The global slowdown in electric vehicle (EV) demand has significantly impacted POSCO FUTURE M’s profitability, as reflected in their sharp decline in operating profit last year.
On Jan. 23, POSCO FUTURE M announced that its operating profit for the last year was 35.9 billion won (US$26.8 million), a 78.4% decrease from the previous year’s 1.659 trillion won, based on consolidated figures.
While the revenue for last year increased by 44.2% to 4.7599 trillion won, net profit plummeted to 44 billion won, 96.4% less than the 1.219 trillion won the previous year. This indicates that although there was a trend of growth in sales, profitability worsened.
In the fourth quarter of last year, the company reported an operating loss of 73.7 billion won, marking the shift to a deficit. This is the first time POSCO FUTURE M has experienced a quarterly operating loss since the second quarter of 2015, eight years ago. The net loss for the same quarter was 1.021 trillion won, and sales for the quarter dropped to 1.1458 trillion won, down 139.9 billion won from the previous quarter.
The global slowdown in EV demand is linked to the fall in battery prices for electric vehicles, leading to a decrease in the prices of materials like cathode materials. POSCO FUTURE M produces cathode and anode materials for secondary batteries and supplies them to battery cell manufacturers.
Last year’s significant drop in lithium prices by more than 60%, along with decreases in the prices of nickel, graphite, and cobalt, which are key battery materials, negatively impacted the company due to the lag effect in raw material pricing.
Park Jin-soo, a researcher at Shinyoung Securities, stated in a report released today, “The key to future performance improvement lies in the recovery timing of lithium prices and cathode material prices, and the rebound in shipments to major customers. Cathode material prices are expected to stop declining from the third quarter of 2024.”