Samsung SDI Q2 profit up 5 percent on solid demand of EVs

Samsung SDI logged 450.2 billion won ($352 million) in operating profit in the second quarter, up 5 percent on year, thanks to solid demand for mid to large batteries for premium electric vehicles.

A logo of Samsung SDI is seen at its booth during the InterBattery 2021, the country’s leading battery exhibition, at Coex in southern Seoul. [AP/YONHAP]

Samsung SDI logged 450.2 billion won ($352 million) in operating profit in the second quarter, up 5 percent on year, thanks to solid demand for mid to large batteries for premium electric vehicles.

The quarterly figure is a record-high figure for any second quarter in the company's history, although it fell slightly short of the market expectation of 459.6 billion won compiled by market tracker FnGuide.

Sales rose 23.2 percent to 5.84 trillion won, also an all-time high second-quarter figure, beating the consensus of 5.8 trillion won.

Net profit came in at 485.8 billion won during the same period, up 18.7 percent on year but missing the analyst expectation of 534 billion won.

"Sales and profits jumped with the boosted sales of premium vehicles with our mid to large batteries like Gen. 5," said Michael Son, senior vice president of the company during a conference call on Thursday.

"Sales also rose for batteries for energy storage systems for uninterruptible power supply."

Gen. 5 is Samsung SDI’s nickel-cobalt-aluminum (NCA) battery with 88 percent nickel content, with BMW as a main client.

But the electronics materials business saw a 66.3 percent decline in operating profit, with sales sliding 14.7 percent, due to the sluggish demand for electronics devices.

Samsung SDI predicted a rosy second half despite the lingering economic uncertainty, with its newly expanded Hungary plants.

Samsung SDI also said recently it will build its second U.S. battery plant with Stellantis, on top of its under-construction $2.5 billion plant in Kokomo, Indiana. With all the factories, Samsung SDI's production capacity get an around 100 gigawatt hours boost by 2027.

Samsung SDI's pilot plant for solid-state batteries in Suwon, Gyeonggi, also started operating trial products.

"We are in negotiations with multiple automakers [for the solid-state batteries] with a goal of starting mass production in 2027, though we can't name them as of now," Son said.

Son also said the company is developing lithium iron phosphate, or LFP, batteries to pursue low-cost and safety. LFP batteries are increasingly favored by global automakers with their fewer risks and low cost, but around 95 percent of the market is controlled by Chinese manufacturers including CATL.

"Development of LFP batteries does not mean ditching our 'premium strategies,'" Son said. "We'd like to diversify our product portfolio from entry products to high-end products."

Samsung SDI closed at 662,000 wo Thursday, down 5.8 percent from the previous trading day.

BY SARAH CHEA, SHIN HA-NEE [chea.sarah@joogang.co.kr]