North American EV slowdown, European customer destocking drag on results
Sales fall 11% to 557.9 billion won; operating margin shrinks to 2.2%
Ecopro BM said Thursday its third-quarter operating profit fell 76 percent from a year earlier to 12 billion won ($8.95 million), citing sluggish electric vehicle demand in North America and ongoing inventory drawdowns at European automakers.
On a consolidated basis, the battery materials maker posted sales of 557.9 billion won for the quarter, down 11 percent year on year, while its operating margin narrowed to 2.2 percent from 8.1 percent in the same period last year.
The company said sales volumes declined due to stagnant EV demand in North America, and that customers continued to work through stockpiles amid model changeover plans at European automakers. Operating profit also fell from the previous quarter, hurt by a temporary suspension at its Hungary factory and a weaker exchange rate.
By product category, EV-related sales came in at 256.1 billion won, down 14 percent year on year. Sales of cathode materials for energy storage systems surged 173 percent from the previous quarter to 123.6 billion won, driven by growing investment in AI data centers, though they were still down 25 percent from a year earlier. Sales for power applications reached 169.7 billion won, up 16 percent from the prior quarter and 50 percent from a year ago.
As a result, EVs' share of total sales fell to 46 percent from 67 percent in the previous quarter, while power applications rose to 30 percent from 25 percent.
The company said it expects EV market weakness to persist into the fourth quarter, reflecting the elimination of North American consumer subsidies and continued model transitions at European automakers. It projected improvement in non-EV segments, however, including power applications and ESS, on the back of AI data center expansion and new demand from drones, as well as rising demand for uninterruptible power supplies and battery backup units.
As a medium- to long-term strategy, the company plans to ramp up full-scale operations at its Hungary factory, with mass production set to begin on two lines in the fourth quarter to increase supply to global automaker customers and accelerate its push into European and other markets.
Ecopro BM is also pursuing vertical integration — from raw material procurement to cathode material production — through an investment in a nickel smelter in Indonesia. The company plans to make capital contributions in stages during the fourth quarter, conduct trial operations by year-end, and begin sequential commercial operation in the first half of 2027.
"Even amid slowing EV demand in North America, we responded swiftly to rising ESS and power application demand driven by the spread of AI infrastructure, maintaining a profitable footing," Chief Executive Song Ho-jun said. "We will successfully complete mass production at our Hungary plant and the Indonesia smelter investment to further solidify our position as a leading global cathode material supplier."
eyre@heraldcorp.com
