Higher than CATL's
Samsung SDI and LG Energy Solution posted record-high sales in the third quarter. The two companies made earnings surprises based on an increase in electric vehicle demand despite a global economic contraction caused by interest rate hikes.
Samsung SDI announced on Oct. 26 that it posted 5,368 billion won in sales and 565.9 billion won in operating profit in the third quarter. Both sales and operating profit are record highs and up 56.1 percent and 51.5 percent, respectively, from the same period of last year. The battery business unit’s operating margin exceeded 10 percent for the first time. Its overall operating margin stood at 10.5 percent. This is an achievement that beat China’s CATL, which posted an operating margin of 9.5 percent in the third quarter.
“We expect that we will be able to meet the subsidy conditions of the Inflation Reduction Act (IRA) beginning from 2025 when our North American joint plant with Stellantis goes into operation,” said Michael Sohn, vice president of the Medium-Sized and Large Battery Business Department at Samsung SDI, in a conference call. “Following the announcement of the IRA, we are having more discussions on large-scale projects with automakers.” This means that Samsung SDI is in talks with automakers on the establishment of joint ventures in North America.
LG Energy Solution announced on the same day that it racked up 7.64 trillion won in sales and 521.9 billion won in operating profit in the third quarter. Its sales rose 89.9 percent from the same period of last year. Its operating margin improved to 6.8 percent in the third quarter from 3.1 percent in 2020 and 4.3 percent in 2021.
LG Energy Solution raised its annual sales target to 25 trillion won and showed confidence in attaining the goal. It raised the sales target from 19.2 trillion won to 22 trillion won in the second quarter.
“The IRA is a great opportunity for LG Energy Solution,” said Lee Chang-sil, the company's chief financial officer (CFO). “We will be able to get a large tax credit of US$35 per kWh through production of batteries in the United States thanks to the IRA.”