Lotte Energy Materials (020150) Q1 2025 earnings summary

Executive summary

• Q1 2025 saw the lowest quarterly sales since the EV market gained traction, with consolidated revenue of KRW 157.98 billion and an operating loss of KRW 46.02 billion, driven by client battery inventory adjustments and underutilized capacity.

• The company operates in materials (notably Elecfoil for batteries and electronics) and construction, with 16 consolidated subsidiaries and recent expansions in Malaysia and Spain.

• Major capital increase and issuance of KRW 150 billion perpetual hybrid bonds funded acquisitions and expansion, including new production capacity and subsidiary share acquisitions.

Financial highlights

• Q1 2025 revenue was KRW 158 billion, down 34.6% year-over-year and 15.2% sequentially; operating loss widened to KRW -46 billion with an operating margin of -29.1%.

• Net loss attributable to owners was KRW 46.75 billion, EPS of -964 KRW; EBITDA was negative at KRW -23 billion, and net loss reached KRW -55 billion.

• Gross profit margin dropped to 1.3% in Q1 2025 from 9.2% in Q1 2024; cash and cash equivalents at Q1-end were KRW 317.34 billion.

• Total assets stood at KRW 2.24 trillion and total equity at KRW 1.87 trillion.

Outlook and guidance

• Inventory adjustments are expected to conclude in Q2 2025, with profitability improving as capacity utilization recovers.

• The company is expanding Elecfoil production in Malaysia (targeting 50,000 tons/year by 2028) and Spain (30,000 tons/year by 2027), aiming for growth in EV and energy storage markets.

• H2 2025 is projected to see sales and profitability growth as client inventory depletion drives higher capacity utilization, despite U.S. tariff policy uncertainties.

• Ongoing R&D in next-generation battery materials and continued innovation in high-end Elecfoil products.