Lotte Energy Materials (A020150) Q2 2024 earnings summary

Executive summary

• Achieved record-high quarterly revenue in Q2 2024, driven by customer portfolio diversification and increased sales to North America, despite a slight profit decrease due to inventory valuation loss and higher global logistics costs.

• Revenue for H1 2024 was ₩504.4 billion, down from ₩809.0 billion in H1 2023, with operating profit at ₩7.4 billion, a decrease from ₩11.8 billion year-over-year.

• Net income attributable to controlling interests was ₩4.3 billion, reversing a loss of ₩32.5 billion in H1 2023.

• Maintained industry-leading financial stability and net cash position, supporting global capacity expansion and next-generation battery Capex.

• The company’s main business is the production and sale of Elecfoil for lithium-ion batteries and PCB, with a construction segment focused on curtain wall and building exteriors.

Financial highlights

• Q2 2024 revenue reached KRW 263bn, up 33% year-over-year and 9% sequentially.

• H1 2024 consolidated revenue: ₩504.4 billion (H1 2023: ₩809.0 billion).

• Operating profit for Q2 2024 was KRW 3bn, with an operating margin of 1.2%.

• EBITDA for Q2 2024 was KRW 24bn, representing a 17% year-over-year increase.

• Net profit turned positive to KRW 8bn in Q2 2024, reversing losses from previous quarters.

Outlook and guidance

• 2024 sales target is double-digit percentage growth over 2023.

• Continued sales growth expected as the leading Elecfoil supplier to K-battery and with expanded sales to North America.

• Ongoing major investments: Malaysia plant expansion (₩600 billion, extended to 2028) and Spain plant (₩560 billion for 30,000 tons capacity).

• Revenue growth in 2H 2024 anticipated to slow due to short-term upstream industry slowdown and policy volatility.

• Ongoing portfolio diversification with expansion into ESS/Hybrid applications and next-generation Al accelerators for North American end-users.