[Bojo, Battery] Despite Electric Vehicle Demand Slowdown, Three Cathode Material Companies Perform Well

Increased Sales of High-Performance Electric Vehicles
Upstream Industries Expected to Remain Sluggish

In March, visitors at 'InterBattery 2024' held at COEX in Gangnam-gu, Seoul, are observing cathode materials, a key substance in electric vehicle components. Photo by Jinhyung Kang aymsdream@

The three battery cathode material companies, which were hit by the electric vehicle chasm (temporary stagnation in a growth industry), succeeded in defending their performance in the first quarter of this year.

EcoPro BM, the largest domestic cathode material company, announced on the 3rd that it recorded sales of 970.5 billion KRW and an operating profit of 6.7 billion KRW in the first quarter. Although sales and operating profit decreased by 52% and 94% respectively compared to the same period last year, operating profit turned positive compared to the previous quarter (Q4 of last year) due to the reversal of asset impairment reserves. The reversal of asset impairment reserves refers to the effect of recovering reserves set aside for potential valuation losses due to rising product prices. The first quarter performance is evaluated as a 'solid defense' in that it avoided the deficit expected by the securities industry and others.

LG Chem's Advanced Materials Division recorded sales of 1.5834 trillion KRW and an operating profit of 142.1 billion KRW. Battery materials shipments increased significantly due to the base effect from the previous quarter.

Another cathode material company, POSCO Future M, recorded consolidated sales of 1.1384 trillion KRW and an operating profit of 37.9 billion KRW during the same period. Compared to the same period last year, sales increased by 0.3% and operating profit by 87%. Despite the overall product price decline due to stagnation in demand for secondary batteries and other sectors, the company succeeded in turning a profit through production stabilization and increased supply. In particular, although the selling price of cathode materials fell compared to the previous quarter, sales volume increased along with improved yield of single-crystal cathode materials for high-performance electric vehicles.

However, these companies plan to review their business strategies as they expect the downturn in front-end industries such as secondary batteries to continue for a considerable period. EcoPro recently formed a cost innovation task force (TF) and is pursuing a plan to reduce costs by 30% within the next two years. An EcoPro official said, "Assuming the market downturn will continue for the time being, we are reviewing overall business strategies including products and customers to turn the crisis into an opportunity," adding, "Having secured sufficient funds through the listing of Materials and bond issuance, we plan to invest these in preparing future growth engines."