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Samsung SDI earns record EBITDA in second quarter Improved cash generation is positive sign ahead of company’s entry into US market

Translated by Ryu Ho-joung 공개 2021-07-29 07:53:06

이 기사는 2021년 07월 29일 07:51 더벨 유료페이지에 표출된 기사입니다.

Samsung SDI has earned record earnings before interest, taxes, depreciation and amortization (EBITDA) of more than 600 billion won ($519.7 million) in the second quarter thanks to improved profitability, a positive sign as the company prepares for an entry into the US electric vehicle battery market this year.

The South Korean company reported an operating profit of 295.2 billion won in the April to June quarter, up 184.4% year-on-year, according to its preliminary results released on Tuesday.

The company’s automotive and energy storage system battery business finally turned profitable in the first half, and strong results from its small-sized battery business continued.

Revenue from its electronic materials business slightly declined as the company is considering an exit from the photovoltaic paste segment. But overall profitability improved thanks to solid results from semiconductor and display materials.

EBTIDA, a metric often used as a proxy for cash flow, surpassed 600 billion won in the second quarter on a consolidated basis, the company’s highest ever on a quarterly basis. If this momentum continues, its full year EBITDA is expected to reach 2 trillion won by the end of this year, compared with 1.75 trillion won at the end of 2020.

“We expect a stronger second half as earnings from the small-sized battery business and electronic materials business are expected to improve,” Kim Jong-sung, vice president and finance head of Samsung SDI said during an earnings conference call on Tuesday.

As cash generation ability improved, the company is expected to accelerate capital expenditure. Samsung SDI adopts a more conservative financial approach than its rivals so that the company’s investment budget does not exceed its cash flow.

Samsung SDI plans to enter the US market this year. “The US market is one of the three pillars of the global electric vehicle market,” said Michael Son, the company’s senior managing director. “It is difficult to disclose the details but we are preparing for an entry into the US market soon enough.”

Samsung SDI earlier this year invested about 1 trillion won in its Hungary operations, Samsung SDI Hungary Zrt. Its capital expenditure is clearly expected to increase this year given its planned investment in the US market. The company is expected to fund most of its capital expenditure internally.

Samsung SDI’s cash, cash equivalents and short-term investment sharply increased from 1.67 trillion won at the end of 2020 to 1.95 trillion won at the end of June. The recent sale of the company’s minority stake in Hanwha General Chemical also fetched 160 billion won, heling raise liquidity. (Reporting by Choong-hee Won)
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