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POSCO Holdings (POSCO Holdings) ROIC %

: 2.19% (As of Dec. 2023)
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ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. POSCO Holdings's annualized return on invested capital (ROIC %) for the quarter that ended in Dec. 2023 was 2.19%.

As of today (2024-04-19), POSCO Holdings's WACC % is 11.78%. POSCO Holdings's ROIC % is 3.41% (calculated using TTM income statement data). POSCO Holdings earns returns that do not match up to its cost of capital. It will destroy value as it grows.


POSCO Holdings ROIC % Historical Data

The historical data trend for POSCO Holdings's ROIC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Array ( [0] => - [1] => - [2] => - [3] => - [4] => - [5] => 4.26 [6] => 3.87 [7] => 11.56 [8] => 6.22 [9] => 3.39 )
POSCO Holdings Annual Data
Trend Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
ROIC %
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 4.26 3.87 11.56 6.22 3.39

POSCO Holdings Quarterly Data
Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23
ROIC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -0.93 3.48 5.50 4.22 2.19

Competitive Comparison

For the Steel subindustry, POSCO Holdings's ROIC %, along with its competitors' market caps and ROIC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


POSCO Holdings ROIC % Distribution

For the Steel industry and Basic Materials sector, POSCO Holdings's ROIC % distribution charts can be found below:

* The bar in red indicates where POSCO Holdings's ROIC % falls into.



POSCO Holdings ROIC % Calculation

POSCO Holdings's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2023 is calculated as:

ROIC % (A: Dec. 2023 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (A: Dec. 2022 ) + Invested Capital (A: Dec. 2023 ))/ count )
=2693.693 * ( 1 - 29.95% )/( (54436.575 + 56755.798)/ 2 )
=1886.9319465/55596.1865
=3.39 %

where

Invested Capital(A: Dec. 2022 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash, Cash Equivalents, Marketable Securities - max(0, Total Current Liabilities - Total Current Assets+Cash, Cash Equivalents, Marketable Securities))
=76549.621 - 7626.501 - ( 14486.545 - max(0, 18116.402 - 37294.701+14486.545))
=54436.575

Invested Capital(A: Dec. 2023 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash, Cash Equivalents, Marketable Securities - max(0, Total Current Liabilities - Total Current Assets+Cash, Cash Equivalents, Marketable Securities))
=77388.7 - 6776.63 - ( 13856.272 - max(0, 16759.897 - 35428.161+13856.272))
=56755.798

POSCO Holdings's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Dec. 2023 is calculated as:

ROIC % (Q: Dec. 2023 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (Q: Sep. 2023 ) + Invested Capital (Q: Dec. 2023 ))/ count )
=870.1 * ( 1 - -41.3% )/( (55732.676 + 56755.798)/ 2 )
=1229.4513/56244.237
=2.19 %

where

Invested Capital(Q: Sep. 2023 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash, Cash Equivalents, Marketable Securities - max(0, Total Current Liabilities - Total Current Assets+Cash, Cash Equivalents, Marketable Securities))
=77176.151 - 6630.634 - ( 14812.841 - max(0, 16534.107 - 36432.084+14812.841))
=55732.676

Invested Capital(Q: Dec. 2023 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash, Cash Equivalents, Marketable Securities - max(0, Total Current Liabilities - Total Current Assets+Cash, Cash Equivalents, Marketable Securities))
=77388.7 - 6776.63 - ( 13856.272 - max(0, 16759.897 - 35428.161+13856.272))
=56755.798

Note: The Operating Income data used here is four times the quarterly (Dec. 2023) data.

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


POSCO Holdings  (NYSE:PKX) ROIC % Explanation

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.

There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.

Why is ROIC % important?

Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, POSCO Holdings's WACC % is 11.78%. POSCO Holdings's ROIC % is 3.41% (calculated using TTM income statement data).


Be Aware

Like ROE % and ROA %, ROIC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.


POSCO Holdings ROIC % Related Terms

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POSCO Holdings (POSCO Holdings) Business Description

Address
POSCO Center, 440 Teheran-ro, Gangnam-gu, Seoul, KOR, 06194
POSCO Holdings Inc is a holding company and operates through its subsidiaries. The company's operating segments are 1) Steel Segment includes the production and sale of steel products. 2) Green Infrastructure Business includes the provision of infrastructure and related services. The segment is divided into three operations, Trading Segment consists trading and natural resources development activities. Construction Segment consists planning, designing and construction of industrial plants, civil engineering projects and buildings. The energy and Other Segment consists power generation and information technology and operational technology services. 3) Green Materials and Energy Segment include manufacturing and sale of energy-related and other industrial materials, 4) Others Segment.