SK IE Technology (361610) Q2 2024 earnings summary

Executive summary

• Revenue for 2Q24 was KRW 61.6B, down KRW 90.2B year-over-year but up KRW 15.4B sequentially from 1Q24.

• Net profit reached KRW 48.0B, up KRW 85.1B year-over-year and up KRW 12.3B sequentially.

• Manufactures and sells lithium-ion battery separators (LiBS), with global production bases in Korea, China, and Poland.

• 2024 H1 consolidated sales reached 107.8 billion KRW, with a significant operating loss of 126.1 billion KRW, and a net loss of 110.5 billion KRW, reflecting challenging market conditions and cost pressures.

• Major investments continue in Poland and China to expand production capacity, targeting 2.7 billion m² by 2025.

Financial highlights

• Gross margin rose to 48% in 2Q24 from 19% in 2Q23, a 67 percentage point increase.

• Operating margin reached 95% in 2Q24, up from 4% in 2Q23.

• H1 2024 consolidated revenue: 107.8 billion KRW (down sharply from 648.3 billion KRW in FY2023).

• Net debt increased by KRW 300.3B to KRW 1,159.9B compared to FY23.

• Cash and equivalents at period end: 305.9 billion KRW.

Outlook and guidance

• Sales volume is expected to increase in 2H24 compared to 1H24.

• Production capacity expansion in Poland and China to reach 2.7 billion m² by 2025.

• Initial shipments to a new North American customer began in July 2024, with ongoing efforts to diversify the customer base.

• Ongoing R&D for next-generation battery materials and carbon capture membranes.

• Limited recovery in utilization rate and profitability anticipated as existing inventory is depleted.