KOSPIBatteries003670

POSCO Future M

₩186,900▲ 2.30%2026-10-02 close

Market Cap

₩16.6T

Turnover

₩42.1B

Volume

230,000 shares

Shares out.

89M

PER

366.5×

PBR

3.9×

EPS

₩501

Dividend Yield

0.14%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩250 per share · Prices as of the 2026-10-02 close

Report overview

Non-China Materials Orders Meet a Slow Profit Recovery

Revenue has shrunk since the 2023 peak, yet full-year 2025 swung back from loss to profit, and the next phase hinges on non-China anode orders and the company's entry into LFP cathode materials.

1
In 2025 consolidated revenue was KRW 2,938.7bn with operating profit of KRW 32.8bn, an operating margin of just 1.1%, while owners' net profit of KRW 32.3bn marked a swing from the large 2024 loss.
2
Second-quarter 2026 revenue was KRW 679.5bn with operating profit of KRW 26.7bn, a second consecutive quarterly operating profit. By segment, energy materials posted revenue of KRW 327.9bn and operating profit of KRW 2.5bn, while basic materials posted KRW 351.6bn and KRW 24.2bn (per the preliminary disclosure of July 30, 2026).
3
The company agreed to supply more than 190,000 tonnes of LFP cathode material to a domestic battery maker over six years from 2027 to 2032, with a formal contract to be signed during the third quarter of 2026 after terms are finalized.
4
Hana Securities said in a May 2026 report that it is the only non-Chinese company producing battery anode graphite with long-term expansion plans above 50,000 tonnes. By contrast, LS Securities argued that localization and indirect entry by Chinese players will delay the regulatory impact reaching anodes, while Daishin Securities noted that automakers and cell makers are lobbying governments to ease Chinese anode sourcing, capping near-term policy benefits.
5
The debt-to-equity ratio fell to 102.7% at end-2025 from 138.9% in 2024, but 2025 operating cash flow remained negative at minus KRW 33.6bn.

Business structure

POSCO Future M is the POSCO group's materials arm, built on two pillars: battery (energy) materials and industrial basic materials. It specializes in cathode and anode materials while also internalizing feedstock, for example needle coke made from steelmaking by-products.

On the preliminary second-quarter 2026 disclosure, energy materials revenue was KRW 327.9bn (operating profit KRW 2.5bn) and basic materials revenue was KRW 351.6bn (operating profit KRW 24.2bn), leaving the two segments at roughly half of sales each.

In other words, investor attention sits with battery materials, but earnings defense still comes from basic materials such as refractories and quicklime. In 2024 the battery materials segment posted an operating loss of KRW 36.9bn, and basic materials narrowly preserved a consolidated operating profit.

In cathodes, it supplies both NCM and NCA and mass-produces single-crystal high-nickel products, and its roadmap spans ultra high-nickel grades above 95% nickel, LFP for ESS and entry-level EVs, solid-state cathodes and silicon anodes.

In anodes, it is the only Korean producer of graphite-based anode materials, serving global customers from its Sejong natural-graphite plant and Pohang synthetic-graphite plant.

The customer base centers on cell and automaker clients such as GM and Samsung SDI and has recently widened to a North American EV maker and a Japanese battery company. Competition is two-tiered: domestic peers in cathodes, and Chinese players such as BTR, which holds more than half of the global anode market.

Earnings trend

Quarterly revenue · Operating profit

₩660.9B₩800M25Q2₩874.8B₩66.7B25Q3₩557.6B-₩51.8B25Q4₩757.5B₩17.7B26Q1₩679.5B₩26.7B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩3.3T₩165.9B2022₩4.8T₩35.9B2023₩3.7T₩700M2024₩2.9T₩32.8B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩660.9B	₩800M	0.1%
2025Q3	₩874.8B	₩66.7B	7.6%
2025Q4	₩557.6B	-₩51.8B	−9.3%
2026Q1	₩757.5B	₩17.7B	2.3%
2026Q2	₩679.5B	₩26.7B	3.9%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩3.3T	₩165.9B	₩118.3B	5.0%	4.8%	75.0%
2023	₩4.8T	₩35.9B	₩28.7B	0.8%	1.2%	142.6%
2024	₩3.7T	₩700M	-₩212.3B	0.0%	−7.1%	138.9%
2025	₩2.9T	₩32.8B	₩32.3B	1.1%	0.8%	102.7%

Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-09-04

Earnings analysis

The annual numbers trace the cycle plainly. Revenue rose from KRW 3,301.9bn in 2022 to a peak of KRW 4,759.9bn in 2023, then shrank for two straight years to KRW 3,699.9bn in 2024 and KRW 2,938.7bn in 2025. Profitability moved more sharply.

The operating margin fell from 5.0% in 2022 to 0.8% in 2023 and 0.0% in 2024 (operating profit of KRW 0.7bn), recovering only to 1.1% in 2025 (operating profit KRW 32.8bn). The bottom line swung from an owners' net loss of KRW 212.3bn in 2024 to net profit of KRW 32.3bn in 2025.

The company and the market have attributed this to negative lagging effects from falling metal prices, lower cathode shipments amid customer inventory adjustments, and heavier depreciation from front-loaded investment.

Quarterly swings are wide: third-quarter 2025 revenue was KRW 874.8bn with operating profit of KRW 66.7bn, but fourth-quarter 2025 deteriorated to revenue of KRW 557.6bn and an operating loss of KRW 51.8bn, and the market views the large fourth-quarter inventory write-downs and one-off costs as having cleared the way for the subsequent margin recovery.

First-quarter 2026 then delivered revenue of KRW 757.5bn and operating profit of KRW 17.7bn, followed by KRW 679.5bn and KRW 26.7bn in the second quarter, and the battery materials segment narrowed its loss to about KRW 1.1bn in the first quarter from more than KRW 60bn in the prior quarter.

In the second quarter of 2026, volumes slipped from the prior quarter as some cathode shipments were deferred, yet cathodes stayed profitable on inventory valuation effects while anode losses shrank sharply on recovering volumes and utilization.

On the balance sheet, total equity of KRW 4,512.1bn (owners' equity KRW 4,067.6bn) against liabilities of KRW 4,631.8bn brought the debt-to-equity ratio down to 102.7% at end-2025, but operating cash flow turned negative again at minus KRW 33.6bn after an inflow of KRW 670.9bn in 2024.

Industry analysis

End demand is shifting from a single EV axis to a dual EV-plus-ESS structure. Power demand from AI data center buildouts is expanding demand for LFP batteries in ESS, while LFP adoption in EVs is growing, led by entry-level models.

However, Chinese firms supply most global LFP cathode material, so Korean suppliers that focused on ternary chemistries start as late entrants. The policy variable is US supply-chain rules.

Washington requires a non-Chinese direct material cost ratio of 60% (40% Chinese content allowed) from 2026, tightening annually to 85% (15% allowed) from 2030. China's concentration is even heavier in anodes.

SNE Research data show Chinese firms held 94.4% of anode material installed in global EVs in January to April 2026, versus 3% for Korea and 2.7% for Japan. The company ranked eleventh in anode shipments in 2024 at 27,200 tonnes, so its absolute scale is still small.

The cycle therefore sits where the late stage of the EV demand slowdown overlaps with the early stage of ESS and de-China demand, and the pace of policy enforcement versus Chinese workarounds remains the key differentiator among Korean suppliers.

Outlook

Confirmed milestones cluster around the LFP cathode entry and anode expansion. The company has finished converting part of its Pohang high-nickel line to LFP, is running customer qualification of samples, and plans to begin mass-production supply from the end of 2026.

It agreed to supply more than 190,000 tonnes to a domestic battery maker over six years from 2027 to 2032, with the formal contract due in the third quarter of 2026, and management said talks with other large customers are in final stages and capacity will be expanded in line with additional orders.

On the joint-venture side, a venture with Pino and CNGR began building an LFP cathode plant in Pohang's Yeongilman 4 industrial complex targeting 2027 mass production, with capacity to be raised in stages to as much as 50,000 tonnes per year.

In anodes, it signed a KRW 1trn long-term synthetic-graphite anode supply contract with a global automaker in March 2026 and is investing about KRW 357bn in a new Vietnamese plant, and the Vietnam synthetic-graphite plant and the Saemangeum spherical-graphite plant are both slated for trial runs in the second half of 2027.

Utilization targets have been set out as well: cathode plant utilization is targeted to recover above 70% by 2028, while anode utilization is targeted at 70% in 2027 and 90% in 2028.

On next-generation products, management said solid-state cathode material moves to mass-production process application around end-2026, third-generation LFP development is complete with mass production starting late this year and an EV grade targeted for 2028, and first-generation LMR is developed with timing under discussion with customers.

Among brokerages, Kyobo Securities forecast full-year 2026 revenue of KRW 3,234bn and operating profit of KRW 101bn in a report dated May 12, 2026, and Daishin Securities upgraded its rating to buy with a target price of KRW 230,000 on July 14, 2026.

It is worth noting, however, that the same report had modeled second-quarter 2026 revenue of KRW 813.5bn, above the level actually reported.

Valuation

PER

366.5×

PBR

3.9×

ROE

1.3%

EPS

₩501

BPS

₩47,212

Dividend per share

₩250

Because the profit accumulated over the last four quarters is still small, the earnings-based multiple sits far above the top of the band in which this stock has historically traded.

The asset-based multiple, meanwhile, reflects a meaningful premium to book value, and the dividend yield is well below market and sector averages.

In other words, the current price appears to weight a scenario in which capacity and orders convert into earnings more than it weights realized profit, and delivery against company targets such as cathode utilization above 70% and anode utilization of 90% by 2028 is the test of that assumption. Views differ.

Hana Securities valued the graphite business separately in a May 2026 report and judged that additional value versus cathode peers could be recognized, and as of June 2026 published brokerage target prices ranged from KRW 190,000 to KRW 294,000.

This report offers no judgment on the appropriateness of any multiple or on price direction; the citations above represent the views of those institutions only.

PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-09-04

Bull factors

Scarcity value of non-China graphite anodes and long-term contracts

Hana Securities said in a May 2026 report that it is the only non-Chinese producer of battery anode graphite with long-term expansion plans of more than 50,000 tonnes.

In October 2025 it disclosed a KRW 671bn natural-graphite anode supply contract with a global automaker running four years from October 2027, structured so that full exercise of extensions could lift the total to KRW 1.7trn over ten years, the largest long-term contract since it entered the anode business.

In March 2026 it added a KRW 1trn long-term synthetic-graphite anode contract with a global automaker. Revenue recognition begins only after 2027, so expansion timing and utilization need to be tracked alongside the orders.

A new demand axis in LFP and ESS

The company agreed to supply more than 190,000 tonnes of LFP cathode material to a domestic battery maker from 2027 to 2032, with the formal contract due in the third quarter of 2026, and industry estimates put the deal at around KRW 3trn.

Notably, it enters via conversion of existing high-nickel lines rather than large new investment. Management said it will improve cost competitiveness with a new process using iron oxide from steelmaking by-products and lithium from Argentine brine.

Still, contracted volumes are recognized only from 2027, and the narrowing of the cost gap versus Chinese producers has yet to be demonstrated.

Basic materials cushioning profits as quarterly results improve

In the second quarter of 2026, basic materials generated revenue of KRW 351.6bn and operating profit of KRW 24.2bn, more profit than energy materials at KRW 2.5bn. In 2024 as well, refractories and quicklime defended profitability while battery materials ran a KRW 36.9bn operating loss.

Quarterly results improved from an operating loss of KRW 51.8bn in the fourth quarter of 2025 to profits of KRW 17.7bn and KRW 26.7bn in the first and second quarters of 2026, with cathode inventory valuation effects and recovering anode utilization cited as drivers. Even so, after two profitable quarters the consolidated operating margin remains in the low single digits.

Bear factors

Structurally low margins and utilization

The operating margin slid from 5.0% in 2022 to 0.8% in 2023 and 0.0% in 2024, and stayed at just 1.1% in 2025. Revenue also fell from KRW 4,759.9bn in 2023 to KRW 2,938.7bn in 2025, raising the weight of fixed costs.

Management targets recovery of cathode plant utilization to above 70% by 2028, which implies current utilization sits below that level. If the recovery is delayed, depreciation and fixed costs can keep pressuring margins.

Policy dependence and uncertain de-China pace

A large part of the investment case is tied to US supply-chain rules.

LS Securities noted that even assuming tighter US FEOC and European rules, localization and indirect entry by Chinese firms will delay the impact reaching anodes, and Daishin Securities said automakers and cell makers are asking governments to ease Chinese anode sourcing, which limits near-term policy benefits.

KB Securities has argued that, given the high share of sales to US customers, a conservative stance on near-term earnings is warranted in light of changes around the Inflation Reduction Act. If the regulatory direction and actual demand shift diverge, order visibility could slip.

Cash flow strain alongside heavy investment

Operating cash flow was minus KRW 33.6bn in 2025, turning negative again after an inflow of KRW 670.9bn in 2024. It was also negative in 2023 at minus KRW 444.8bn and in 2022 at minus KRW 61.0bn, so three of the past four years saw outflows.

Meanwhile, expansion continues in parallel, including roughly KRW 357bn for the Vietnam synthetic-graphite plant and construction of the Pohang LFP joint-venture plant. The debt-to-equity ratio fell from 138.9% in 2024 to 102.7% in 2025, yet total liabilities of KRW 4,631.8bn remain similar in size to total equity.

Risk factors

Regulatory and policy risk

The US non-Chinese material cost requirement is scheduled to tighten in stages from 60% in 2026 to 85% in 2030, so any loosening or delay could slow the demand shift.

Conversely, China's move to impose export controls on battery materials and technologies including graphite is an industry-wide variable on the raw material side. Because both the direction and the pace of regulation feed straight into earnings, guideline revisions need continuous monitoring.

Raw material price and inventory valuation volatility

Cathode profitability depends heavily on lithium and nickel prices and the lag in passing them through to selling prices. In past downturns in metal prices, negative lagging effects shook profitability.

In the second quarter of 2026, inventory valuation effects helped keep cathodes profitable, a factor that can also work in reverse. Quarterly results can swing sharply, as the KRW 51.8bn operating loss in the fourth quarter of 2025 showed.

Customer concentration and execution risk on expansion

Large long-term contracts are concentrated among a few customers, so changes in their line operations or inventory policies feed directly into shipments. Even in the second quarter of 2026, volumes fell from the prior quarter as some cathode shipments were deferred.

In the past, delays at North American projects weighed on results. Whether the Saemangeum and Vietnam plants hit their trial-run schedules and whether LFP customer qualification proceeds on time are the key items to watch.

What to watch next

September to October 2026
Watch whether the formal LFP cathode supply contract slated for the third quarter of 2026 is signed, and the disclosed value, term and customer. Conversion from agreement to contract would be the first hard evidence for the LFP business.
Around late October 2026
In the third-quarter 2026 results, check energy materials segment operating profit or loss, the extent of the reduction in anode losses, and cathode utilization metrics. This should help distinguish whether the profits in the first and second quarters of 2026 rested on inventory valuation effects or on genuine volume recovery.
Around December 2026
Track whether mass-production supply of LFP from the converted Pohang line and completion of customer qualification and the move of solid-state cathode material into mass-production process application happen on schedule. Any slippage would shift the timing of 2027 revenue recognition.
January to February 2027
Check the confirmed full-year 2026 results, the dividend decision, and the direction of the debt-to-equity ratio and operating cash flow. Given that 2025 operating cash flow was negative, whether cash generation recovers during the expansion phase is the point to watch.
First to second half of 2027
Watch the start of trial runs at the Vietnam synthetic-graphite anode plant and the Saemangeum spherical-graphite plant and progress toward the 70% anode utilization target for 2027. These tie directly to revenue recognition on the KRW 1trn anode contract signed in March 2026.

Overall view

POSCO Future M's last four years trace a path from a revenue peak of KRW 4,759.9bn in 2023 to KRW 2,938.7bn in 2025, and from an owners' net loss of KRW 212.3bn in 2024 to net profit of KRW 32.3bn in 2025.

Consecutive operating profits in the first and second quarters of 2026 confirm a recovery trend, but the consolidated operating margin is still thin and a large share of profit continues to come from basic materials.

The positives are clear: a scarce position in non-China graphite anodes, trillion-won-scale long-term anode contracts in October 2025 and March 2026, and an agreement to supply more than 190,000 tonnes of LFP cathode material over six years from 2027.

The negatives are equally clear: low utilization and margins, expansion spending alongside negative operating cash flow, and the observation that lobbying to ease Chinese anode sourcing could cap near-term policy benefits.

Ultimately the question is what fills the gap between confirmed results and announced plans, and the answer should emerge in sequence from the formal LFP contract, the segment detail in third-quarter results, and the 2027 trial-run schedule for new plants. This report is for information purposes only and contains no buy or sell opinion and no target price.

Sources

Korea Exchange (KRX) — Prices · Market Cap · Volume
FSS electronic disclosure system (DART) — Financial statements · Dividend filings

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Report written 2026-09-05 · Data as of 2026-09-04

This content is AI analysis of market data and web search results, provided for information only. It is not a solicitation or recommendation to invest. Investment decisions and their consequences are the investor's own responsibility. Data may be delayed or contain errors.