[SMM Analysis]SAMSUNG SDI Announces Second Quarter 2024 Earnings Results

On July 30, 2024, Samsung SDI announced its Q2 financial report for the period ending June 30, 2024. The report shows that Samsung SDI's Q2 revenue was KRW 4.45 trillion , with an operating profit of KRW 280.2 billion. Revenue decreased by 24% YoY and 13% MoM, while operating profit fell by 38% YoY but increased by 5% MoM.The new energy business achieved revenue of 3.87 KRW trillion , down 15% MoM and 27% YoY. The operating profit was KRW 208 billion won, down 3% MoM and 46% YoY, with an operating profit rate of 5.4%. The main reasons for the simultaneous decline in revenue and profit were sluggish demand in the automotive and energy storage businesses, with earnings not meeting market expectations. Meanwhile, customers in the power tools and mobile sectors adjusted their inventories in Q2, leading to a decline in quarterly revenue for the small battery business. However, operating profit increased due to one-time compensation from long-term agreements. Pouch cell revenue also declined amid overall market demand contraction.

2024 H2 Outlook: Although the market recovery in H2 is expected to be later than anticipated, Samsung SDI predicts that the high growth in the electric vehicle industry will remain unaffected in the long run. The automotive battery business is expected to gradually improve earnings in H2, with electric vehicle market demand likely to steadily rebound in Q4. Samsung SDI plans to expand the supply of P6 products to the U.S. market while launching mass production of StarPlus Energy to enhance performance and continuously improve profitability. The small battery business will focus on increasing sales by seeking new business opportunities. In terms of cylindrical batteries, Samsung SDI plans to expand business opportunities in market segments such as power tools, outdoor power equipment, and specialty vehicles by leveraging differentiated products with long life and fast charging features.

SMM believes that the current growth rate of NEV sales in the U.S. and Europe is lower-than-expected, and the demand for power battery cells is weak, with intense industry competition. Whether battery cell manufacturers can achieve growth against the trend in H2 depends not only on improving technical levels and producing high-quality products but also on gaining a larger market share through their own marketing strategies.