Samsung SDI Q2 Earnings Far Exceed Expectations

Securities Firms Q2 Earnings Outlook

Next-Generation Medium-to-Large Battery Sales Up
Growth Expected in Small Battery Sector Too

[Asia Economy Reporter Myunghwan Lee] Securities firms generally have an 'above expectations' outlook on Samsung SDI's second-quarter earnings this year. There is consensus that operating profit will surpass market forecasts, and some predict it will achieve the highest operating profit margin in the secondary battery sector. However, there are also projections that demand could be affected by the global economic downturn.

According to the securities industry on the 19th, all six securities firms that released earnings forecast reports for Samsung SDI since the end of last month expect the company to post operating profits exceeding market expectations for the second quarter. The average operating profit forecast for Samsung SDI's second quarter by these firms is 410.7 billion KRW, which surpasses the market consensus formed in the high 300 billion KRW range.

The reason behind the securities firms' consecutive positive earnings forecasts is Samsung SDI's next-generation large and medium-sized battery, 'Gen.5,' which began production last year. Sales are increasing centered on Gen.5, which has higher profitability than existing products, leading to improved profitability. Sungryul Kwon, a researcher at DB Financial Investment, explained, "The number of European automakers adopting Gen.5 is increasing, and Gen.5 batteries are scheduled to be supplied to new European customers in the fourth quarter. The proportion of Gen.5 within automotive batteries is expected to rise from 10% in the fourth quarter of last year to over 20% annually this year."

The small battery segment is also expected to continue its strong performance, supported by growth in the electric vehicle market. Jinsu Park, a researcher at Shin Young Securities, analyzed, "Growth in the small battery segment is expected due to price increases in the second quarter and an expanded share for electric vehicles (EVs). The fact that Samsung SDI was less affected by China's lockdown compared to competitors and that Rivian's second-quarter production volume, which uses Samsung SDI's cylindrical batteries, increased by 75% compared to the previous quarter, had a positive impact."

However, there is also a possibility that demand for secondary batteries could decline due to the global economic downturn. Korea Investment & Securities lowered Samsung SDI's target stock price by 10.5%, citing worsening business conditions caused by inflation. Chulhee Jo, a researcher at Korea Investment & Securities, explained the reason for the target price downgrade: "Due to inflation and economic slowdown, consumers' purchasing power has weakened, leading us to lower the compound annual growth rate of secondary battery demand from 47.4% to 44.6% for 2021?2025."

This content was produced with the assistance of AI translation services.