LG Energy Solution and Samsung SDI earned more than 1 trillion KRW in operating profit in the third quarter of this year. It was mainly affected by the increase in demand for electric vehicle (EV) batteries as well as the rise in battery prices.
LG Energy Solution achieved 7.6482 trillion KRW in sales and 521.9 billion KRW in operating profit in the third quarter. In comparison to the same period last year, 89.9% of sales and operating profit turned into a surplus. Samsung SDI recorded 5.368 trillion KRW in sales and 565.9 billion KRW in operating profit in the third quarter. In comparison to the same period last year, sales increased by 56.1% and operating profit by 51.5%.
The operating profit of LG Energy Solution and Samsung SDI in the third quarter reaches a total of 1.878 trillion KRW. Both companies’ operating profits exceeded market expectations by far, and are ‘earning surprises’.
Behind the scenes of the highest recorded operating profits of LG Energy Solution and Samsung SDI, was the rise in sales prices of the EV batteries, favorable exchange rates, the increase of EV battery supply, etc. The operating profit of LG Energy Solution and Samsung SDI reached 521.9 billion KRW and 484.8 billion KRW respectively in the battery sector alone, setting the breaking record of over 1 trillion KRW in operating profit in the EV battery sector for the first time.
At a conference call in the third quarter, LG Energy Solution explained, “The profitability has improved as economies of scale have been achieved (in the EV battery business) and as increased cost of core minerals such as lithium, metals, etc. has been reflected in the product.” The fact that the exchange rate environment had a positive effect on the battery manufacturer was also a major factor in the improvement in performance.
LG Energy Solution and Samsung SDI plan to continue the growth of EV batteries also in the second half of the year. “The fourth quarter is usually a peak season, and following the third quarter, a rise in demand for EV battery products is expected. Although the global recession is expected to continue for the time being, we will closely respond to the downstream industry situation and customer demand for EV batteries.
LG Energy Solution and Samsung SDI plan on developing new next-generation products in the EV battery business and secure customers for completed vehicles. Both companies will develop a new cylindrical product with an increased diameter of 46p mm, and establish a joint venture with North American automakers such as Stellantis, Rivian, etc.
LG Energy Solution Vice Chairman Youngsoo Kwon revealed, “Based on the solid order backlog of EV batteries, we will strengthen our profitability capabilities including smart factories and strengthen our standing as a leading EV battery company through strategic partnerships with global automakers.” Based on the 360 trillion KRW order backlog, LG Energy Solution is rapidly expanding its joint EV battery plants in North America the with General Motors (GM), Honda, and Stellantis.
Samsung SDI CEO Yoonho Choi said, “In order to become a global top-tier company by 2030, we will strive to fulfill our social responsibility by strengthening eco-friendly management as we accelerate the implementation of the three major management policies, such as super-gap technology, best quality, and qualitative growth of profitability advantage.”
By Staff Reporter Jiwoong Kim (jw0316@etnews.com)