K Battery’s performance outlook for the third quarter is… LG Ensol·Samsung SDI ‘Sunny’ SK On ‘Cloudy’

(Seoul = Yonhap News) Reporter Lim Seong-ho = As the three domestic battery companies are about to announce their final earnings for the third quarter of this year, attention is being paid to whether performance improvement will continue due to increased orders for energy storage systems (ESS) and increased demand for electric vehicle batteries, mainly in Europe.

Among the three major domestic battery companies, there is an analysis that LG Energy Solutions and Samsung SDI may have recorded a surplus thanks to increased ESS production capacity and expansion of high-output battery sales. However, the securities market believes that SK On would not have been able to avoid a deficit.

According to the industry on the 19th, LG Energy Solution will announce its confirmed results on the 3rd of next month, and Samsung SDI and SK On will announce their confirmed results on the 29th.

Previously, LG Energy Solution announced provisional results of 9.6434 trillion won in sales and 756 billion won in operating profit for the third quarter. Compared to the same period last year, sales increased 59.0% and operating profit increased 25.7%, respectively, the highest quarterly records ever.

This operating profit included KRW 416.9 billion, which is the expected amount of Advanced Manufacturing Production Tax Credit (AMPC) under the U.S. Inflation Reduction Act (IRA) in the third quarter. However, even after excluding these one-time profits, it is evaluated that there was a clear increase in performance, recording 339.1 billion won, which is three times the operating profit of the second quarter last year (113.3 billion won).

Securities analysts predicted that LG Energy Solutions' performance will continue to grow steadily after the fourth quarter due to the full-scale production of ESS in North America, improvement in electric vehicle volume, and solid order flow.

As a result of Yonhap Infomax's compilation of the consensus (market forecast) of 11 securities companies that published reports within the past month, LG Energy Solution's fourth quarter sales were KRW 9.684 trillion (up 57.7%), and operating profit was KRW 572.1 billion, showing that it is expected to turn into a surplus compared to the same period last year when it had a deficit of KRW 122 billion.

There are predictions that Samsung SDI will also continue its profit streak. Samsung SDI succeeded in generating a profit of 203.8 billion won in the second quarter of this year for the first time in seven quarters.

Yonhap Infomax compiled the consensus of 10 securities companies that published reports within the past month and found that Samsung SDI is expected to record sales of KRW 4.0135 trillion (up 31.5%) and operating profit of KRW 237 billion, turning into a surplus compared to the same period last year (operating deficit of KRW 591.3 billion).

Samsung SDI was analyzed to have recorded good performance due to a full-scale expansion of domestic ESS supply and increased demand for power tools and AI data center battery backup units (BBU) in the round battery business.

This performance is also expected to reflect settlement profits estimated at around 100 billion won arising from Samsung SDI's acquisition of shares in Synergy Cells, a joint venture with General Motors (GM) of the United States. Synergy Cells is the first battery factory operated by Samsung SDI in North America.

There is an analysis in the securities market that SK On recorded a deficit in the late 100 billion won range in the third quarter. Meritz Securities predicted that SK On recorded a loss of 179.4 billion won (including AMPC 90 billion won) on sales of 1.5984 trillion won in the third quarter, which would have increased compared to the same period last year (sales of 1.8079 trillion won and deficit of 124.8 billion won).

SK On recorded a surprising operating profit of KRW 821.8 billion in the second quarter due to compensation from customers, AMPC, and expansion of sales in Asia. However, it is predicted that performance will decline in the third quarter as one-time profits disappear and demand for batteries for electric vehicles is sluggish.