Korea's battery trio would likely deliver better-than-expected Q3 earnings

[Graphics by Song Ji-yoon]

South Korea’s major battery makers, including LG Energy Solution, Samsung SDI, and SK on, would have done sharply better than the previous quarter in the third quarter despite signs of slowing in the global economy, on the back of strong demand in North America.

According to consensus on brokerage firms compiled by Yonhap Infomax, LG Energy Solution is estimated to report consolidated operating profit of 382 billion won ($266 million) in July-September period on revenue of 6.15 trillion won, up 52.73 percent from a year ago.

The company incurred an operating loss of 372.8 billion won due to its defective battery recalls in the third quarter of last year.

Compared with the previous quarter, its operating profit would have risen 95.3 percent and sales up 21.31 percent.

“LG Energy Solution will likely report stronger-than-expected results due to positive effects from produce price hikes and increased shipments to Tesla,” said Joo Min-woo, a researcher at NH Investment & Securities.

Samsun SDI is projected to deliver 471.6 billion won in operating profit on sales of 5.23 trillion won, which could be its quarterly best, in the third quarter.

The market consensus projects the firm will post a 26.27-percent rise in operating profit from a year ago and sales gain of 52.07 percent.

“Its EV battery business will likely report a growth of around 15 percent. Its operating margin in midsized and large batteries would have risen to 6 percent for the first time due to rising demand, the weakening Korean currency, and battery price hikes, “said Jang Jeong-hoon, a researcher at Samsung Securities.

SK on, a latecomer in the industry, is likely to report a deficit in the third quarter. The unlisted battery maker however would report smaller loss.

Its operating loss is projected to have shrunken to 33.9 billion won from 326.6 billion won in the second quarter. “Given the improving margins in pouch battery cells and increasing shipments from its plant in Georgia, U.S., SK on could deliver its first profit in the fourth quarter,” said Hwang Kyu-won, a researcher at Yuanta Securities

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