SK Innovation expecting over W3 trillion in battery sales this year

By Kim Bo-eun

SK Innovation said Thursday it expects sales generated from electric vehicle (EV) batteries to exceed 3 trillion won this year, doubling the figure for 2020.

Sales generated by the SK affiliate's battery business came to 526.3 billion won in the first three months of the year, up 80 percent year-on-year. The battery business saw an operating loss of 176.7 billion won. SK Innovation is expecting its operating loss to shrink by 30 percent this year.

"Costs incurred in the early stages of a factory set-up including such costs generated at our Yancheng plant that went into operation in the first quarter and costs that arose from plants that will go into operation next year expanded the scale of losses," the company's head of battery business Yoon Hyung-jo said in a conference call on first-quarter earnings. He confirmed the battery maker's goal to reach the break-even point in 2022.

The company is expecting battery sales to surge as production capacity continues to grow. SK Innovation's Chinese factories in Yancheng and Huizhou went into operation in the first quarter of this year and the company is constructing two plants in the U.S. state of Georgia and in Hungary.

The SK unit stated it will make aggressive investments to achieve its goal of 85 gigawatt-hours of annual production capacity by 2023 and 125 gigawatt-hours of production capacity by 2025.

Orders on hand ― referring to secured orders that have not been executed ― amounted to 80 trillion won. "We will see additional orders with global carmakers in the near future," Yoon said.

SK Innovation said the rise in raw material prices will have a limited impact on its battery business, based on medium- to long-term contracts that have been secured with material vendors.

Meanwhile, the company is projecting its battery material-making subsidiary SKIET will see sales of separators used in batteries grow by more than 50 percent this year from 2020. This is based on a boost in production capacity, as the company's Beijing plant is currently operating at 80 percent of full capacity and is set to reach full capacity in the latter half of this year.

SK Innovation's sales for the first quarter came to 9.24 trillion won, down 16.36 percent from 11.05 trillion won in the same period last year. It posted an operating profit of 502.5 billion won, up from an operating loss of 1.82 trillion won in the first quarter of 2020. Earnings were backed by the strong performance of its petrochemical business, the company said.

SK Innovation logged a net loss in the first quarter of this year, as settlement costs for a battery suit with LG Energy Solution were reflected.