Sales: 810.7 billion won, down 16%

Operating profit: 11.2 billion won, down 93%

Ecopro Materials widens losses

New North American customer secured

Battery recycling business expanded

Ecopro's headquarters building [Ecopro]
Ecopro's headquarters building [Ecopro]

Ecopro maintained an operating profit in the third quarter of this year, but earnings shrank more than 90 percent from a year earlier and the company swung to a net loss of 135.1 billion won ($101 million). The battery materials group plans to improve profitability by securing new customers in North America and expanding its battery recycling business.

Ecopro disclosed Thursday that its consolidated third-quarter sales reached 810.7 billion won and operating profit came in at 11.2 billion won. Sales fell 15.5 percent from 959.4 billion won in the same period last year, while operating profit plunged 92.5 percent from 149.4 billion won.

Performance also deteriorated from the previous quarter. Sales slipped 1.3 percent from 821.5 billion won, and operating profit dropped 66.8 percent from 33.6 billion won. The operating margin narrowed to 1.4 percent in the third quarter from 4.1 percent in the second.

The net loss of 135.1 billion won marked a sharp reversal from a net profit of 173.9 billion won in the third quarter of last year and from a net profit of 51.8 billion won in the second quarter of this year.

For the first nine months of the year, however, cumulative operating profit held at 101.1 billion won, keeping the company in positive territory. Cumulative sales over the same period reached 2.45 trillion won, down 9.2 percent from a year earlier, while cumulative operating profit fell 39.4 percent.

Results varied across subsidiaries.

Ecopro BM, which produces cathode materials, posted third-quarter sales of 557.9 billion won and operating profit of 12 billion won — down 18.8 billion won and 6 billion won, respectively, from the previous quarter.

Slowing growth in the North American electric vehicle market weighed on results, though sales of cathode materials for energy storage systems expanded as AI data center buildout accelerated.

Ecopro Materials, which makes precursor materials, widened its losses. Third-quarter sales edged up to 181.1 billion won from 178.8 billion won in the prior quarter, but the operating loss deepened to 29 billion won from 10.6 billion won.

Ecopro attributed the pressure on profitability to external factors including falling metal prices and exchange rate fluctuations. The company said it expects results to improve as the utilization rate at the Green Eco Nickel smelter in Indonesia recovers.

Ecopro HN, which handles the environmental business, benefited from a boom in the semiconductor industry. Sales rose to 52.8 billion won from 51.5 billion won in the prior quarter, and operating profit nearly doubled to 11.3 billion won from 5.8 billion won.

Ecopro HN's cumulative operating profit for the first nine months of the year reached 22.1 billion won, already surpassing its full-year operating profit of 11.7 billion won last year. The company said orders for environmental plant projects are expected to be reflected in revenue starting in the fourth quarter.

Revenue from the battery recycling segment rose to 41.8 billion won from 33.2 billion won in the prior quarter. The lithium business recorded sales of 54.2 billion won, with some volume declining as customers shifted production lines.

Ecopro is accelerating efforts to secure North American customers and diversify its business to offset weakness in its core electric vehicle battery materials segment.

The company recently signed a black mass tolling contract with a new North American customer. Black mass is a powder obtained by shredding spent batteries and contains recoverable metals such as nickel, cobalt and lithium.

Under the contract, Ecopro will process black mass on behalf of the customer using its integrated process technology spanning spent battery recycling through materials production.

The US government has restricted the export of black mass since Aug. 27. It has allowed exceptions, subject to regulatory approval, for black mass processed overseas and then reimported into the United States.

In response to these market changes, Ecopro is in discussions with multiple customers, including those in North America, on a business model linking recycled raw material sourcing with the supply of lithium, precursors and cathode materials.

The company is also deepening cooperation in next-generation batteries. Ecopro BM signed an MOU with Samsung SDI last month to jointly develop materials for all-solid-state batteries. The two companies are working together on cathode materials and solid electrolytes with the goal of commercializing sulfide-based all-solid-state batteries next year.

Ecopro plans to expand operations at its overseas production bases. Ecopro BM intends to stabilize production lines at its Hungary factory, secure new customer orders and increase shipments. In Indonesia, the company aims to strengthen its raw material supply base — including nickel — through its smelter operations, while also pursuing new customers for its lithium business.

Ecopro HN has completed a pre-mass production line for semiconductor back-end packaging materials at its Ochang campus in North Chungcheong Province and is working toward final customer approval next year.

"We plan to build a foundation for earnings improvement by diversifying business opportunities with customers — including black mass tolling, new precursor volumes and new cathode material customers," Ecopro Chief Executive Kim Jang-woo said. "Starting in the fourth quarter, we will pursue solid growth and secure mid- to long-term growth drivers."


kwater@heraldcorp.com