Korean battery makers enjoy rapid growth in sales

By Park Jae-hyuk

Korea's top three battery makers achieved successful second-quarter revenue results, thanks to solid growth in sales of electric vehicles in the North American market, their regulatory filings showed Friday.

The three companies also remain confident that they will be able to continue posting satisfactory earnings during the latter half of this year, by expanding their global supply chains and accelerating their efforts to develop next-generation technologies.

SK Innovation said Friday that its battery manufacturing unit, SK On, posted 3.7 trillion won ($2.9 billion) in second-quarter sales, up 187 percent year-on-year.

Although SK On failed once again in making an operating profit, the company reduced its operating loss to 131.5 billion won from the previous quarter's 344.7 billion won. It also posted 72.5 billion won in earnings before interest, tax, depreciation and amortization (EBITDA).

“The earnings improvement during the first half of this year can be attributed to 167 billion won worth of advanced manufacturing production credit (AMPC) in accordance with the U.S. Inflation Reduction Act (IRA),” SK Innovation Chief Financial Officer (CFO) Kim Yang-seob said.

SK Innovation also said SK On's annual revenue will be double the revenue of last year, leading to a larger benefit from the U.S. law during the second half.

Securities analysts expect SK Innovation to see an operating profit from its battery business, starting in the fourth quarter.

“SK Innovation's second-half operating profit from its battery business is expected to be 203.2 billion won,” Shinhan Securities analyst Lee Jin-myung said.

LG Energy Solution (LGES) and Samsung SDI, both of which announced their second-quarter earnings on Thursday, also showed rapid growth in their revenues.

LGES posted 8.77 trillion won in sales, up 73 percent from the previous year. As a result, its revenue went up for the sixth straight quarter. Its operating profit rose 135.5 percent year-on-year to 460.6 billion won, as the company took into account 110.9 billion won worth of AMPC according to the IRA.

“Due to the high inventory levels, our major European clients are expected to postpone their purchase to the fourth quarter,” LGES CFO Lee Chang-sil said. “Our third-quarter revenue will therefore go down slightly, but the demand from our U.S. clients remains strong, so we will be able to see a recovery in sales during the fourth quarter.”

Samsung SDI's second-quarter revenue from its battery business rose 29 percent year-on-year to 5.27 trillion won. Its operating profit from the business went up 59 percent to 388.1 billion won during the same period.

The company saw growth in its operating profit, even without benefits from AMPC.

“After beginning the production of the all-solid-state battery's prototype in June, we will start producing the battery's samples for our customers from the second half,” Samsung SDI Executive Vice President Michael Son said. “With a plan to start mass production in 2027, we are in talks with multiple carmakers.”