Samsung SDI Co Ltd Earnings - Q1 2025 Analysis
Positives
- The ESS market is expected to experience a rapid growth through 2025, primarily in the US market, driven by the expansion of renewable energy and increasing current demand from AI.
- The company is solidifying its market share within existing customers based on differentiated technology and product reliability, while placing strong emphasis on customer diversification to drive continued sales growth.
- The company expects a gradual recovery in demand in Europe driven by EV-friendly policies, which should lead to an increase in sales.
- The company is expanding sales of high safety, high energy density, Samsung battery box and strengthening UPS solution offerings in North America and Europe.
- The company sees potential for its all solid state batteries in emerging markets, such as robots and UAN, which increasingly demand not only high volumetric energy density but also gravimetric volume.
Q&A Highlights - Q1 2025
Analyst asked about the impact of tariff policies on the company's performance and the outlook moving forward.
The company expects a gradual recovery in demand in Europe driven by EV-friendly policies, which should lead to an increase in sales. The company anticipates a meaningful improvement in profitability. The demand for power tools and micromobility batteries is expected to make a further recovery in the second half of the year, and the company expects significant loss reduction in Q2 compared to the previous quarter. The company will focus on steadily improving its performance from what it recognizes as the bottom point in Q1.
Analyst asked about the impact of the uncertainty surrounding the tariff policies of the Trump administration and the action plan announced by Europe.
The unpredictability of US tariff policies makes it challenging to accurately assess their full impact. The company expects to place both direct and indirect pressure on the company's performance. The company expects a positive impact on its performance due to supportive government policies and is actively seeking to maximize the benefits of these favorable policies.
Analyst asked about the sales outlook for Stellantis joint ventures and the reason for competitors scaling back CapEx in response to market demand changes.
Jin Sung Park, EVP of the Automotive and ESS Battery Business, explained that the company expects significant demand volatility in the near term due to recent uncertainties related to US tariffs. They are working closely with their customers to reassess this year's sale outlook and explore appropriate countermeasures.
Analyst asked about the growth trend of ESS and the forecast for annual performance in 2023.
Jin Sung Park, EVP for Business Management Office (Automotive & ESS Battery Business), stated that the ESS market is expected to experience a rapid growth through 2025, primarily in the US market, driven by the expansion of renewable energy and increasing current demand from AI. The company has already secured orders for approximately 90% of its planned ESS Battery production capacity for this year, and they anticipate continued quarterly revenue growth and annual revenue growth rate exceeding 20% compared to last year. However, tariffs may create challenges by impacting demand and driving price increases, and the company is committed to collaborating closely with its customers to minimize any potential impacts. Additionally, they are exploring various options for securing on ESS Battery production base in the US.
Analyst asked about the strategies to expand sales of Electronic Materials.
Ik Kim, VP, responsible for strategy and the Electronic Materials Business, stated that the Electronic Materials Business division has been focusing on semiconductor and OLED materials to secure growth engine. They are solidifying their market share within existing customers based on differentiated technology and product reliability, while placing strong emphasis on customer diversification to drive continued sales growth. The company is responding to the increase in advanced find patterning processes, which is driving up the usage of materials, particularly in patterning and polishing materials, and they are working to strengthen their product competitiveness by establishing on early presence in their customers' next generation platform market. They are also broadening their OLED deposition materials portfolio and developing next OLED color conversion materials with a focus on driving growth through high value-added products.
Analyst asked about the current development and preparation status of all solid state batteries and if it would be possible to expand this technology to applications beyond EVs.
Jin Sung Park, EVP for Business Management Office (Automotive & ESS Battery Business), stated that the company is working on key tasks necessary for mass production, such as expanding cell capacity, stabilizing manufacturing processes, and establishing materials supply chain in order to meet their target of mass production for all solid state batteries by 2027. Additionally, some investments in the domestic metal line are
