Samsung SDI's profits soaring on ESS, EV parts

By Jun Ji-hye

Samsung SDI enjoyed a soaring operating profit in the second quarter thanks to skyrocketing sales of energy storage system (ESS) battery modules in addition to increased sales of batteries for plug-in hybrid electronic vehicles (PHEV).

The company's increase in earnings was also attributed to a diversification of customers for display material and growing demand for semiconductor material amid the booming memory chip market.

In the small-sized batteries unit, sales of cylindrical cells have continued to grow, expanding the non-IT market based on high-power and high-value batteries for power tools.

In its earnings report, the nation's leading battery maker posted 2.25 trillion won ($2 billion) in sales and 152.8 billion won in operating profit.

Sales and operating profit increased by 17.8 percent and 112.2 percent from the previous quarter, respectively.

The firm's battery unit posted 1.7 trillion won in sales, a 21.9 percent surge from the previous quarter, while its electronic materials division posted 518.8 billion won in sales, up 5.9 percent.

The firm's operating profit surged 2,696 percent from a year ago when it posted 5.5 billion won. The company turned to profit that year after running deficits for six consecutive quarters. Since then, it has continued to see sales and profits grow for five consecutive quarters.

The firm's deficits were due to the explosion issue of batteries for the Galaxy Note 7 as well as heavy investment in its battery business.

The company said its performance in each division is expected to continue to improve in the latter half of the year.

“We expect overseas demand for ESS to grow and sales of batteries for electric vehicles to increase,” said a Samsung SDI official.

The market for products such as power tools and electric bicycles is expected to consistently expand, which will lead to continuous growth for the small-sized battery unit, the company noted.

“Demand for polymer batteries is also expected to grow as our major customers plan to release flagship phones,” the official said.

Amid the expansion of the display market based on large-scale LCDs and mobile OLEDs, the electronic materials unit is anticipated to show consistent growth, the firm said, adding that demand for semiconductors is also forecast to increase on the back of customer expansion and the trend of semiconductor scaling.