SEOUL, Oct. 26 (Korea Bizwire) — Samsung SDI Co. said Wednesday it posted record high profit and sales in the third quarter on the back of strong demand for secondary batteries used in electric vehicles (EVs).
Operating profit reached 565.9 billion won (US$396 million) in the July-September period, up 51.5 percent from 373.5 billion won the previous year, the South Korean battery maker said in a regulatory filing.
Sales rose 56.1 percent to 5.37 trillion won, while net profit came to 638.3 billion won, up 51.8 percent from a year earlier.
The earnings exceeded market expectations. The average estimate of net profit by analysts stood at 497 billion won, according to a survey by Yonhap Infomax, the financial data firm of Yonhap News Agency.
The stellar performance was attributable to its lucrative battery segment, which generated 4.83 trillion won in sales for the third quarter, up 76.4 percent from the previous year, Samsung SDI said.
Samsung SDI said it expects solid growth for the fourth quarter as well, given the usual seasonal effect expected for the three-month period.
It expects new vehicle models that use Gen 5 batteries will be released toward the end of the year, with growing demand forecast for ESS batteries.
The implementation of the new U.S. law on promoting EVs and green energy, or the Inflation Reduction Act (IRA), is a boon for the battery maker, Michael Sohn, vice president for the strategic marketing division, said in an earnings call.
Samsung SDI intends to diversify its sourcing of critical minerals used in battery manufacturing to meet the IRA requirements, Sohn added.
“We should be able to fulfill the requirements once we start local production in 2025 by working with key partners,” Sohn said.
The IRA calls for giving tax benefits to battery makers whose products are made with a certain portion of minerals produced or processed in North America, or countries that have free trade pacts with the U.S.
Samsung SDI is spending $2.5 billion in the joint venture with Stellantis N.V., the Chrysler parent, to build what will be its first U.S. EV battery plant in Indiana.
Construction will begin at the end of this year, with operations expected to begin in the first quarter of 2025.
For the third quarter, operating profit from the mid to large battery division, mainly EV batteries, more than doubled to 484.8 billion won, with the operating margin coming in at 10 percent.
Increased sales of its premium Gen. 5 batteries improved its profitability, contributing to the stronger bottom line, amid burgeoning EV battery demand.
The energy storage system (ESS) battery sector also fared better due to sales growth in Europe.
Its electronics materials business saw sales shrink 23.6 percent to 534 billion won, with operating profit falling 53 percent to 81.1 billion won, due largely to faltering demand in display components.
Shares in Samsung SDI soared 3.36 percent to 677,000 won on the main Seoul bourse, outperforming the broader KOSPI’s 0.65 percent gain. The earnings results were released before the market opened.