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Samsung SDI's Q1 operating loss exceeds $278 million amidst U.S.-related uncertainties

Published: 25 Apr. 2025, 18:28

People walk by the Samsung SDI booth during InterBattery 2021, the country's leading battery exhibition, at Coex in Gangnam District, southern Seoul, on June 9, 2021. [AP/YONHAP]

Samsung SDI reported an operating loss of more than 400 billion won ($278.3 million) in the first quarter, hit by a temporary slowdown in electric vehicle demand. While the company expects a recovery in the second quarter as downstream demand rebounds, uncertainty linked to U.S. President Donald Trump’s policies continues to loom.

Samsung SDI announced Friday a provisional consolidated operating loss of 434.1 billion won for the first quarter.

The company swung to a loss from a profit a year earlier. The figure also fell short of market expectations, which had forecast a loss of 318.7 billion won, according to financial data provider FnGuide. This marks the second consecutive quarterly loss following a 256.7-billion-won deficit in the fourth quarter of last year. Sales fell 34 percent on-year to 3.18 trillion won.

Included in the first quarter operating loss was Advanced Manufacturing Production Credit (APMC) of 109.4 billion granted under the U.S. Inflation Reduction Act (IRA). That was up 84.5 billion won from the previous quarter’s 24.9 billion won. Excluding the benefit, the company’s actual loss approached 500 billion won.

The downturn was attributed to inventory adjustments by key customers in electric vehicle and power tool sectors, alongside seasonal weakness in the energy storage system (ESS) market. The battery division posted 2.98 trillion won in sales, down 34.9 percent on-year, and an operating loss of 452.4 billion won.

“Profitability worsened due to lower utilization rates and increased fixed costs,” a Samsung SDI spokesperson said.

Nick Wells, the vice president of Jaguar Land Rover Automotive's Procurement for China Asia Pacific Region, left, presents Park Jeong-ho, the head of Samsung SDI’s Tianjin subsidiary, the certification for the JLR Quality Award during a ceremony on April 23. [SAMSUNG SDI]

The weak performance isn't unique to Samsung SDI. The broader Korean battery industry is also under pressure. SK On, a battery subsidiary of SK Innovation, is expected to report a loss when it announces earnings on Wednesday.

LG Energy Solution, which recently released provisional results, reported an operating profit of 374.7 billion won, up 139.2 percent from a year ago. However, it posted a loss of 80.3 billion won, excluding AMPC.

Samsung SDI is hoping its Q1 results mark the bottom, with improvements expected in the coming months. As inventory adjustments by major automakers wrap up and environmental regulations and EV incentives expand across Europe, demand is projected to bounce back. The company said it has finalized discussions with key clients on new projects involving high-nickel NCA (nickel-cobalt-aluminum), lithium iron phosphate (LFP), and 46 mm cylindrical batteries, and is preparing to secure new orders.

Still, U.S.-related uncertainties persist. Although Korea’s three major battery makers already have U.S. production operations, which limits the impact of potential tariffs, a recovery in EV and ESS battery demand remains essential.

“Performance will likely recover somewhat in the second quarter thanks to gradually improving downstream demand,” a Samsung SDI representative said. “But volatility is expected to increase due to uncertainty surrounding tariff policies.”

Industry voices are also calling for a Korean version of the IRA, with direct subsidies for domestic battery makers. Chinese companies like CATL and BYD are rapidly expanding their global market share with strong backing from Beijing. In Korea, tax credits are available for capital investments, but the benefits are offset against corporate taxes — meaning loss-making firms cannot access them.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY NA SANG-HYEON [[email protected]]