Samsung SDI (006400) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was KRW 3.9 trillion, down 4% QoQ and 30% YoY, with operating profit at KRW 129.9 billion, down 46% QoQ and 72% YoY, reflecting weak battery demand and the impact of discontinued polarizer business.

• Net profit reached KRW 230.4 billion, including KRW 3.6 billion from discontinued operations; pre-tax profit was KRW 266 billion, aided by KRW 136 billion in non-recurring non-operating profit.

• Cumulative 2024 Q3 sales were ₩12.84 trillion, down 40.1% YoY, with operating profit at ₩620 billion, a 59.9% decrease YoY.

• ESG initiatives advanced, including lithium recycling, carbon footprint certifications, and top ESG rating from KCGS.

• The company divested its polarizer film business in Q3, classifying related assets and liabilities as held for sale and results as discontinued operations.

Financial highlights

• Battery business revenue was KRW 3.6 trillion, down 5% QoQ and 31% YoY; operating profit declined 69% QoQ and 85% YoY to KRW 63.5 billion due to market slowdown and absence of prior one-off profit.

• Electronic materials revenue rose 24% QoQ to KRW 263 billion, with OLED materials operating profit up 102% QoQ and 24% YoY to KRW 66.4 billion.

• Gross margin was 19.3% in Q3 2024, down from 22.6% in Q2 2024 and 17.2% in Q3 2023.

• Total assets increased to KRW 38.1 trillion, liabilities to KRW 17.92 trillion, and equity to KRW 21 trillion; debt-to-equity ratio rose to 80%.

• R&D expenses were ₩98.6 billion, 7.7% of sales.

Outlook and guidance

• ESS segment earnings expected to improve in Q4, driven by growing utility sales and new product launches.

• EV battery sales improvement limited in Q4 due to sluggish demand and inventory destocking, despite new production and high-value product sales.

• European EV demand expected to rebound in 2025, supported by stricter CO2 regulations and renewed policy incentives.

• ESS demand in the U.S. projected to expand significantly, with long-term growth driven by AI and renewables.

• Semiconductor and OLED material demand expected to rise with AI device launches and memory price recovery.