POSCO Holdings Completes 6% Share Cancellation Pledge — But Core Profit Recovery Remains the Missing Piece

[Korea Financial Times, Jeong Chaeyun] POSCO Holdings has completed its three-year plan to cancel treasury shares equivalent to 6% of total issued shares. The shareholder return measure, aimed at simultaneously improving earnings per share (EPS) and stabilizing the stock price, has now been fully executed. Analysts say the move, in tandem with a roughly KRW 2 trillion restructuring effort amid a steel industry downturn, reflects a deliberate strategy to enhance capital efficiency and redirect resources to core businesses.

Three-Year, 6% Share Cancellation Complete — Total KRW 1.7176 Trillion Retired

POSCO Holdings shares closed at KRW 347,500 on the Korea Exchange on March 12, rising 3.4% from the previous close of KRW 336,000 on March 9 — a third consecutive session of gains, even as markets have been volatile amid the U.S.-Iran standoff.

In July 2024, POSCO Holdings' board of directors formally announced a plan to cancel treasury shares equivalent to 6% of total issued shares in three tranches of 2% each through 2026.

The company stated that it would cancel the entire remaining 6% stake — worth approximately KRW 1.9 trillion, excluding the 4% held in escrow for exchangeable bonds — by 2026, and that any newly acquired treasury shares would in principle be cancelled immediately, except for specific purposes such as employee stock options.

Following actual cancellations of 2% in 2024 and 2% in 2025, the final 2% cancellation — valued at approximately KRW 635.1 billion — was approved at the regular board meeting in February this year. This brings the total treasury share cancellations over three years to approximately KRW 1.7176 trillion, effectively retiring all holdings outside the exchangeable bond escrow portion.

Once final approval is granted at the annual general shareholders' meeting scheduled for March 24, the three-year, 6% cancellation roadmap will be complete in all legal and procedural respects.

POSCO Holdings stated that the purpose of the share cancellations was to strengthen shareholder returns and enhance corporate value. The market interprets the move as targeting medium-to-long-term stock price stability — both by boosting EPS through a reduction in total shares outstanding and by codifying a standing "cancellation principle."

Capital Reallocation Amid Steel Slump — 73 Non-Core Assets Divested, KRW 1.8 Trillion Secured

The treasury share cancellations are seen as part of a broader capital reallocation strategy tied to the disposal of low-return and non-core assets. With no quick fix for earnings in sight as the steel industry slump drags on, analysts say the company is signaling its intent to proactively improve its capital structure and lift shareholder value first.

From 2024 through last year, POSCO Holdings divested 73 low-return businesses and non-core assets, securing KRW 1.8 trillion in cash. The company plans to raise a total of approximately KRW 2.8 trillion through the additional sale of around 50 assets by 2028, deploying the proceeds into growth business reinvestment and shareholder returns.

This strategy is reflected in the company's 2024 financials. During that year, POSCO Holdings spent KRW 92.3 billion on new treasury share purchases and KRW 754.5 billion on cancellations, removing more than KRW 750 billion worth of shares from the market on an annual basis.

At the group level, POSCO Holdings has also been rebalancing its secondary battery materials and battery investment portfolio — withdrawing from a planned nickel joint venture for EV batteries and initiating the liquidation of related subsidiaries.

With a clear commitment to improving capital efficiency and concentrating resources on core businesses such as steel and secondary battery materials, the share cancellations are seen as part of a process of simplifying the capital structure alongside a strategy of focus and selectivity.

Kim Seung-jun, Head of POSCO Holdings' Finance & IR Division, said during the company's 2025 annual earnings conference call: "In 2026, we expect earnings growth driven by the commencement of commercial production at our resource-based lithium business and the tangible effects of our restructuring efforts. This year could prove to be a meaningful inflection point, breaking away from the downward trend of recent years."

Preemptive Response to Commercial Act Amendment — "Value-Up Groundwork Is Laid; What's Left Is Earnings"

POSCO Holdings' latest moves have drawn market attention not only as a straightforward share cancellation but also as having wrapped up a key agenda item ahead of regulatory changes — namely, the passage of the third amendment to the Commercial Act.

With the amendment potentially making future capital restructuring procedures more complex, the completion of the three-year, 6% cancellation is seen as positioning the company one step removed from capital flexibility controversies.

This capital slimming serves as a mechanism to support the stock's downside by boosting EPS, while also underpinning investor confidence — reinforced by the company's maintenance of a base dividend of KRW 10,000 per share despite the steel industry headwinds.

Adding to this the plan to reinvest the approximately KRW 2.8 trillion secured from low-return asset disposals into core businesses, the company has sent the market a clear message: it intends to pursue growth and shareholder returns simultaneously.

However, the final piece of the puzzle needed for the stock to truly take flight is a recovery in core business profitability. Having built a solid foundation through three years of delivering on its promises, the extent of the leverage effect going forward will depend on how clearly the recovery of global steel markets and the earnings visibility of the secondary battery materials segment materialize.

"POSCO Holdings has laid the groundwork for the stock to rise with resilience through share cancellations and restructuring," said one securities industry official. "If a rebound in steel market conditions and growth in the secondary battery materials business are confirmed, the refined capital structure will serve as a powerful lever for further stock price gains."

Jeong Chaeyun (chaeyun@fntimes.com)