LG Energy Announces Annual Surplus… Samsung’s highest earnings forecast
SK Inno confirmed high growth… Uncertainty, but a good wind this year
The performance of the three domestic battery makers is expected to increase at a time in the fourth quarter of last year, reaching a record high.
According to the industry on the 3rd, LG Energy Solutions, Samsung SDI, and SK Innovation, which have recently been independent from LG Chem, will all announce their annual results, including 4Q 2020 results at the end of this month.
The industry is predicting that LG Energy Solution will make the first annual surplus, Samsung SDI will make the first quarterly surplus, and SK Innovation, a latecomer, will also see steady growth.
LG Chem announced its provisional results for the first time in the third quarter of last year ahead of the spin-off of LG Energy Solutions. It is reported that in the fourth quarter, the results of LG Energy Solutions and other business divisions will be announced together without any provisional results.
According to the securities industry, LG Chem’s 4Q operating profit is estimated at 700 billion won, of which LG Energy Solutions’ operating profit is estimated at 200 billion won. The battery business is predicting an annual surplus, with a continuous surplus following the second and third quarters.
Overall, LG Chem’s overall performance was somewhat sluggish compared to the previous quarter due to the fire at the Yeosu Naphtha Decomposition Facility (NCC) and the provision for the energy storage system (ESS) fire, but LG Energy Solutions is expected to continue its growth.
LG Chem’s battery business turned to the black from the second quarter of last year and recorded the highest operating profit ever in the third quarter. Cumulative operating profit in 3Q is expected to reach KRW 272.5 billion, and annual profit is expected to reach KRW 400 billion or more if included through 4Q.
Among the three battery companies, Samsung SDI is the one that will stand out in the fourth quarter. The securities industry forecasts Samsung SDI’s fourth quarter operating profit in the early half of 300 billion won and sales in the mid-3.5 trillion won.
Operating profit in 4Q is expected to surge by more than 1,400% from the same period last year, and Samsung SDI is expected to record the highest performance ever.
In particular, there is a forecast that the mid- to large-sized battery division, including electric vehicle batteries, will turn to the black for the first time in 4Q.
Eugene Investment & Securities expects Samsung SDI’s 4Q operating profit for mid- and large-sized battery division to be 72 billion won, and for small-sized battery division to be 128.3 billion won, and explained, “The profit growth is in earnest thanks to the turnaround of the battery.”
At the time of its 3Q earnings announcement, Samsung SDI said that the break-even point of electric vehicle batteries was approaching, and that it aims to turn profitable with electric vehicle batteries alone in the new year.
SK Innovation is not yet able to turn to the black, but it is expected to steadily reduce its operating loss. The scale of operating loss in the fourth quarter was estimated at 90 billion won.
In the third quarter, SK Innovation’s battery business sales increased 2.5 times from the same period of the previous year to 486 billion won, and operating loss decreased to 98.9 billion won.
SK Innovation is setting a goal to achieve profits by reaching the mid-range of 5 trillion won in sales in the battery business in 2022.
This year, the three battery makers are expected to continue high growth. This is thanks to the increase in sales of electric vehicles around the world as governments in each country have strengthened their EV support policies to stimulate the economy after the Corona 19 incident.
All three companies are aggressively investing in capacity expansion. LG Energy Solutions set a goal of achieving 30 trillion won in sales by 2024, and the industry predicts that it will further strengthen its dominance in the global market this year.
It is expected that Samsung SDI will be able to achieve rapid growth with an annual operating profit of 1 trillion won this year, taking the fourth quarter as a turning point.
SK Innovation is also planning to create a solid growth momentum in the rechargeable battery business this year by listing SKIET, a subsidiary of separators as well as EV batteries.
The US ITC ruling on the battery trade secret infringement lawsuit against LG Energy Solutions and SK Innovation is scheduled to come out in February, and the industry expects that long-standing uncertainties will be resolved if the two companies agree.
There is also a prospect that the internalization of batteries by automakers could be a boon for the three Korean battery makers.
Reporter Kim Ji-eun
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