'All-Time Quarterly Sales' Samsung SDI, Earnings Momentum from Car Battery Profit Turnaround (Comprehensive)

[Asia Economy Reporter Suyeon Woo] Samsung SDI, which achieved the highest quarterly sales ever in the second quarter of this year, is gaining momentum in improving its performance thanks to the electric vehicle (EV) battery business turning profitable. With growing expectations for sales growth in the EV battery sector ahead of the mass production of the new Gen5 battery, the company is expected to increase new orders in the second half of the year to diversify its customer base.

On the 27th, during the Q2 earnings conference call, Samsung SDI stated, "The automotive battery business recorded a profit in the second quarter, and although the amount is small, it also achieved a cumulative profit in the first half of the year," adding, "In the second half, as the proportion of projects with Gen3 or higher, which have better profitability, increases, improvements in profitability are expected."

Concerns about the semiconductor supply shortage in the automotive industry, which have persisted recently, are expected to have a limited impact on Samsung SDI’s EV battery business performance. Kim Jong-sung, Vice President of Samsung SDI’s Management Support Office, said, "The semiconductor shortage is expected to ease somewhat from the second half of the year, and due to OEMs’ policy to prioritize EV production to meet CO2 regulations, the impact on (EV battery) performance will be limited."

In the second half of the year, mass production of the new Gen5 battery will be in full swing, and with supply to customers such as BMW starting, sales in the automotive battery sector are expected to grow further. Entry into the U.S. market through joint ventures with automakers is also an area to watch, considering competitors’ moves. Son Mikael, Executive Director in charge of Strategy and Marketing for Medium and Large Batteries, said, "With the enforcement of USMCA, local production of key EV components will be inevitable from 2025," adding, "We will proceed with plans to enter the U.S. market without delay."

Samsung SDI Electric Vehicle Battery / Photo by Samsung SDI

Additionally, Samsung SDI has set a strategy to find new growth engines in the electronic materials and ESS (Energy Storage System) businesses. The company is developing new QD display inks and OLED polarizing films with a goal to enter the market within a year, while commercialization of semiconductor photoresists is expected to take more time. In the second half, semiconductor materials sales are expected to grow due to customer expansion and increased wafer input, and OLED materials sales are also anticipated to increase with the adoption of OLED panels in new smartphones.

The ESS market is projected to grow at an average annual rate of over 25% until 2026, and Samsung SDI plans to expand sales in Europe and Asia by launching new products with enhanced cost competitiveness. In the small battery sector, sales growth is expected to continue with the full-scale sales of cylindrical batteries for EVs and key applications such as power tools, vacuum cleaners, and electric bicycles. Sales of pouch-type batteries are also expected to increase with the launch of new smartphones.

Meanwhile, Samsung SDI announced that its sales for the second quarter of this year reached KRW 3.3343 trillion, and operating profit was KRW 295.2 billion, up 30.3% and 184.4% respectively from the previous year. This marks the highest quarterly sales ever, and the EV battery business turned profitable. The profitability turnaround in this sector comes after a year and a half since Q4 2019.