Samsung SDI announced on the 30th that it recorded 5.1309 trillion won in revenue and 267.4 billion won in operating profit for the first quarter of 2024.
The revenue decreased by 223.9 billion won (△4%) compared to the same period last year and by 433.9 billion won (△8%) from the previous quarter. Operating profit also saw a decline of 108 billion won (△29%) year-on-year and 44.4 billion won (△14%) quarter-on-quarter.
□ Q1 2024 Performance by Business Segment
The sales in the battery division amounted to 4.5818 trillion won, a decrease of 216 billion won (△5%) compared to the same period last year and a reduction of 416.5 billion won (△8%) from the previous quarter. Operating profit was 214.5 billion won, down 101.9 billion won (△32%) year-on-year, and decreased by 11.7 billion won (△5%) from the previous quarter. The operating profit margin recorded 4.7%.
Despite the weakening demand from end markets, the medium and large batteries showed solid profitability.
In automotive batteries, strong sales of the premium P5 model and the initial supply of the P6 model to North America contributed to an increase in both revenue and operating profit compared to the same period last year, driven by the expansion of high-value product sales and AMPC profit recognition. In contrast, the sales and operating profit for ESS batteries decreased due to seasonal impacts.
Sales for small batteries fell; however, profitability improved mainly in pouch-type batteries.
For cylindrical batteries, sales decreased mainly due to client inventory impacts in the mobility sector; however, power tools maintained sales and profitability at levels comparable to the previous quarter based on long-term supply contracts. The pouch-type batteries thrived on strong sales of flagship smartphones from major customers, leading to increases in both sales and operating profit compared to the same period last year and driving improvements in small battery performance.
The electronic materials division generated sales of 549.1 billion won, a decline of 7.9 billion won (△1%) year-on-year and a decrease of 17.4 billion won (△3%) quarter-on-quarter. Operating profit stood at 52.9 billion won, down 6.1 billion won (△10%) year-on-year and decreasing by 32.7 billion won (△38%) from the previous quarter. The operating profit margin was recorded at 9.6%.
The sales of polarizing films expanded mainly in large panels over 75 inches, improving profitability. However, semiconductor materials saw a decrease in both revenue and operating profit compared to the previous quarter due to clients’ temporary inventory adjustments.
□ Q2 2024 Outlook
Medium and large batteries are expected to gradually improve in performance. Automotive batteries are likely to maintain strong profitability through the wide distribution of the new P6 model. ESS batteries are anticipated to see improvements in both sales and operating profit due to the increased demand for high-capacity UPS batteries and the expansion of sales for the power-use Samsung Battery Box (SBB).
Plans are in place to secure profitability in small batteries while pushing for new demand discovery. Cylindrical batteries will work to enhance profitability based on long-term supply contracts and secure stable production volumes. There will also be efforts to enter the outdoor power equipment market early, especially in markets like North America and Southeast Asia for electric two-wheelers, while continuing to prepare for large-scale production and acquiring new customers for 46mm batteries. Pouch-type batteries aim for proactive supply for new products from major clients in the second half.
The electronic materials sector expects sales to expand as market demand shows signs of recovery. Polarizing films will likely see increased sales in the third quarter due to peak demand in the TV market, and semiconductor materials are projected to show improved performance due to better conditions in the memory semiconductor market. OLED materials, however, might be affected by seasonal off-peak impacts.
Choi Yoon-ho, CEO of Samsung SDI, stated, “In a highly uncertain business environment, we are continuously pursuing qualitative growth with profitability superiority while securing leading-edge technological competitiveness” and emphasized, “We will accelerate achieving our goal of becoming a global Top Tier company by 2030 through significant transformations and innovations unlike anything we’ve seen before.”
□ ESG Management Activities
Since declaring its pro-environmental management, Samsung SDI has been progressing steadily with eight strategic tasks including the transition to renewable energy, the expansion of battery recycling, and reducing water usage.
To align with mandatory sustainability disclosure regulations such as the European Sustainability Reporting Standards (ESRS) and the International Financial Reporting Standards (IFRS) related to climate, Samsung SDI is preparing related process improvements and system setups.
Moreover, Samsung SDI is also working to enhance supply chain sustainability.
As part of this effort, Samsung SDI is conducting assessments of partners in Europe, China, and North America alongside the Responsible Business Alliance (RBA), a global ESG assessment organization, and providing focused education to enhance partners’ ESG management capabilities as needed.
By Sang-jin, daedusj@autodiary.kr