EcoPro’s 2023 profit halves on softer EV demand, materials prices

South Korea’s major battery materials company EcoPro Co. saw last year’s operating profit halved from the previous year after a steeper-than-expected fall in battery materials prices and as cooling electric vehicle demand worldwide erased some of its record-high annual sales.

The company announced in a regulatory filing on Wednesday that its consolidated operating profit for 2023 plunged 51.9% from 2022 to 295.2 billion won ($222.3 million).

Net profit also sank 61.2% to 85.5 billion won over the same period despite its historic-high annual sales of 7.26 trillion won, up 28.7%.  

EcoPro, the holding company of cathode producer EcoPro BM Co. and chemicals firm EcoPro HN Co., blamed the steeper-than-expected decline in the prices of main battery materials like nickel and lithium and a delayed recovery in EV demand for its profit loss.

In the fourth quarter ended December, the company even swung to a loss from a year ago largely due to huge inventory losses worth 181.3 billion won caused by a drop in metal prices, as well as one-off spending.

Operating loss in the quarter stood at 122.4 billion won versus an operating profit of 178.0 billion won in the same quarter in 2022.

Over the same period, sales decreased 39.2% to 1.27 trillion won on a fall in cathode sales and a sales price dip, according to the company.

BETTING ON A BETTER RESULT IN Q1

The company expects its earnings to improve in the first quarter of this year ended in March on the moderating decline in metal prices.

“Mineral prices declined steeper than expected and the EV market slowdown worsened (in the fourth quarter),” EcoPro President and Chief Executive Officer Song Ho-jun was quoted as saying in a recent meeting with the presidents of its affiliates.

Song was said to have urged employees to diversify customer bases, supply chains and product lineups to prop up both sales and profits this year.

As part of its efforts to improve profit, EcoPro plans to expand its high-nickel portfolio and add new customers with mid-nickel products.

STOCK SPLIT

In a separate filing on Wednesday, EcoPro also announced a stock split plan.

According to the filing, the company plans to shave the face value of its stock to 100 won per share from the current 500 won. This will increase the number of shares to 133,138,340 from 26,627,668.

The plan needs approval from the board of directors this month and at a general shareholders meeting in March.

EcoPro shares jumped 13.8% to end at 579,000 won on Wednesday.

EcoPro BM shares rose 6.7% to 230,500 won, while EcoPro HN shares inched down 0.3% to 60,000 won.

The cathode producer’s operating profit for last year plunged 59.7% on-year to 153.2 billion won on sales of 6.9 trillion won, up 28.8%.

The Kosdaq heavyweight with the largest market capitalization on the junior bourse announced during an earnings conference call that it is considering moving to the bigger Kospi market as part of its shareholder-friendly measures in hopes of attracting capital from passive funds.

Write to Hyung-Kyu Kim at khk@hankyung.com


Sookyung Seo edited this article.