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SK On’s battery manufacturing plant in the US state of Georgia (SK On) |
SK On, SK Innovation’s battery subsidiary, reported its first-ever quarterly profits in the third quarter of this year after years of operating losses since its spinoff in 2021.
During its earnings conference call on Monday, the battery maker reported an operating profit of 24 billion won ($17.4 million) in the July-September period, a significant turnaround from last year’s 86.1 billion won deficit, largely driven by inventory clearance and enhanced cost structure.
Its sales fell 54.9 percent to 1.4 trillion won as its supply prices were adjusted for falling metal prices. Its Advanced Manufacturing Production Credit, a tax credit for domestic manufacturers in the US, also dipped 45.6 percent to 60.8 billion won.
An SK On spokesperson noted, “(Turning a profit) was the outcome of collective efforts within the company by channeling our capabilities into cutting production costs and maximizing operation efficiency. We will strive to achieve sustained profitability.”
The battery maker also hinted at revamping its alliance with its key client Hyundai Motor Group on the cost-efficient Extended-Range Electric Vehicles that require lower battery capacities than pure EVs. The auto giant is making a big push on the EREVs as part of its strategies to tackle the global EV slowdown.
“As one of Hyundai Motor Group’s major vendors, we are at the vanguard of (supplying batteries for the company’s) hybrid and plug-in EVs and as well as all-electric vehicles,” said Chun Hyun-wook, vice president of IR division at SK On. “In particular, we expect to benefit the most from Hyundai Motor’s expansion plan for its hybrid fleet. Based on this comprehensive partnership, we are in talks with (Hyundai Motor) on further collaboration in EREVs.”
In the meantime, SK On added that it is still gauging the timeline for the launch of its joint venture with Hyundai Motor in the US state of Georgia, depending on the carmaker’s electrification strategy and the battery maker’s production optimization. The original launch had been planned for 2025.
Among the three joint ventures with Ford Motor Company in the US, the second Kentucky plant has also decided to delay production due to unfavorable market conditions.
On the impact of Tuesday's US presidential election, Kim noted that even if Donald Trump is reelected, the complete repeal of the Inflation Reduction Act is unlikely.
“(Under the Trump administration,) there could be a reduction in the EV subsidies … However, there seem to be differing opinions among Republicans. Many IRA investments were made in the Republican states, and 18 lower chamber members (of the US Congress) and the leader (of the House of Representatives) objected to scrapping the IRA. Young Republicans are interested in environmental protection and even the US oil companies are pushing for maintaining the IRA regulations,” explained Kim.
In line with SK Innovation and SK E&S’ merger on Friday, SK On has completed its merger with SK Trading International, a trading arm under SK Innovation, strengthening its financial stability and competitiveness in raw material procurement. SK Enterm, SK Innovation’s oil logistics subsidiary, will be merged into SK On by Feb. 1, 2025.
