[Photo provided by Samsung SDI Co.]
Samsung SDI Co., the battery making unit of South Korea’s Samsung Group, reported a 31.3 percent on-year fall in its operating profit for the third quarter as it grappled with the series of fires at its energy storage systems (ESS).
The company said in its regulatory filing Tuesday that its operating profit for the quarter ended September was 166 billion won ($142 million), down 31.3 percent from a year ago but up 5.5 percent from the previous three months.
Sales totaled 2.57 trillion won, up 1.79 percent on year and 6.8 percent on quarter. Net profit gained 1.53 percent on year and 35.7 percent on quarter to 217.4 billion won.
Shares of Samsung SDI finished Wednesday 0.88 percent higher at 230,000 won.
Samsung SDI blamed the on-year earnings drop on the ongoing breakout of ESS fires and sluggish sales of cylindrical battery cells. At least 28 fires have erupted at ESS installations of major battery makers across the country since August 2017, drying up new orders as a result. Two fires broke out again last week at ESS facilities made by LG Chem and Samsung SDI. The exact causes of the fire are still under investigation.
Samsung SDI’s battery sales, however, rose 1.5 percent on year in the third quarter to 1.95 trillion won, helped by increased demand for electric vehicle battery models and ESS batteries for electricity needs.
Kwon Young-no, chief financial officer of Samsung SDI, said in a conference call after the earnings report that the company was devoting 200 billion won to reinstalling battery modules with a special fire extinguishing system at its 1,000 ESS sites across the country. “Our new ESS shipments would also be equipped with the enhanced safety measures, which would not put a big dent on the company’s bottom line as the additional costs are limited,” he said.
Kwon expected strong ESS growth overseas, especially in the Americas and Europe, given the governmental push for tougher environmental policies. He cited the latest mandate in five U.S. states, including California, New Jersey and New York, that requires power developers to install ESS facilities. He also noted the growing potential of ESS for solar power plants, given the renewable energy’s reduced operating costs and improved economic efficiency.
“The global ESS market is expected to grow from 12 gigawatt hours (GWh) this year to 100GWh by 2025. We plan to further bolster our overseas portfolio by focusing on the Americas, Europe and Australia,” Kwon said.
By Kim Hyo-jin
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