Slumping EV demand batters Korean battery makers in Q4 of 2024

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Slumping EV demand batters Korean battery makers in Q4 of 2024

Audio report: written by reporters, read by AI


Samsung SDI booth at the InterBattery 2024 in Coex in southern Seoul. [NEWS1]

Samsung SDI booth at the InterBattery 2024 in Coex in southern Seoul. [NEWS1]

 
Korean battery makers suffered a gloomy fourth quarter of 2024, impacted by slumping EV demand globally. 
 
Samsung SDI dove into the red in the fourth quarter, reporting an operating loss of 256.7 billion won ($180 million) from October to December compared to 295.3 billion won of operating profit during the same period in 2023, according to its earnings reports announced Friday. 
 

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It marks the first quarterly loss in almost eight years since the first quarter of 2017.   
 
The figure wildly missed the market consensus of 44.9 billion won in losses compiled by market tracker FnGuide.  
 
Revenues also plunged 28.8 percent to 3.75 trillion won, falling short of the analyst prediction of 3.91 trillion won. 
 
Net losses came in at 242.7 billion won, significantly missing the market estimation of 96.8 billion won in net profit. 
 
LG Energy Solution CEO Kim Dong-myung talks at an event held in Gangnam District, southern Seoul, on Nov. 1. [LG ENERGY SOLUTION]

LG Energy Solution CEO Kim Dong-myung talks at an event held in Gangnam District, southern Seoul, on Nov. 1. [LG ENERGY SOLUTION]

The losses came despite reflecting 24.9 billion won in credits granted by the U.S. government under the Inflation Reduction Act. 
 
The Korean battery maker blamed weak demand for the lower-than-expected figures as major automakers like General Motors revised their EV sales targets. 
 
In the secondary battery sector, Samsung SDI reported 268.3 billion won in operating losses, with sales falling 28.7 percent to 3.56 trillion won. 
 
However, sales for energy storage systems (ESS) batteries hit a new high thanks to the soaring demand for electricity following the boom of data centers in the United States, Samsung SDI said.
 
Sales for battery materials jumped 31 percent to 190 billion won while operating profit stood at 11.6 billion won. 
 
Samsung SDI also hinted at cutting its investment for the year and revising the timeline of already-announced investments. 
 
"We will have to cut capital expenditure considering the market situation and stay conservative," said Kim Yoon-tae, vice president of the business management office at Samsung SDI, during a conference call Friday. 
 
"But investment in future engines like joint ventures with General Motors, lithium iron phosphate batteries and cylindrical batteries 46 millimeters in diameter will proceed according to initial plans." 
 
LG Energy Solution, Korea's largest battery maker, also said on Friday that it swung to a 225.5 billion won operating loss in the fourth quarter from 338.2 billion won operating profit in the same period of the previous year. 
 
It's also the first quarterly loss since reporting 372.8 billion won in losses in the third quarter of 2021, when it suffered from a massive recall for General Motors' Bolt EVs.
 
When tax credits from the IRA are excluded, the losses expand to 602.8 billion won. LG Energy reflected 377.3 billion won in incentives in the fourth quarter.
 
Quarterly revenue came in at 6.45 trillion won, down 19.4 percent on year, to fall short of the analyst estimate of 6.77 trillion won compiled by FnGuide.
 
"North American sales increased, but sales to Europe declined, and there was considerable spending on the operation of new plants," said Lee Chang-sil, chief finance officer, on Friday. 
 
LG Energy Solution set a target of up to 10 percent sales growth in 2025.  

BY SARAH CHEA [[email protected]]
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