Samsung SDI booth at the DIFA 2024 (Courtesy of Samsung SDI)
Samsung SDI Co., the world’s sixth-largest battery producer, continued grappling with dwindling battery demand from the electric vehicle industry, reporting disappointing earnings in the third quarter without signs of any imminent recovery in EV battery demand.
The company, also South Korea’s third-largest battery maker, announced in a regulatory filing on Wednesday that it earned 129.9 billion won ($94 million) in consolidated operating profit in the July-September period, down 72.1% from the same period last year.
The profit includes 10.3 billion won worth of tax benefits from the US Advanced Manufacturing Production Credit (AMPC) program, according to the company.
Sales also lost 29.8% over the same period to 3.9 trillion won, and net profit plummeted 63% to 230.4 billion won.
EV battery demand remained weak in the cited quarter amid the protracted slowdown in the global EV market, eating away at the company’s overall profit, Samsung SDI said.
The Korean battery maker said it will find breakthroughs with battery joint ventures in the US that could increase AMPC tax benefits and energy storage systems (ESS) whose demand remains firm.
EV CHASM CONTINUES TAKING A TOLL
Samsung SDI’s battery unit reported 63.5 billion won in operating profit in the third quarter, 85% lower than a year ago, on sales of 3.7 trillion won, down 31%.
Samsung SDI displays PRiMX battery lineup at its booth at DIFA 2024 (Courtesy of Samsung SDI)
Its prismatic battery cell business saw a deterioration in profitability due to the protracted slump in EV demand in Europe but its sales increased thanks to a rise in shipments of the prismatic battery P6 (sixth edition) in the US, said the company.
Cylindrical cell sales decreased on a fall in its production amid the EV slump, but pouch cells sold well on the launch of new smartphone models.
Its ESS business saw an improvement in revenue and profit following the launch of the Samsung Battery Box (SBB) 1.5, an upgraded version of its predecessor, which debuted in Munich last year.
The company’s electronic materials unit reported 66.4 billion won in operating profit in the quarter, up 24% year over year. Its revenue also inched up 0.2% mainly driven by brisk sales of its high-value-added organic light-emitting diode (OLED) materials, explained the company.
MORE AMPC TAX BENEFITS NEXT YEAR
Samsung SDI pins high hopes on JVs to overcome the EV chasm.
In August, the company announced a plan to build a $3.5 billion battery cell plant with General Motors Co. in the US, the world’s third-largest EV market.
The JV will mainly produce premium prismatic battery cells once the plant is up and running.
SBB 1.5 on dislay (Courtesy of Samsung SDI)
The Korean battery maker is also set to start mass production of battery cells from its JV with Stellantis NV, called Starplus Energy (SPE), in Kokomo, Indiana in December.
The company expects bigger tax benefits from the AMPC program next year when Stellantis is expected to roll out a slew of new EV models.
It is also considering setting up battery cell additional JVs with other carmakers in the US or independent plants, the company said.
To expand demand for its ESS, Samsung SDI is building a mother line to develop and produce lithium iron phosphate (LFP) batteries for ESS. The LFP plant in Ulsan, Korea, is expected to start commercial production in 2026.
It eyes the US as the next production site for LFP batteries for ESS, Michael Son, vice president of Samsung SDI, said during the company’s third-quarter earnings call on Wednesday.
The Korean battery maker is also in talks with its key customers to supply 46-phi cylindrical batteries, the company said.
It plans to roll out its 46-phi cylindrical batteries for micro-mobility applications early next year, a year ahead of its initial plan, the company said last month.
Samsung SDI shares fell 1.5% to end at 339,000 won on Wednesday.
By Hyung-Kyu Kim
khk@hankyung.com
Sookyung Seo edited this article.
