SAMSUNG SDI CO. LTD Earnings - Q1 2026 Analysis & Highlights
Samsung SDI reported improving operational performance driven by strong demand in energy storage systems and AI data center applications, with management expecting a return to profitability in the second half of 2026.
Key Financial Results
Q1 2026 revenue was KRW 3.6 trillion, representing a 7.3% decrease from the previous quarter but a 12.6% increase year-over-year.
Operating income was a loss of KRW 156 billion, with the loss narrowing compared to both the previous quarter and the same period last year.
Pre-tax income recorded a loss of KRW 43 billion, reflecting equity income in affiliates and other factors.
Net income was a profit of KRW 56 billion, driven by a decrease in corporate tax.
Total assets grew by KRW 2.3 trillion year-over-year to KRW 44.5 trillion, factoring in capital expenditures and increased equity value of affiliates.
Total equity rose by KRW 1.3 trillion quarter-over-quarter to KRW 24.9 trillion.
Business Segment Results
Battery business revenue increased by 13% year-over-year to KRW 3.4 trillion, driven by significant recovery in demand from utility energy storage systems, uninterruptible power supplies, and backup battery units for AI data centers and power tools, despite a 7% sequential decline due to seasonality.
Battery business operating income improved due to increased AMPC benefits from rising sales of locally produced energy storage systems in the US and extended sales of high value-added cylindrical batteries used in backup battery units and professional power tools.
Electronic materials business revenue increased by 13% year-over-year, benefiting from robust semiconductor materials sales and rebounding display materials sales driven by increased flagship smartphone sales by major customers.
Electronic materials business operating income increased by 15% year-over-year, though performance slightly decreased compared to the previous quarter due to seasonality.
Capital Allocation
Capital expenditures for Q1 were KRW 589 billion.
Liabilities increased by KRW 911 billion quarter-over-quarter to KRW 19.6 trillion.
Industry Trends and Dynamics
US total energy storage system demand is expected to grow from 90 gigawatt hours in 2025 to 160 gigawatt hours in 2030, representing a 12% compound annual growth rate.
Data center energy storage system demand is estimated to grow from 9 gigawatt hours in 2025 to 40 gigawatt hours or more in 2030, representing growth of 30% plus compound annual growth rate.
Microgrid energy storage system demand, installed onsite in data centers for independent power supply, is estimated to grow by more than 60% compound annual growth rate until 2030.
Backup battery unit battery market size is expected to be $800 million this year, representing over 70% year-over-year growth.
Power tool battery demand is growing driven by increased AI data center construction, with Samsung SDI targeting over 30% increase in sales year-over-year.
European electric vehicle battery demand is expected to increase by more than 10% on a year-over-year basis, driven by reintroduction and expansion of subsidies in key countries and rising oil prices increasing consumer interest in electric vehicles.
Semiconductor wafer input is expected to grow in mid-single digits on a year-over-year basis this year, with limited impact from new capacity increases.
Competitive Landscape
Samsung SDI secured prismatic lithium iron phosphate project awards for utility energy storage solutions from major US customers and signed high power battery supply agreements for backup battery units in data centers.
Samsung SDI signed a supply agreement with Mercedes-Benz for prismatic batteries, securing all three of Germany's top premium automotive manufacturers as customers.
Samsung SDI entered into a relationship with a new global memory manufacturer leveraging semiconductor packaging materials.
Samsung SDI won a tabless cylindrical battery project for hybrid electric vehicles, diversifying its product portfolio.
Samsung SDI leverages high-power output and non-China supply chain advantages in the backup battery unit market, significantly increasing sales in Q1 and expecting to outgrow the market in terms of sales volume on a full year basis.
Samsung SDI is focusing on high-end products such as metal slurry and high thermal conductivity packaging materials to outgrow market demand in semiconductor materials.
Macroeconomic Environment
The company sees limited impact on the demand side of major businesses despite continuing uncertainty in the business environment and impacts related to the Iranian war.
Downstream demand continues to show signs of improvement across battery and electronic materials business units.
Recent oil price increases have helped increase consumer interest in electric vehicles, improving electric vehicle demand especially around the volume segment.
Subsidy policies in key countries such as Germany and France are expanding, strengthening growth momentum centered on volume models.
Total cost of ownership for internal combustion engine vehicles is rising, increasing expectations for recovery in electric vehicle demand.
Growth Opportunities and Strategies
Samsung SDI is expanding local energy storage system mass production and sales of high-power uninterruptible power supplies for data centers to address the US power market.
Samsung SDI is actively participating in domestic government-led energy storage system project bidding and next-generation grid connected energy storage system projects to expand business.
Samsung SDI is expanding sales by focusing on tabless and high-power products tailored to specific applications in the small battery business and improving profitability.
Samsung SDI is expanding sales of new semiconductor patterning materials and organic light-emitting diode materials to sustain revenue growth in electronic materials.
Samsung SDI is planning to start mass production for a new battery project for a European volume model from Q2, expecting meaningful contribution to Hungary plant utilization and business performance.
Samsung SDI is planning to switch some production lines to lithium iron phosphate and refit lines with latest manufacturing processes this year.
Samsung SDI is focusing on increasing sales of EUV material for DRAM advanced node production and patterning material for foundries while diversifying to overseas customers.
Samsung SDI is planning to start supply of tabless products for backup battery units from Q2 and for hybrid electric vehicles from the second half, driving improvement in cylindrical battery business profitability.
Samsung SDI is proactively establishing a lithium iron phosphate material supply chain to meet non-PFE procurement requirements of the US OBBBA.
Samsung SDI is gradually switching to Korean sources for lithium iron phosphate cathode active material to meet non-PFE requirements and has already secured supply from a key Korean supplier.
Samsung SDI unveiled an all-solid-state battery for physical AI at the INTERBATTERY exhibition in March, which currently garners significant market interest.
Samsung SDI has developed solutions to improve the lifespan and safety of next-generation lithium metal batteries, continuously strengthening future technological competitiveness.
Financial Guidance and Outlook
Management expects the company's loss to further narrow into Q2 as it did in Q1, with downstream demand improving.
Management expects to turn profitable on a quarterly basis during the second half of 2026, driven by increasing local US energy storage system production, winning electric vehicle volume model production projects, and increasing supply of cylindrical tabless batteries.
Hungary plant utilization is expected to improve to about 70% in the second half reflecting capacity efficiency effects from switching lines to lithium iron phosphate and refitting with latest manufacturing processes.
Management is targeting breakeven performance during the second half with improved Hungary utilization and increased sales from the new project, though customer demand changes remain a possibility.
The company expects to outgrow the backup battery unit market in terms of sales volume on a full year basis this year.
The share of tabless batteries in power tool battery sales is expected to increase from 3% to 4% last year to over 20% this year.
Strategic Initiatives and Capital Allocation
Samsung SDI is making relevant preparations and reviewing details related to the sale of its stake in Samsung Display Company, with a committee comprised of independent directors considering the deal from company growth strategy and shareholder interest protection perspectives.
Management is working towards the goal of completing the Samsung Display Company stake sale within the year, though details including the sales timeline have not yet been decided.
