POSCO Holdings unveils aggressive value-up plan, hike in cash dividends

South Korea’s steel-to-battery materials conglomerate POSCO Group on Monday unveiled a spate of corporate value-up measures, including a higher shareholder return ratio, a more frequent dividend payout and a share buyback and cancellation.

POSCO Holdings Inc. said in a regulatory filing It plans to achieve a revenue growth rate of 6-8% and a return on invested capital (ROIC) of 6-9% over the next three years through ongoing investments in the steel and secondary battery materials sectors.

ROIC is a financial metric used to determine how well a company allocates its capital to profitable projects or investments.

The holding company said it will retire 6% of its treasury shares over the next three years, starting this year, and pay a total cash dividend of 2.3 trillion won ($1.6 billion) over three years to enhance shareholder value.

POSCO said the move is part of its mid-term value-up program.

To achieve a group revenue growth target of 6-8%, the company said it will increase investments and apply advanced technology to its steel and battery materials businesses.

POSCO Future M Co. is in charge of the group’s battery materials business.

The group’s portfolio will be restructured around its core businesses — steel and secondary battery materials — while exploring opportunities in new growth sectors under the “2Core+New Engine” strategy.

“We plan to apply the ROIC indicator, which evaluates both profitability and capital investment for each business unit, not only to our structural reorganization but also to future business management,” said a company official.

TO BOLSTER SHAREHOLDER RETURN POLICY

POSCO Holdings said it also plans to sharply raise its shareholder return rates to boost shareholder value.

In line with its mid-term share cancellation plan announced in July, POSCO Holdings will cancel 6% of the treasury shares it already owns over the next three years, starting this year.

For cash dividends, the company will spend 50-60% of its free cash flow to pay a basic dividend of 10,000 won per share, plus additional dividends if funds remain after the initial payout.

The company intends to maintain a dividend policy of paying out a minimum of 2.3 trillion won.

So far this year, POSCO Holdings retired 2% of the treasury shares it held and repurchased 100 billion won worth of shares and canceled them.

It paid 7,500 won in cash dividends per share for the first nine months of this year.

STRENGTHENED ESG STANDARDS

The company said it is strengthening its environment, society and governance (ESG) standards across its affiliates by improving the outside director appointment process and managing ESG risks groupwide.

POSCO International Corp., the group’s trade and energy subsidiary, said it will increase its total shareholder return (TSR) rate to 50% next year, or double its TSR target of 25% set earlier this year.

TSR is a measure of financial performance, indicating the total amount an investor reaps from an investment — specifically, equities or shares of stock.

It is calculated by combining the amount spent on dividends and share buybacks and cancellations and dividing by net income. TSR is a critical metric for stock investors.

The company said it will also introduce a mid-year interim dividend system to increase the frequency of dividend payouts.

It said it aims to achieve an annual pre-tax profit growth rate of 8% and an ROIC rate of more than 8%.

POSCO International said it also seeks to aggressively enlarge its presence in the energy and food sectors through cooperation with its group affiliates.

Write to In-Soo Nam at [email protected]
Joel Levin edited this article.