EcoPro BM (247540) Q2 2024 earnings summary

Executive summary

• Q2 2024 consolidated revenue declined 15% quarter-over-quarter to KRW 864.1 billion, with an operating loss of KRW 54.6 billion, mainly due to lower battery material ASPs and slowing downstream demand; EBIT at -KRW 54.6B and EBITDA at -KRW 8.7B.

• Net income was -KRW 63.6 billion in Q2 2024, further deteriorating from -KRW 42.5 billion in Q1 2024.

• Inventory valuation reversals and global resources investment gains partially offset losses, with a KRW 4.9 billion equity method gain in Q2.

• European expansion is progressing, with the Hungary cathode plant set to begin production in Q3 2025 and capacity targets of 180,000 tons by 2028; ECA funding of KRW 1.2 trillion completed in July 2024.

• Borrowings increased to support global resource investments and plant expansions, with cash & equivalents at KRW 802.6 billion, up 5.5% QoQ.

Financial highlights

• EcoPro BM Q2 revenue fell 17% Q/Q to KRW 809.5 billion; operating profit was KRW 3.9 billion, flat Q/Q due to inventory valuation loss reversals.

• EcoPro Materials Q2 revenue dropped 16% Q/Q to KRW 66.7 billion, with an operating loss of KRW 3.7 billion; precursor sales volume down 44% Q/Q, but ASP up 2.9%.

• EcoPro HN Q2 revenue decreased 9% Q/Q to KRW 46.8 billion; operating profit was KRW 3.6 billion, OP margin 7.7%.

• Total assets for the holding company rose 2.7% Q/Q to KRW 7,641.5 billion; liabilities up 6.3% Q/Q, equity down 1.3% Q/Q.

• Cash and cash equivalents at June 2024: KRW 412,039 million.

Outlook and guidance

• Metal price volatility expected to ease in H2, with potential gradual price increases; profitability in lithium and recycling businesses anticipated to improve.

• Nickel project investments in Indonesia expected to boost H2 profitability, with production capacity expanding to 150,000 tons/year.

• Battery material sales expected to expand to new customers, with long-term supply agreements signed with Samsung SDI and SK Innovation.

• Recycling business to benefit from new sourcing partners in Japan and the U.S., supporting sales and margin growth.

• Ongoing capacity expansion in Korea and overseas (Hungary, Canada), with new plants scheduled for completion in 2024.