North American EV slump, European OEM model changes weigh on outlook

Hungary factory ramps up mass production with new projects

Indonesia smelter targets $1.7 billion in annual sales

Ecopro BM's factory in Hungary. [Ecopro BM]
Ecopro BM's factory in Hungary. [Ecopro BM]

Ecopro BM said profitability improvement will remain limited in the third quarter as the North American electric vehicle market continues to slump and European automakers shift their model lineups. The company plans to recover growth momentum by ramping up its Hungary factory and expanding supply to new European customers.

Kim Jang-woo, chief executive of Ecopro BM, said during a second-quarter earnings conference call Friday that third-quarter market conditions remain difficult. "The North American EV market slump caused by the elimination of consumer subsidies is persisting, and the volume stagnation stemming from European OEM model changes is expected to continue for now," he said. "Overall profitability improvement is expected to be limited due to stagnant EV sales volumes from existing OEMs, a weaker exchange rate and costs associated with the new Hungary factory coming online."

Ecopro BM plans to secure new European orders through its Hungary factory, which began operations in the second quarter. Oh Dong-gu, executive director of the sales division, said the factory has already started mass production for newly secured European projects. "We are also advancing development and production preparations for multiple additional new projects," he said. "Once European volumes begin to expand in earnest and shipments from the new projects currently in production preparation begin, we expect more visible growth momentum to return."

The Hungary factory is expanding production on schedule. Bang Han-min, executive vice president for strategic planning, said the first line began operating in June and is currently meeting its target utilization rate and yield. "We plan to bring the second line online in September, and we expect output to reach approximately 10,000 tons this year and grow to 30,000 tons next year," he said.

The factory aims to turn profitable in the second half of the year. Bang acknowledged that losses remain for now, given that fixed costs such as depreciation and labor expenses are high relative to limited initial output. "In the second half, we plan to enter a quarterly profit structure through volume expansion, stabilization of both lines, improved operational efficiency and additional cost reductions," he said. "On an annual basis, we are targeting at least breakeven."

Investment in the BMSI nickel smelter in Indonesia is also proceeding as planned. Bang said BMSI is targeting a trial run by the end of this year and full operation in the second quarter of 2027. "We expect an initial utilization rate of around 60 percent," he said. "Once the facility reaches normal operating levels, we are targeting annual sales of $1.7 billion and a double-digit operating profit margin."

Kim said the company's commitment to the Indonesia investment through a rights offering remains unchanged despite the recent decline in its share price. "Investment in Indonesia's BMSI is essential for Ecopro BM's future competitiveness," he said. "Although increased share price volatility makes it difficult to speak to any changes in our stake acquisition plans at this point, we are reviewing optimal investment and financing options that reflect a range of scenarios."

Ecopro BM reported second-quarter consolidated sales of 576.7 billion won ($394 million) and operating profit of 18 billion won. Both figures fell sharply from a year earlier — sales dropped 26 percent and operating profit declined 63 percent — as EV volumes weakened in both Europe and North America.


eyre@heraldcorp.com