"Inevitable Reduction in IRA Subsidies"
"US Trend of Moving Away from China Will Continue"
Ecopro recorded an operating loss exceeding 300 billion KRW last year due to a downturn caused by the electric vehicle chasm (Chasm: temporary demand stagnation) and other factors. The company predicted a reduction in subsidies under the US Inflation Reduction Act (IRA) this year but maintained that the trend of front-end customers moving away from China would continue, allowing Ecopro to sustain a relative advantage over Chinese companies in the US market.
On the 11th, Ecopro announced in its Q4 earnings conference call that consolidated sales amounted to 3.1103 trillion KRW, a 57% decrease compared to the previous year. Operating loss turned to a deficit of 314.5 billion KRW.
In Q4 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.
On the day, a company official stated, "The possibility of the IRA being repealed seems low, but it appears inevitable that subsidies related to the IRA will be reduced through various administrative measures," adding, "However, the trend of front-end customers moving away from China is expected to continue, so we believe a relative advantage over Chinese companies in the US market can be maintained."
He continued, "To make the most of this situation, we are promoting the Indonesia nickel refining project and creating a partnership structure that can flexibly respond to checks against China," and forecasted, "This strategy is expected to be particularly useful in the precursor business, where customers have a high dependence on China."
Regarding Ecopro Materials’ Indonesia project, he explained, "We are pursuing the acquisition of Green Eco Nickel, which has a production capacity of 20,000 tons of nickel, aiming to complete the acquisition and start mass production of nickel MHP within this year," adding, "Once production runs smoothly after the acquisition, it will be reflected in the consolidated profit and loss as a subsidiary. Green Eco Nickel can be considered a company capable of achieving annual sales of 300 to 400 billion KRW and an operating profit of about 100 billion KRW."
Regarding the precursor sales business, the company stated, "We expect annual precursor sales to increase compared to last year through recovery in sales volume from affiliated companies and expansion of external sales," and explained, "Currently, many customers are concerned about China-related risks due to the IRA and tariffs. We are conducting sample tests and discussing business cooperation with partners in the US, Japan, and Europe."
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