Samsung SDI (006400) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was KRW 3.94 trillion, down 4% QoQ and 30% YoY, with operating profit at KRW 129.9 billion, down 46% QoQ and 72% YoY, reflecting weak battery demand and the impact of discontinued polarizer business.

• Net profit for Q3 was KRW 230.4 billion, including KRW 3.6 billion from discontinued operations, down 24% QoQ and 63% YoY.

• Battery segment revenue dropped 5% QoQ and 31% YoY, while Electronic Materials grew 24% QoQ and was flat YoY.

• The company divested its polarizer film business in Q3, with related assets/liabilities classified as held for sale and results as discontinued operations.

• 2024 Q3 cumulative sales reached KRW 12.84 trillion, down 40.1% YoY, with operating profit at KRW 620 billion, a 59.9% decrease YoY.

Financial highlights

• Gross margin was 19.3% in Q3 2024, down from 22.6% in Q2 2024 and 17.2% in Q3 2023.

• Operating margin decreased to 3.3% from 5.9% in Q2 2024 and 8.3% in Q3 2023.

• Pre-tax profit was KRW 266 billion, with KRW 136 billion in non-recurring non-operating profit.

• Total assets increased to KRW 38.1 trillion, liabilities to KRW 17.92 trillion, and equity to KRW 21 trillion; debt-to-equity ratio rose to 80%.

• R&D expenses were KRW 98.6 billion, 7.7% of sales.

Outlook and guidance

• ESS revenue and profit are expected to improve in Q4, driven by utility sales and new product launches.

• EV battery sales improvement is limited in Q4 due to sluggish demand and inventory destocking, despite new production and high-value product sales.

• Small battery demand recovery remains slow, but new product launches and market expansion are planned for mid- to long-term growth.

• European EV demand is expected to rebound in 2025, supported by stricter CO2 regulations and renewed policy incentives.

• Semiconductor and OLED material demand expected to rise with AI device launches and memory price recovery.