"Deep Seek Syndrome Taught a Lesson in Price Disruption"
"We Will Dominate the Market by Drastically Lowering Prices"
EcoPro recorded an operating loss exceeding 300 billion KRW last year due to a recession caused by the electric vehicle chasm (Chasm·temporary demand stagnation) and other factors. The company plans to focus all efforts on turning a profit this year, expecting increased sales from the recovery of upstream industries and securing new European customers through the Hungary plant scheduled for completion this year.
On the 11th, EcoPro announced that its consolidated sales last year amounted to 3.1103 trillion KRW, down 57% from the previous year. Operating loss turned to 314.5 billion KRW.
In the fourth quarter of last year, sales increased by 6.2% quarter-on-quarter to 631.3 billion KRW due to increased external sales in the battery materials business and strong performance in the environmental business, but operating loss was recorded at 121.3 billion KRW.
An EcoPro official explained, “Despite profitability improvements in listed subsidiaries, the operating loss in the fourth quarter increased due to the recognition of 82.6 billion KRW in year-end inventory valuation allowances for unlisted subsidiaries.” The price of lithium hydroxide (LH) fell from $9.8 per kg (14,231 KRW) at the end of Q3 last year to $9.5 at the end of Q4, and nickel prices dropped from $17.3 per kg to $15.1 during the same period.
The company expects a recovery in business conditions and performance improvement through the new plant this year. They explained that positive effects such as business structure improvement can be seen due to customer inventory depletion and new car launches by major automobile OEMs.
In particular, the company plans to secure new customers in Europe based on the Hungary plant to be completed this year. Along with sales volume recovery due to the base effect, they also expect profitability improvement through the reversal of inventory valuation allowances.
The company successfully raised a total of 615.9 billion KRW in capital-type funds in the fourth quarter of last year. Following successful issuance of perpetual bonds and hybrid capital securities, they also secured large-scale capital through a successful rights offering subscription.
The holding company EcoPro expanded capital by 105 billion KRW through two rounds of perpetual exchangeable bond issuance in October and December last year. Among these, the exchangeable bonds issued in December were fully acquired by bnw Investment, a private equity fund manager, which formed a fund for the purchase. The maturity of the perpetual exchangeable bonds issued by EcoPro is 30 years. Since investors do not have the right to demand repayment, the funds raised through these exchangeable bonds last year are recognized as capital in accounting terms.
EcoPro BM, an anode material manufacturer, also increased its capital by successfully issuing 336 billion KRW worth of hybrid capital securities. EcoPro HN, which operates both environmental and secondary battery materials businesses, raised 174.9 billion KRW through a rights offering at the end of last year.
Due to this capital expansion and reduction in borrowings, EcoPro’s debt ratio significantly decreased from 132.2% at the end of Q3 last year to 112.4% at the end of last year.
Song Hojun, CEO of EcoPro, said, “The Deep Seek Syndrome taught us the lesson that only price disruption can shake the market,” adding, “Let’s dominate the market by drastically lowering prices through securing mineral resources such as nickel and establishing an integrated corporation in Indonesia.”
Kim Jangwoo, CEO of EcoPro BM, said, “Sales volume expansion is expected this year due to inventory depletion of major OEMs’ electric vehicles and new car launches,” and added, “From a profitability perspective, we expect operating profit improvement through fixed cost reduction and cost-saving effects.”
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