S. Korea’s battery trio expected to post upbeat Q4 earnings on EV boom

[Photo by MK DB]

South Korea’s top three battery makers LG Energy Solution (LGES), Samsung SDI and SK on are expected to report upbeat earnings in the fourth quarter on solid global demand for electric vehicles (EV) despite the economic downturn.

According to securities firms’ consensus compiled by Seoul-based financial information provider Yonhap Infomax on Monday, Korea’s biggest battery maker LG Energy Solution is estimated to post an operating profit of 422.1 billion won ($330.12 million) in the fourth quarter, surging more than five times from a year ago, while its consolidated sales rose 82.5 percent to 8.10 trillion won over the same period. Compared with the third quarter, its operating profit is estimated to be down 19.1 percent, with sales up 5.9 percent.

The on-quarter loss in operating profit was mainly due to foreign exchange losses and one-off remuneration payments, said Jeong Won-seok, a researcher at HI Investment & Securities.

“Its battery shipments in the fourth quarter are estimated to go up by 5 percent on quarter, as the peak season for EV sale has entered,” added Jeong. “Its battery order backlog already exceeded 300 trillion won as of the end of this year,” indicating its growth potential despite lingering global economic uncertainties.

Runner-up Samsung SDI is projected to rake in 544.5 billion won in operating profit for the fourth quarter, more than doubled from a year ago, with sales estimated at 5.80 trillion won, up 52.2 percent, according to Yonhap Infomax.

The solid results were largely driven by brisk sales of its EV batteries and energy storage systems, said Park Kang-ho, a researcher at Daishin Securities. But demand for small batteries and polarizing films for smartphones weakened due to the global economic slowdown, he added.

SK on, a latecomer in the industry, is forecast to remain in the red in the fourth quarter but its operating loss is expected to narrow to 22 billion won from the previous quarter’s 135 billion won.

“It is expected to generate tangible results in quantitative growth on a gain in battery sales,” SK Securities forecast in a report, which also projected the company’s profitability would improve on a growth in mass-production at its global production bases in Hungary and North America, as well as a rise in battery selling prices and an improvement in production yields.

LG Energy Solution shares rose 0.22 percent to 456,500 won in morning trading Monday, while Samsung SDI shares were down 0.16 percent to 621,000 won.