Lotte Energy Materials (A020150) Q3 2024 earnings summary

Executive summary

• Q3 2024 saw revenue decline due to sluggish EV sales in Europe and customer inventory adjustments, leading to lower sales volumes.

• Operating profit turned negative, impacted by increased fixed costs, reduced production rates at domestic and Malaysian plants, adverse FX effects, and inventory write-offs.

Financial highlights

• Q3 2024 revenue was KRW 211 bn, down 1.4% year-over-year and 19.5% quarter-over-quarter.

• Operating profit was a loss of KRW 31.7 bn, compared to a profit of KRW 3 bn in Q3 2023 and Q2 2024.

• Net profit remained positive at KRW 7 bn, flat year-over-year and quarter-over-quarter.

• EBITDA margin and operating margin both declined sharply from previous quarters.

Outlook and guidance

• Mass production for key North American customers' JV plants to begin in Q4 2024, with sales escalation expected.

• Direct supplies to North American OEMs to start in 1H 2025, with sales in North America projected to rise over 50% year-over-year in 2025.

• European market recovery expected post-Q4 2024 as EV subsidies resume and new models launch in 2025.