Samsung SDI Co Ltd Earnings - Q3 2025 Analysis & Highlights
Key Takeaways
Samsung SDI's Q3 2025 earnings call highlighted a challenging quarter with revenue declines and operating losses, primarily due to sluggish EV battery sales, but also pointed to growth opportunities in ESS, small batteries, and electronic materials. The company is focusing on strengthening its US presence, particularly in the ESS market, and is adapting its strategies to address evolving EV demand and macroeconomic uncertainties.
Key Financial Results
Q3 2025 revenue was KRW 3.1 trillion, down 4% Q-on-Q and 22.5% Y-o-Y.
Operating income recorded a loss of KRW 591 billion.
Pre-tax income recorded a loss of KRW 430 billion.
Net income posted a profit of KRW 5.7 billion due to gains from the sale of the Polarizer film business.
Assets increased to KRW 42.2 trillion, up by KRW 738 billion from the end of 2Q.
Liabilities decreased to KRW 18.7 trillion, down by KRW 56.6 billion Q-o-Q.
Equity rose to KRW 23.5 trillion, up by KRW 794 billion Q-o-Q.
3Q CapEx was KRW 499 billion, bringing the cumulative total for 2025 to KRW 2.3 trillion.
Business Segment Results
Battery business revenue was KRW 2.82 trillion, down 5% Q-o-Q and 23% Y-o-Y due to sluggish EV battery sales.
Battery business operating profit recorded a loss of KRW 630 billion.
Electronic Materials business revenue increased to KRW 232 billion, up by 6% Q-o-Q.
Electronic Materials business operating profit recorded KRW 38.8 billion.
Capital Allocation
Completed the deal for the Polarizer Film business sales during 3Q, strengthening financial stability through a cash inflow of KRW 1.1 trillion.
Optimizing investment strategy by adjusting the timing of new projects based on market conditions.
Prioritizing the conversion and utilization of existing lines rather than adding entirely new capacity.
Industry Trends and Dynamics
Demand for EV and ESS batteries is expected to grow due to year-end seasonality, while uncertainties such as tariffs still exist.
EV demand is expected to grow, particularly in the volume and entry segments in the EU.
In the US, EV demand is likely to slow due to subsidy expiration and tariff uncertainties.
The US ESS market is projected to grow due to rising AI electricity demand and the expansion of renewable energy generation.
Government-led ESS programs are expected to increase to stabilize the domestic grid.
Power tool demand is expected to slow down after a temporary increase driven by early purchases ahead of US tariff impacts.
Demand for IT devices and smartphones is expected to stay firm, thanks to flagship smartphone launches.
For the semiconductor market, wafer production is projected to grow as DRAM production increases, driven by a larger pool of investment in AI servers.
The OLED panel market is expected to expand particularly in flagship smartphones, including foldable phones.
The robotics market has been advancing rapidly, driven by more sophisticated movement capabilities, AI-enabled intelligence, and declining costs.
The humanoid market is projected to grow quickly from around 20,000 units this year to over 600,000 units by 2030.
Competitive Landscape
As the only non-Chinese company capable of supplying prismatic products, Samsung SDI will actively target the fast-growing ESS market in the US through mass production of their SBB 1.7 and SBB 2.0.
Developing LFP and mid-nickel prismatic batteries targeting mass production in 2028 to capture opportunities in the volume and entry-level EV market.
Plan to optimize global supply chain by production base, develop low-cost materials, expand dual sourcing of components, and improve manufacturing efficiency to enhance cost competitiveness.
Actively pursuing opportunities with multiple US clients and expect to see steady growth in ESS orders going forward.
Pursuing customer diversification while strengthening material competitiveness to meet customer needs for process migration and performance enhancements in the semiconductor materials business.
Macroeconomic Environment
Uncertainties such as tariffs still exist.
In the US, EV demand is likely to slow due to subsidy expiration on September 30 and tariff uncertainties.
EV battery demand growth is expected to remain limited in the US due to the expiration of EV subsidies and fuel efficiency regulations.
Europe is projected to see stronger demand supported by the reinstatement of subsidy programs in major countries and the continued enforcement of CO2 regulations.
Growth Opportunities and Strategies
Signed supply agreements with multiple global major OEMs for EV projects totaling over 110 gigawatt per hour based on 46-phi and prismatic EV batteries.
Completed the award of the first-round bidding for the Korean government-led ESS project.
Introduced US local, next-generation ESS lineup to expand ESS business, including NCA-based, high-capacity SBB 1.7 and LFP-based SBB 2.0.
Converting existing EV lines into ESS Dedicated Lines, aiming to expand ESS production capacity to around 30 gigawatts per hour annually by around the end of next year.
Expanding sales of new high power tab-less products targeting major customers' launch of new power tools for experts.
Aiming to begin initial supplies through a first-in strategy for major customers' flagship smartphones and expand into various new IT applications, including tablets and laptops scheduled to be launched next year for IT batteries.
Plan to enter new platforms of major customers targeting 2026 for OLED materials.
Continue efforts for major project awards, including Korean government-led projects.
Signed an MoU with the Korea Electrical Safety Corporation to promote the domestic ESS industry and improve safety.
Continue social efforts to establish a safe and reliable domestic ESS industry foundation and promote shared growth.
Actively entering volume and entry segments with prismatic LFP and mid-nickel products to enhance market share.
Expanding sales portfolio by introducing tablet cylindrical batteries for increasingly growing hybrid EV projects.
Continue to win awards for the premium EV segments with high nickel cylindrical 46-phi in prismatic batteries.
Converting its SPE production line for ESS use, targeting approximately 30 gigawatt hour of US ESS capacity by the end of next year.
SDI is also engaged in additional discussions with multiple robotics manufacturers to further expand business opportunities.
To capture opportunities in the expanding AI related device market, a company fair to leverage cylindrical-based coin cells and pouch-based mini cells.
Financial Guidance and Outlook
In Q4, the company expects its operating loss to narrow from Q3, supported by a recovery in sales from other business divisions, although a short-term rebound in EV battery demand is unlikely.
There is a possibility of one-off costs toward the end of the year, which could influence a degree of profit improvement.
Growth opportunities are anticipated in the ESS, small battery, and Electronic Materials businesses next year, although challenges in the EV market are expected to persist.
The company plans to share more detailed market response strategies in the next quarter's earnings call.
Not considering any additional capital increase at this time.
Should further funding needs arise, the company will review various options, including borrowings and potential utilization of existing assets, taking into account market conditions and financing requirements.
