LG Energy Solution, Samsung SDI end Q3 with record sales on strong EV battery demand

South Korea¡¯s battery majors LG Energy Solution and Samsung SDI ended the third quarter on record sales and were buoyant for the coming quarter as green migration won¡¯t likely be affected by economic uncertainties.

LG Energy Solution, global No. 2, revised up its sales estimate for fiscal 2022 to 25 trillion won ($17 billion) upon reporting record sales of 7.6 trillion won in the quarter ended in September on Wednesday.

Its operating income came to 521.9 billion won, up 166.8 percent from the previous quarter and in yawning contrast to the loss of 372.8 billion won posted a year earlier. The income is the best after 724.3 billion won generated in the second quarter of 2021 when extra one-off income from settling license-related issues was included.

For the full year, it anticipates operating income to exceed the 1 trillion won milestone as the cumulative number already came to 970 billion won as of September.

Revenue jumped 50.8 percent on quarter and 89.9 percent on year.

On Wednesday, LG Energy Solution shares closed 3.5 percent higher at 529,000 won.

Strong earnings owed to demand jump from electric vehicle makers in North America and Europe, said Lee Chang-sil, chief financial officer of LG Energy Solution during the earnings conference call. The energy storage system (ESS) business in North America is also doing well and the company has successfully responded market¡¯s demand for new IT systems, Lee added.

The company projected the EV battery market in North America to expand 33 percent on average every year through 2023, stronger than 26 percent in Europe and 17 percent in China on U.S. green initiative accelerated by the Inflation Reduction Act.

To actively respond to fast-growing market demand in North America, it plans to focus its business efforts on four areas – regional production capacity, client expansion, product portfolio, and the smart factory system. The company currently is building new EV battery plants in the U.S. together with General Motors and other global auto giants. It will be capable of producing 250-260 gigawatt-hour of EV battery cells in North America by 2025, which would be the largest in the world.

Samsung SDI on the same day reported record sales and operating income in the third quarter, placing the cumulative figure until September far above last year¡¯s annual figures.

Samsung SDI in a regulatory filing said its third-quarter operating income came to 565.9 billion won, up 31.9 percent on quarter and 51.5 percent on year.

Revenue totaled 5.4 trillion won, up 13.2 percent on quarter and 56.05 percent on year.

Net income jumped 55.97 percent on quarter and 51.8 percent on year to 638.3 billion won.

Samsung SDI shares added 3.4 percent to close Wednesday at 677,000 won.

By business, the energy division contributed 4.8 trillion won in sales, up 18.7 percent on quarter and 76.4 percent on year. Operating income was 484.8 billion won, up 98.0 percent on quarter and 140.2 percent on year. Operating margin recorded 10.0 percent.

The company said its medium and large-sized battery sales improved sharply compared to the previous quarter. Its sales of EV battery cells, especially high-value types, rose on growing market demand for premium electric cars.

The profitability of its ESS business improved after it was able to reflect rising raw material costs to its selling price. Its sales in Europe also rose.

Electronic materials sales and profit, in contrast, fell compared to previous periods, due to slow demand, especially for polarizing films from TV makers.

Sales declined 20.2 percent on quarter and 23.6 percent on year to 534.0 billion won. Operating income plunged 55.9 percent on quarter and 52.8 percent on year to 81.1 billion won.

However, the company is confident to keep up its strong earnings streak in the fourth quarter.

It expects stronger EV battery sales as automakers are launching new EV models fitted with Gen 5 battery cells. The company has been actively seeking to win orders for next-gen battery cells.

SK on, Korea's other major EV battery maker, is scheduled to release its third-quarter earnings result on Nov. 3.

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