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 EV 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.

• Strategic investments in nickel projects and expansion into new business areas aim to secure future growth and supply chain stability.

• Major long-term supply contracts secured with SK Innovation (₩10.1 trillion, 2024–2026) and Samsung SDI (₩43.9 trillion, 2024–2028).

• Completed absorption merger of subsidiary EcoPro Global in May 2024, with no significant impact on consolidated financials.

Financial highlights

• Consolidated revenue for 2024 Q3 YTD: ₩2,301.9 billion, down from ₩6,900.9 billion in 2023 and ₩5,357.6 billion in 2022.

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

• Operating loss of ₩30.7 billion and net loss of ₩47.5 billion for 2024 Q3 YTD, compared to operating profit of ₩156.0 billion and net profit of ₩124.8 billion in 2023.

• EBIT dropped to -1,088 billion KRW, with an operating margin of -18%.

• Cash and cash equivalents at Q3-end: ₩477.4 billion, down from ₩512.7 billion at 2023 year-end.

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 4Q24.

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

• Expanding product portfolio to include mid-nickel, Mn-rich, LFP, and sodium cathode materials to address growing EV and ESS demand.

• Ongoing capacity expansion in Korea, Hungary, and Canada, with new plants (CAM8, LFP pilot) completed and further construction underway.