Samsung SDI, SK On and LG Energy Solution all reported declining revenues from their battery sectors in their recent second-quarter reports, due to weaker metal prices and slowing international demand for EVs.
Samsung SDI’s revenues from its battery sector was 3,872.9 billion Won ($2.84 billion) in the second quarter of 2024, down by 708.9 billion Won or 15.47% quarter on quarter from 4581.8 billion won, and down by 1,397.2 billion Won or 26.51%, year on year from 5,270.1 billion Won in the second quarter of 2023.
Its profit from the battery sector was 208.0 billion Won in the second quarter of 2024, down by 6.5 billion Won or 3.03%, quarter on quarter from 214.5 billion Won in January-March and down 180.1 billion Won, or 46.41%, year on year from 388.1 billion Won in the second quarter of 2023.
Similarly, SK On’s holding company, SK Innovation, said revenues from the battery sector amounted to 1,553.5 billion Won in the second quarter of 2024, a decrease of 130.1 billion Won or 7.73% quarter on quarter from 1,683.6 billion won, and down by 2,142.6 billion Won or 57.97%, from 3,696.1 billion Won in April-June 2023.
The company posted an operational loss of 460.1 billion Won for the second quarter of 2024, extending its losses by 128.6 billion Won, or 39%, from the loss at 331.5 billion Won in the first quarter, and down by 328.6 billion Won, or 249.89%, from the loss at 131.5 billion won in April-June 2023.
LG Energy Solution, meanwhile, posted revenues of 6,161.9 billion Won for the second quarter, up by 33.2 billion Won or 5.42% from 6,128.7 billion Won in the second quarter last year, but down by 2,611.6 billion Won or 29.77% from 8,773.5 billion Won in April-June 2023. Operating profit was up by 38 billion Won or, 24.16 %, from 157.3 billion Won quarter on quarter to 195.3 billion Won in April-June 2024, but this was down by 265.3 billion Won, or 57.60%, from 460.6 billion Won year on year.
Samsung SDI said revenues and operational profit from the battery sector was “impacted by slowing market demand and falling metal prices.”
Losses at SK Innovation’s battery sector was due to “the burden of fixed costs from lower utilization rates in the battery business,” the company said.
And LG Energy Solution’s chief financial officer, Chang Sil Lee said: “The EV demand slowdown and the impact of declining metal prices on average selling prices continued through the quarter.”
LG Energy Solution revised down its annual guidance for 2024, with annual consolidated revenue now expected to fall by more than 20% year on year.
Lithium price barometer
Lithium hydroxide prices are seen as a barometer on the wider battery market due to its use in both nickel cobalt manganese (NCM) batteries, the dominant battery chemistry in the international EV market.
The bearishness in the battery sector has been reflected in the downturn in lithium prices.
And prior to the release of these quarterly results, the lithium demand in South Korea had already been thin, which indicated the sluggishness in the battery market there.
A South Korean battery producer source told Fastmarkets that it had been mainly relying on long-term deliveries of lithium and had no appetite for spot lithium amid “the demand drop from original equipment manufacturers (OEMs).”
Fastmarkets’ daily assessment of lithium hydroxide monohydrate LiOH.H2O 56.5% LiOH min, battery grade, spot price cif China, Japan & Korea was was $10.50-12.00 per kg on Thursday, unchanged from a day earlier, but down by $1.80-2.00 per kg from $12.30-14.00 per kg on April 2.
Plug-in electric (PEV) sales in Europe and the US grew at a slower rate in the first quarter of 2024, according to Fastmarkets researchers.
And the decline of the EV demand has been reflected in the quarterly results for Ford’s EV division, Ford Model e, which had revenues of $1.1 billion for the second quarter of 2024. This was down by $0.7 billion, or 38.88%, from $1.8 billion year on year, “amid ongoing industry-wide pricing pressures on first-generation electric vehicles and lower wholesale [numbers],” the company said.
Total EV sales, including PEVs, were down by 8,000 units, or 23.53%, to 26,000 year on year in the second quarter from 34,000 units.
General Motors, which had predicted reaching production capacity of 1 million EV units by 2025, recently admitted to “seeing a little bit of slowdown” right now.
“We won’t get to a million just [yet] because the market is not developing, but it will get there,” GM chief executive Mary Barra told US news channel CNBC in July.
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