Battery 3 Companies on Track with Performance Amid the War of Money

Battery Top 3 Achieve Strong Q2 Results
LG Energy Solution Forecasts Over 200% Operating Profit Growth
Samsung SDI 'Steady' · SK On 'Expecting Turnaround'

The three major domestic battery companies are expected to continue both quantitative and qualitative growth in the second quarter of this year. Having successfully raised funds amounting to trillions of won, the construction of overseas factories is progressing smoothly, while they continue to either turn a profit or expand their profitability.

The second-quarter performance of the three battery companies this year is expected to be as follows: LG Energy Solution with sales of 8.7643 trillion won and operating profit of 694.7 billion won; Samsung SDI with sales of 5.7489 trillion won and operating profit of 458.7 billion won; and SK On with sales of 3.6029 trillion won and operating profit of 7 billion won (turning to profit). (Based on FnGuide consensus and Hanwha Investment & Securities estimates)

The performance of the three battery companies is gaining momentum as results from their entry into the North American market emerge and the effects of the U.S. Inflation Reduction Act (IRA) tax credits are fully reflected. Looking at each company, LG Energy Solution’s performance forecast shows a 72.8% increase in sales and a 255.1% increase in operating profit compared to the same period last year. Sales of batteries for electric vehicles continue to rise, and the Advanced Manufacturing Production Tax Credit (AMPC), which provides subsidies directly to companies, is boosting profitability. In the first quarter, AMPC contributed approximately 100.3 billion won to operating profit, and in the second quarter, an AMPC benefit of 150.5 billion won is expected to be reflected. LG Energy Solution will announce its preliminary results on the afternoon of the 7th.

Samsung SDI is expected to see sales and operating profit increase by 21.2% and 6.9%, respectively, compared to the second quarter of last year. Samsung SDI does not receive AMPC benefits as it does not have a battery production plant operating in North America, but it is recording sales focused on high value-added products. SK On is on the verge of turning a profit for the first time since its establishment. Hanwha Investment & Securities forecasts SK On’s second-quarter results to be sales of 3.6029 trillion won and operating profit of 7 billion won. If AMPC is reflected in the results, the amount for the first quarter will also be applied retroactively. The expected AMPC amount for the second quarter is around 220 billion won. However, if the application of AMPC is delayed, the timing of turning a profit could also be postponed to the second half of this year.

The strong performance of the three battery companies is expected to help reduce financial burdens as they complete large-scale fundraising for overseas factory construction.

LG Energy Solution has successfully raised 1 trillion won through its first-ever corporate bond issuance since its establishment. Of the 1 trillion won secured this time, 100 billion won will be used as operating funds for purchasing raw materials such as cathode materials, and 900 billion won will be used as investment funds for joint ventures (JV). Previously, LG Energy Solution announced the establishment of North American joint ventures with automakers Stellantis, Honda, and Hyundai Motor Group, and has begun factory construction.

SK On has successfully raised up to 8.17 trillion won from the end of last year to the present. This includes 2 trillion won in loans from Hyundai Motor and Kia, 2 trillion won from its parent company SK Innovation, and 1.2 trillion won from the Korea Investment PE East Bridge Consortium. SK On plans to accelerate efforts to expand its annual production capacity to at least 220 GWh by 2025, using new investments as a stepping stone. SK On is pursuing expansion of its own factories in China and Hungary, as well as establishing battery joint ventures with automakers such as Ford and Hyundai Motor Group.

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