EcoPro BM (247540) Q3 2024 earnings summary

Executive summary

• Q3 2024 saw significant revenue declines and operating losses across major business units, mainly due to weak battery materials demand, falling metal prices, and inventory valuation losses.

• Inventory rationalization and cost control measures were implemented, with expectations for financial improvement in Q4 via hybrid securities issuance and increased external sales.

• Ongoing investments in global resource projects and capacity expansion continued, with some positive contributions from equity method profits.

• Inventory valuation losses and unfavorable foreign exchange rates further impacted profitability.

Financial highlights

• Consolidated revenue fell 31% QoQ and 69% YoY to KRW 5,943B, with an operating loss of KRW 108.8B and EBIT margin of -18%.

• EcoPro BM Q3 revenue down 36% QoQ to KRW 521.9B, with an operating loss of KRW 41.2B and inventory valuation loss of KRW 18.8B.

• EcoPro Materials Q3 revenue down 1.2% QoQ to KRW 65.9B, operating loss of KRW 38.5B, with KRW 15.2B inventory valuation loss.

• EcoPro HN Q3 revenue up 20% QoQ to KRW 56.1B, operating profit up 58% QoQ to KRW 5.7B, OP margin at 10%.

• Inventory valuation losses totaled approximately KRW 34.4B in Q3 2024.

Outlook and guidance

• Q4 expected to remain challenging for cathode and precursor businesses due to ongoing inventory adjustments by customers.

• Utilization rates and reversal of inventory losses are expected to improve results in Q4 2024.

• Gradual recovery in battery materials and precursor sales anticipated in 2025 as EV inventory clears and new customer shipments ramp up.

• Sales volume is projected to rebound in 1Q25, supported by stricter EV carbon emission regulations in Europe and new plant operations in North America.

• Additional inventory valuation provisions are anticipated for lithium and recycling businesses at year-end.