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Samsung SDI expecting growth in battery biz in 2021
By Kim Bo-eun
By Kim Bo-eun
Samsung SDI said Thursday it expects to see profits in its automotive battery business this year based on the expansion of the market.
The company had initially expected the business would reach the break-even point in the fourth quarter of last year.
"We were not able to meet that target due to quality cost-related provisioning. Without provisioning, our EV battery business showed significant profitability improvement," Senior Vice President Son Michel said in a conference call upon announcing the company's fourth-quarter earnings. "We expect revenue to grow on a year-on-year basis, and in the first quarter, battery profitability will be close to the break-even point," he said, adding that the first quarter is usually a seasonally weak quarter.
Samsung SDI's new Gen. 5 battery, which will start being supplied in the second half of this year, is expected to drive the company's earnings in the automotive battery division.
"We are on schedule with product testing and preparations for mass production," Son said.
Given the fact that the Gen. 5 delivers high energy density and is expected to require 20 percent less material costs compared to previous products, it is expected to boost profitability.
"As the Gen. 5 accounts for larger volume and is adopted in more projects, we expect a positive contribution to profitability," the executive said.
The company said it plans to expand production capacity, given projections of strong growth in the market for automotive batteries this year, as many countries introduce stronger environmental requirements and automotive original equipment manufacturers (OEM) push forward with major EV projects.
"This year we are expecting to increase our capacity similar to what we added last year,” the executive said. "Given that the projects of European customers account for a large share of our volume, our Hungarian plant will remain at the center of production for the time being. We will look into new production sites for the medium to long term.”
Samsung's battery affiliate posted 11.29 trillion won in sales in 2020, an 11.9 percent increase from the previous year. Sales for the fourth quarter came to 3.25 trillion won, a 15.3 percent jump compared to the same period in 2019.
Its operating profit for last year came to 671.3 billion won, up 45.2 percent from 462.2 billion won in 2019. The company posted an operating profit of 246.2 billion won in the fourth quarter of last year, which was a 1,124.9 percent expansion from the same quarter in 2019.
Samsung SDI said sales of car batteries saw notable growth due to environmental policy initiatives, including an increase in electric vehicle subsidies in Europe that went into effect in the latter half of last year. Earnings from energy storage systems (ESS) grew due to large-scale projects in the U.S., the company said.