
The Company, by a resolution of the Board of Directors, may repurchase and cancel its outstanding shares following the methods set forth in the applicable laws or regulations.
ADDENDA (March 21, 2024)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 56th fiscal year.
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ADDENDA (March 17, 2023)
The amended Articles of Incorporation shall be effective as of the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 55th fiscal year; provided, however, that the amendments to Article 56, Paragraph (3) shall apply starting from the payment of year-end dividends for the fiscal year 2023.
ADDENDA (January 28, 2022)
The amended Articles of Incorporation shall be implemented from the date on which the spin-off under the Spin-Off Plan dated December 10, 2021 takes effect.
ADDENDA (March 12, 2021)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 53rd fiscal year.
ADDENDA (March 15, 2019)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 51st fiscal year; provided, however, that the amendments to Articles 6, 9, 9-2, 13 and 18 shall take effect starting from the effective date of the Enforcement Decree of the Act on Electronic Registration of Stocks, Bonds, Etc.
ADDENDA (March 9, 2018)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 50th fiscal year.
ADDENDA (March 11, 2016)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 48th fiscal year.
ADDENDA (March 16, 2012)
Article 27 of the Articles of Incorporation shall be effective from the date the Ordinary General Meeting of Shareholders for the 44th fiscal year approves such Article while the other amended Articles shall be effective from April 15, 2012.
ADDENDA (February 25, 2011)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 43rd fiscal year.
ADDENDA (February 26, 2010)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 42nd fiscal year.
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ADDENDA (February 27, 2009)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 41st fiscal year.
ADDENDA (February 23, 2007)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 39th fiscal year.
ADDENDA (February 24, 2006)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 38th fiscal year.
ADDENDA (March 12, 2004)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 36th fiscal year.
ADDENDA (March 14, 2003)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 35th fiscal year.
ADDENDA (March 15, 2002)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 34th fiscal year.
ADDENDA (March 16, 2001)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 33rd fiscal year.
ADDENDA (March 17, 2000)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 32nd fiscal year.
ADDENDA (March 16, 1999)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 31st fiscal year.
ADDENDA (August 20, 1998)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Extraordinary General Meeting of Shareholders for the 31st fiscal year.
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ADDENDA (March 17, 1998)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 30th fiscal year.
ADDENDA (March 14, 1997)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 29th fiscal year.
ADDENDA (March 15, 1996)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 28th fiscal year.
ADDENDA (March 15, 1995)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 27th fiscal year.
ADDENDA (April 15, 1994)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Extraordinary General Meeting of Shareholders for the 27th fiscal year.
ADDENDA (March 8, 1993)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 25th fiscal year.
ADDENDA (October 13, 1992)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Extraordinary General Meeting of Shareholders for the 25th fiscal year.
ADDENDA (March 7, 1992)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 24th fiscal year.
ADDENDA (March 14, 1991)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 23rd fiscal year.
ADDENDA (March 6, 1990)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 22nd fiscal year.
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ADDENDA (March 15, 1989)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 21st fiscal year.
ADDENDA (February 27, 1988)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 20th fiscal year.
ADDENDA (March 7, 1987)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 19th fiscal year.
ADDENDA (February 26, 1986)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 18th fiscal year.
ADDENDA (February 5, 1985)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 17th fiscal year.
ADDENDA (February 18, 1984)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 16th fiscal year.
ADDENDA (February 23, 1982)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 14th fiscal year.
ADDENDA (February 28, 1981)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 13th fiscal year.
ADDENDA (February 24, 1979)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 11th fiscal year.
ADDENDA (February 25, 1978)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 10th fiscal year.
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ADDENDA (February 8, 1977)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 9th fiscal year.
ADDENDA (February 6, 1976)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 8th fiscal year.
ADDENDA (February 8, 1975)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 7th fiscal year.
ADDENDA (February 5, 1974)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 6th fiscal year.
ADDENDA (February 12, 1973)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 5th fiscal year.
ADDENDA (November 29, 1972)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Extraordinary General Meeting of Shareholders for the 5th fiscal year.
ADDENDA (February 4, 1972)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 4th fiscal year.
ADDENDA (November 23, 1971)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Extraordinary General Meeting of Shareholders for the 4th fiscal year.
ADDENDA (February 6, 1971)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 3rd fiscal year.
ADDENDA (February 7, 1970)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 2nd fiscal year.
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ADDENDA (June 16, 1969)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Extraordinary General Meeting of Shareholders for the 2nd fiscal year.
ADDENDA (March 20, 1969)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Extraordinary General Meeting of Shareholders for the 2nd fiscal year.
ADDENDA (February 20, 1969)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Ordinary General Meeting of Shareholders for the 1st fiscal year.
ADDENDA (July 10, 1968)
The amended Articles of Incorporation shall be effective from the date on which they are approved by the resolution at the Extraordinary General Meeting of Shareholders for the 1st fiscal year.
ADDENDA (March 6, 1968)
The Articles of Incorporation shall be effective from March 6, 1968.
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Exhibit 8.1
LIST OF CONSOLIDATED SUBSIDIARIES
For a list of POSCO HOLDINGS INC.’s consolidated subsidiaries as of December 31, 2023 and their jurisdiction of incorporation, please see Note 1(b) of Notes to the Consolidated Financial Statements contained in POSCO HOLDINGS INC.’s annual report on Form 20-F for the fiscal year ended December 31, 2023.
Exhibit 12.1
CERTIFICATION
I, Chang, In-Hwa, certify that:
| 1. | I have reviewed this annual report on Form 20-F of POSCO HOLDINGS INC.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
| 4. | The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and |
| 5. | The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. |
Date: April 29, 2024
| /s/ Chang, In-Hwa |
| Chang, In-Hwa |
| Chief Executive Officer and Representative Director |
Exhibit 12.2
CERTIFICATION
I, Jeong, Ki-Seop, certify that:
| 1. | I have reviewed this annual report on Form 20-F of POSCO HOLDINGS INC.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
| 4. | The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and |
| 5. | The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. |
Date: April 29, 2024
| /s/ Jeong, Ki-Seop |
| Jeong, Ki-Seop |
| Representative Director and President |
Exhibit 13.1
CERTIFICATION
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsection (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsection (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of POSCO HOLDINGS INC., a corporation organized under the laws of the Republic of Korea (the “Company”), does hereby certify, to such officer’s knowledge, that:
The annual report on Form 20-F for the year ended December 31, 2023 (the “Form 20-F”) fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Form 20-F fairly presents, in all material respects, the financial condition and results of operation of the Company.
| /s/ Chang, In-Hwa |
| Chang, In-Hwa |
| Chief Executive Officer and |
| Representative Director |
Date: April 29, 2024
| /s/ Jeong, Ki-Seop |
| Jeong, Ki-Seop |
| Representative Director and President |
Date: April 29, 2024
A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to POSCO HOLDINGS INC. and will be retained by POSCO HOLDINGS INC. and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 15.1
KPMG Samjong Accounting Corp.
| 27th Floor, Gangnam Finance Center, 152 Teheran-ro, Gangnam-gu, Seoul 06236 Republic of Korea |
Tel. 82-2-2112-0100 Fax. 82-2-2112-0101 www.kr.kpmg.com |
April 29, 2024
Securities and Exchange Commission
Washington, D.C. 20549
Ladies and Gentlemen:
We were previously principal accountants for POSCO HOLDINGS INC. and, under the date of April 29, 2024, we reported on the consolidated financial statements of POSCO HOLDINGS INC. as of and for the years ended December 31, 2023 and 2022, and the effectiveness of internal control over financial reporting as of December 31, 2023. On April 29, 2024, the auditor-client relationship ceased.
We have read POSCO HOLDINGS INC.’s statements included under Item 16.F of its Form 20-F dated April 29, 2024, and we agree with such statements except we are not in a position to agree or disagree with POSCO HOLDINGS INC.’s statements in the first paragraph regarding the engagement of the new accountants and that the change of newly engaged accountant was approved by the audit committee, or any of POSCO HOLDINGS INC.’s statements in the second paragraph that relates to the stated reason for changing principal accountant.
Very truly yours,
/s/ KPMG Samjong Accounting Corp.
Exhibit 97.1
POSCO Holdings
Policy for the Recovery of Erroneously Awarded Compensation
Article 1 (Purpose)
The purpose of this Policy is to define the rules and procedures by which Executive Officers will be required to repay or return Erroneously Awarded Compensation in accordance with the Clawback Rules adopted by the New York Stock Exchange and the Securites and Exchange Commission.
Article 2 (Application)
This Policy shall apply to POSCO Holdings Inc. (the Company) and any Executive Officer of the Company. Additionally, by the Administrator’s decision, this Policy may also apply to affiliated companies, directly or indirectly governed by the Company, and their Executive Officers.
Article 3 (Definitions)
The terms used in this Policy have the meanings provided below:
1.[Accounting Restatement] shall mean an accounting restatement made to correct a material error (regardless of whether correction disclosure has been filed) in previously disclosed financial statements.
2.[Administrator] shall refer to the Evaluation and Compensation Committee of the board of directors of the Company.
3.[Clawback Eligible Incentive Compensation] shall mean any financial statement-based Incentive Compensation (including shares granted as equity-based incentive compensation) received by an individual who served as an Executive Officer at any given time during the applicable period that meets all of the requirements set forth below (whether or not the individual is serving as an Executive Officer at the time the Erroneously Awarded Compensation is required to be repaid to the Company).
(In the administration of this Policy, the Clawback Eligible Incentive Compensation shall be deemed as payment during the relevant fiscal year, whether or not the actual payment occurred during that fiscal year)
(i) on or after the effective date of the Clawback Rules (i.e. October 2, 2023);
(ii) in service as an Executive Officer;
(iii) while the Company has listed securities on the Exchange based in the U.S.A.; and
(iv) during the applicable Clawback Period.
4.[Clawback Period] shall mean the three (3) fiscal years of the Company immediately preceding the Restatement Date.
5.[Clawback Rules] shall mean Section 10D of the Exchange Act, Section 303A.14 of the New York Stock Exchange Listed Company Manual and any applicable rules or standards adopted by the SEC or the New York Stock Exchange in connection with clawback and currently in effect.
6.[Executive Officer] shall mean any individual who is or was an executive officer in accordance with the definition of ‘executive officer,’ as defined in the Clawback Rules. The Administrator shall have full discretion to determine specifically to whom this Policy shall apply.
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7.[Erroneously Awarded Compensation] shall mean, in connection with an Accounting Restatement that results in restatement of amounts that served as the basis of previously awarded incentive compensation, the amount of Clawback Eligible Incentive Compensation previously paid that exceeds the amount of Clawback Eligible Incentive Compensation as determined based on the restated amounts.
8.[Impracticable] shall mean, as determined by the Administrator, that either:
(i) expenses for recovering the Erroneously Awarded Compensation would exceed the amount to be recovered; or
(ii) the Company obtains a legal opinion that recovery would violate the Company’s domestic law where that law was adopted prior to November 28, 2022.
9.[Method of Recovery] shall include, but not limited to, the following examples, as determined by the Administrator:
(i) requiring reimbursement of Erroneously Awarded Compensation;
(ii) seeking recovery of any gain realized on equity-based awards;
(iii) offsetting the Erroneously Awarded amount from any future compensation owed by the Company to the Executive Officer;
(iv) canceling outstanding equity-based awards; and/or
(v) taking any other remedial and/or recovery action permitted by applicable law.
10.[Restatement Date] shall mean the earliest to occur of:
(i) the date on which the board of directors authorized, or reasonably should have authorized, the Company to prepare an Accounting Restatement;
(ii) the date on which a court or other legally authorized body directs the Company to prepare an Accounting Restatement; or
(iii) the date on which a court ruling confirms that the Company must prepare an Accounting Restatement.
Article 4. (Administration)
Except when specifically defined herein, this Policy shall be managed and administered by the Administrator. Any approval and determination made by the Administrator on the interpretation, application, management and administration of this Policy shall be final and binding. Subject to limitations under applicable law, the Administrator may authorize and empower an officer or employee of the Company to perform any and all actions necessary to administer this Policy; however, that such personnel cannot be an officer from whom Erroneously Awarded Compensation must be or may be recovered under this Policy.
Article 5. (Repayment of Erroneously Awarded Compensation)
① In the event the Company is required to prepare an Accounting Restatement, the Administrator shall immediately determine the amount of any Erroneously Awarded Compensation for each Executive Officer and shall promptly thereafter provide each Executive Officer a with written notice containing the said amount and a demand for repayment or return. In no event may the Company accept an amount that is less than the amount of Erroneously Awarded Compensation in satisfaction of an Executive Officer’s obligations hereunder; however, if recovery is deemed Impracticable, the Company may determine not to take action to administer such recovery.
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② Whether or not there is a finding of any misconduct by an Executive Officer or such Executive Officer being found responsible for the accounting error leading to an Accounting Restatement, the Company shall be authorized to recover the Erroneously Awarded Compensation.
③ The Administrator shall determine the Method of Recovery deemed reasonable and appropriate, taking into account the amount to be recovered and the recovery cost.
④ The Administrator is authorized to engage any third-party advisor it deems necessary to perform the calculations contemplated by this Policy.
⑤ If the Accounting Restatement results from any misconduct by the Executive Officer or such Executive Officer being found responsible for the accounting error, the Executive Officer shall be required to reimburse the Company for any and all expenses incurred by the Company in recovering the Erroneously Awarded Compensation.
Article 6. (Reporting and Disclosure)
The Company shall file disclosures with respect to this Policy in accordance with the requirements of the U.S. federal securities laws, SEC rules and listing rules.
Article 7. (Indemnification Prohibition)
The Company shall not be permitted to indemnify an Executive Officer against any loss related to Erroneously Awarded Compensation that is recovered, including any payment or reimbursement for the cost of Executive Officer liability insurance. Any agreement purporting to indemnify any Executive Officer against such losses shall be null and void.
Article 8. (Amendment, Termination)
The Administrator may modify or amend this Policy, in whole or in part, from time to time and may terminate this Policy at any time. However, should any amendment or termination violate the Clawback Rules, or any U.S. federal securities law, SEC rule or listing rule, no such amendment and/or termination shall be effective. Furthermore, this Policy shall automatically be deemed amended in a manner necessary to comply with any changes in the Clawback Rules.
Article 9. (Consent)
Each Executive Officer subject to this Policy must submit to the Company a signed copy of the Acknowledgement and Acceptance Form (Appendix 1) regarding this Policy. However, this Policy shall apply to any Executive Officer whether or not s/he has submitted the Form to the Company.
Addendum
Article 1 (Effective Date) This Policy is effective from November 17, 2023.
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Policy for the Recovery of Erroneously Awarded Compensation
Acknowledgement and Acceptance
As an Executive Officer belonging to POSCO Holdings, an individual to which the Clawback Policy (the Policy) applies, I hereby acknowledge the terms defined below and offer my consent to comply.
1. I accept to comply, both during and after employment with the Company, with the rules outlined in the Policy, which includes rules regarding the recovery of Erroneously Awarded Compensation.
2. Where this Policy may conflict with terms outlined in my service agreement (employment contract) with the Company, I acknowledge that this Policy supercedes any other agreement, and that the terms outlined in any other contract will be deemed automatically amended in accordance with this Policy.
3. I acknowledge that this Policy applies to any and all Clawback Eligible Incentive Compensation awarded to me by the Company.
4. I accept that the Evaluation and Compensation Committee may amend the Policy from time to time, and that the consent provided in this Form is equally effective and valid on any amended Policy.
5. I accept that the Company will administer the Policy to recover from me any Erroneously Awarded Compensation in a manner deemed appropriate by the Evaluation and Compensation Committee.
6. I accept that the Company will offset from any future payment owed to me the amount that is payable to the Company as Erroneously Awarded Compensation.
I hereby acknowledge full understanding of the terms outlined in this Form and freely and willingly provide my consent, which I will not claim annulled or voided at any time in the future.
YYYY/ MM/ DD
Position:
Name :
[Signature]
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