Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Samsung SDI Co Ltd (FRA:XSDG, Financial) maintained solid results by prioritizing profitability despite a challenging market environment.
- The company is on track with its preparation for commercializing all-solid-state batteries, expanding sample supply to five customers.
- Samsung SDI Co Ltd (FRA:XSDG) secured a large-scale ESS project from a leading clean energy company in the US, reflecting market recognition of its competitiveness.
- The electronic materials segment saw a revenue increase of 5% QoQ and 1% YoY, with operating profit rising 36% QoQ and 16% YoY.
- The company is actively preparing for mass production of LFP batteries in 2026 to capture expanding demand in the volume and entry-level EV markets.
Negative Points
- Q2 revenue was KRW4.5 trillion, down 13% quarter over quarter and 24% year over year, impacted by slowed market demand.
- The battery business posted a 15% QoQ and 27% YoY decline in revenue, with operating profit down 3% QoQ and 46% YoY.
- The EV battery segment fell short of market expectations due to sluggish demand, leading to a decline in sales and utilization rate.
- The company faces continued market demand slowdown in the EV battery sector, which derailed more than anticipated.
- Near-term EV demand remains weak, and changes have been detected in OEM's electrification strategies, requiring active market monitoring.
Q & A Highlights
Q: Do you think the difficulties faced by new battery companies in Europe and China can provide benefits to Samsung SDI in terms of larger opportunities to win new projects?
A: This is Michael Son, Head of the Automotive and ESS Battery Strategy Marketing Office. Yes, the struggles of new entrants have brought positive effects for SDI. Producing automotive batteries requires significant financial resources, consistent quality, and global supply chain capabilities, which are challenging for new entrants. Therefore, the impact of new entrants is expected to remain limited, and top-tier players like SDI are likely to remain dominant.
Q: Does Samsung SDI plan to adjust its CapEx plans due to the decreasing demand for EVs in the US and European markets?
A: This is Yun Jae Kim of the business management office. Our investments are carried out with a long-term perspective. We remain consistent about the growth potential of the business in the mid to long term. While we are actively monitoring market changes, there are no major changes to our investment plan. Investments executed in the first half have already more than doubled year over year.
Q: Can you provide an update on your battery development for the mass and entry vehicle segment and plug-in hybrids?
A: This is Michael Son. We have been developing low-cost battery platforms using NMX or LFP cathode material to capture demand in the volume and entry EV segment. We plan to complete platform development in the second half of this year and target mass production by 2026. For plug-in hybrids, we are focusing on capturing market demand using our product competitiveness.
Q: What is the current status of your 46-phi battery development and preparations for mass production?
A: This is Han-Je Cho. Our 46-phi battery development and mass production preparations are progressing smoothly. We secured our first 46-phi project for micromobility, with mass production scheduled to start early next year. We are also in active discussions with major OEMs about projects and expect to announce tangible results soon.
Q: Do you expect to increase market share in the utility ESS segment following your recent ESS supply contract win in North America?
A: This is Michael Son. Yes, we expect to increase market share. SDI's utility ESS solution, the Samsung Battery Box (SBB), has become more competitive with higher energy density, better safety, and longer product life. We are also preparing high-quality LFP products for mass production in 2026 and exploring ways to expand our global footprint.
Q: What are the advantages of prismatic batteries, and do you think this trend will benefit Samsung SDI?
A: Prismatic batteries offer advantages such as ease of standardization, safety, and efficient pack design. These advantages are attracting more attention, and we expect the share of prismatic batteries to increase within the EV market. SDI has extensive know-how in developing and mass-producing prismatic batteries, giving us a competitive edge.
Q: How is the recent surge in the AI industry impacting your semiconductor material business?
A: This is Kyungho Yoon. Increased HBM production for AI semiconductors is expected to boost demand for SDI's major products like SOH and SOD, positively impacting sales and profitability. We are also developing new EUV materials and slurry to capture AI semiconductor-related material demand.
Q: What are the implications of the AI industry's growth on your ESS business?
A: The growth of the AI industry is expected to significantly increase power consumption and demand for data centers, driving demand for ESS and UPS solutions. SDI is collaborating with large-scale power companies to capture this demand, and we have already booked orders to cover next year and a large part of the year after.
Q: Can you provide an update on the development of your all-solid-state batteries?
A: This is Michael Son. We built a pilot line for all-solid-state batteries last year and have been producing samples. Customer feedback has been positive, and we are finalizing our production process and investment plan. In the second half of this year, we plan to finalize the production process and supply the next-stage samples, which will help us engage in more detailed project discussions with customers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
