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 was -KRW 54.6 billion and EBITDA -KRW 8.7 billion, reflecting higher material costs and weak market demand.

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

• Inventory levels and working capital were reduced, but borrowings increased to support global resource investments and plant expansions.

• 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.

Financial highlights

• Consolidated revenue: KRW 864.1B, down 15% QoQ and 57% YoY.

• 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%.

• Net income: -KRW 63.6B, further deteriorating from -KRW 42.5B in 1Q'24.

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 a long-term supply agreement signed with Samsung SDI.

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

• EcoPro BM expects EV cathode sales to rebound post-October as OEM inventories normalize; ESS cathode sales to remain strong.