The financial performance of South Korea's three major battery companies, which recorded profits in the second quarter, is expected to diverge again due to factors such as customer compensation. LG Energy Solution has reported results that significantly exceed market expectations, while Samsung SDI is also anticipated to continue its profit trend. In contrast, SK On is projected to return to a loss.
According to industry sources, LG Energy Solution announced on October 8 that its consolidated revenue for the third quarter reached 9.6434 trillion won, with an operating profit of 756 billion won. This represents a 59% increase in revenue and a 25.7% rise in operating profit compared to the same period last year. Notably, the operating profit surpassed the securities market's forecast of around 300 billion won by more than double.
Industry analysts believe that one-time gains from compensation received from automotive customers significantly contributed to the strong performance. While the exact amount of compensation has not been disclosed, estimates suggest it could be as high as 300 billion won.
Excluding the Advanced Manufacturing Production Credit (AMPC) of 416.9 billion won under the U.S. Inflation Reduction Act, the operating profit stands at 339.1 billion won. However, this figure is also believed to include customer compensation, making it difficult to ascertain the actual improvement in core profitability.
Previously, SK On also experienced a substantial performance improvement in the second quarter due to customer compensation. The company reported revenue of 2.946 trillion won and an operating profit of 821.8 billion won, marking its return to profitability after seven quarters. The compensation received from customers played a significant role in this improvement.
However, SK On is expected to return to a loss in the third quarter. According to FnGuide, SK On's third-quarter revenue is estimated at 1.764 trillion won, with an operating loss of 221 billion won.
Samsung SDI is expected to maintain its profitability in the third quarter. FnGuide projects Samsung SDI's revenue at 4 trillion won and operating profit at 257.5 billion won. Following an operating profit of 203.8 billion won in the second quarter, which marked its return to profitability after seven quarters, the company is expected to sustain its earnings.
Samsung SDI is also anticipated to benefit from one-time gains. DS Investment & Securities estimates that a settlement profit of approximately 150 billion won from the acquisition of shares in the joint venture with GM, Synergy Cells, will be reflected in the third-quarter results. However, it is also expected that profitability will improve even when excluding one-time gains, due to increased domestic ESS supply and rising sales of high-output small batteries.
As such, the financial performance of South Korea's three major battery companies is showing significant volatility from quarter to quarter, influenced by customer compensation and U.S. production tax credits. Amid the ongoing electric vehicle chasm, changes in production plans by automakers are directly impacting the profitability of battery manufacturers.
An industry insider stated, "As the electric vehicle chasm continues, the future performance of the three battery companies will depend on the improvement of core profitability, excluding one-time gains. Securing a stable profit structure is a key challenge."
* This article has been translated by AI.
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