Samsung SDI Earnings: Margin Remained Weak Amid Reduced EV Outlook and Lithium Price Decline

Samsung SDI’s March-quarter revenue and operating profit missed our expectations. While sales of medium and large batteries for electric vehicles, or EVs, recorded a single-digit year-on-year growth, on our estimate, demand for cylindrical batteries and energy storage system, or ESS, batteries stayed sluggish during the quarter. Operating margin declined across all major battery segments, as the drop in the lithium price negatively affected product pricing and profitability. We lower our 2024-28 revenue estimates by 7%-10% mainly due to a reduced outlook for EV battery and energy storage battery demand. To factor in margin weakness, we reduce our 2024-28 operating income forecasts by 8%-11%.