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POSCO Chemical achieves best quarterly performance as a result of investment in battery materials
2022.07.21
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Cylindrical batteries for electric vehicle and POSCO Chemical’s cathode materials.
- The battery materials business drove the highest sales and operating profit as a result of global mass production investment and the strategic procurement of raw materials.
- Focusing on securing market dominance by increasing mass production capacity for accelerated growth, diversifying the portfolio, and obtaining more orders.
POSCO Chemical achieved its highest-ever sales and operating profit through investment in the battery materials business.
On July 21, POSCO Chemical announced the Q2 2022 performance of 803.2 billion won in sales and 55.2 billion won in operating profit on a consolidated basis. Sales increased by 20.9% QoQ and operating profit by 116.2%, far exceeding the *market outlook.
* Average performance forecasts of securities companies compiled by FnGuide: 671.6 billion won in sales, 32 billion won in operating profit.
Sales in Q2 reached an all-time high for 8 consecutive quarters due to the increased mass production of battery materials and higher sales prices. Operating profit also more than doubled over the previous quarter derived by the strategy to increase profitability in the cathode materials business, recording the highest figures ever.
In the battery materials business, Chinese subsidiary ZPHE, established in 2021 as the first global investment in cathode materials, led the good results. Sales increased by 24% to 393.3 billion won QoQ due to the increased prices of raw materials, such as lithium and nickel, for which the company is building a strategic procurement system in collaboration with the Group.
The cathode materials business is constantly growing, with the share of high-nickel products for electric vehicles with high profitability reaching 91%, as well as the increasing utilization rate and yield of mass production lines that are being expanded at home and abroad. Sales of the cathode materials business rose from 31.9 billion won in Q2 2019, when the company first entered the business by merging with POSCO ESM, to 346.8 billion won in Q2 this year, showing a 987.1% increase over the past three years.
By increasing global mass production investment in the future, the company will further accelerate growth and secure a leading position in the market by increasing the annual production capacity of 45,000 tons to 105,000 tons in 2022, and 340,000 tons in 2025, and 610,000 tons in 2030.
Sales from the anode materials business were 46.5 billion won, showing a constant growth with the increasing share of products for ESS and IT batteries despite the supply shortage of semiconductors for electric vehicles.
* In the lime chemical business, sales and profits increased as the selling price of coal tar and other products rose due to increased oil prices, but the decreased sales due to blast furnace repair works led to a 3.2% decrease in sales to 191.6 billion won QoQ. Sales of the refractory business decreased by 2.1% to 133.8 billion won QoQ with the decrease in sales volume due to a change in the construction schedule of the client’s manufacturing facilities.
* Lime chemical business: Production of raw materials and products for quicklime and coal chemistry, which are raw materials for the steelmaking process.
The company’s subsidiary PMC Tech, which produces needle cokes, materials for electrode rods used for electric furnaces, recorded 60.1 billion in sales with an increase of 3.6% QoQ and an operating profit ratio of 27.7%, due to an increase in the utilization rate and unit price of electric furnaces in China.
POSCO Chemical forecasts that macroeconomic uncertainty andraw materials and supply chain issues will continue in the second half of this year, along with the growth of the global electric vehicle market.
Accordingly, the company plans to focus on accelerating growth and increasing profitability by investing in mass production capacity to meet the demands in time, diversifying portfolios for client and market diversification, increasing orders for new clients, and upgrading the raw material supply chain.
For cathode materials, POSCO Chemical will complete the production line at the Gwangyang Plant in the second half of this year, giving it an annual capacity of 90,000 tons, which is the world's biggest as a single plant. The company will also smoothly proceed with the building of a new joint plant for cathode materials in Canada with GM, establishing a new cathode materials plant in Pohang, and extending the cathode materials plant in China.
For anode materials, POSCO Chemical is building a production line for 15,000 tons of low-expansion natural graphite anode materials in Sejong and a production line for synthetic graphite anode materials in Pohang. The production capacity, which is 82,000 tons this year, will be increased to 170,000 tons in 2025 and 320,000 tons in 2030.
POSCO Chemical is also focusing on expanding product portfolios based on R&D. The company is planning to mass produce cathode materials with more than 90% of nickel in response to the high performance of electric vehicles and commercialize LFP and high-manganese products for high-nickel NCA and diffusion-line electric vehicles. The company also plans on building a mass production system for anode materials, such as next-general materials like SiOx (silicon oxide) and Si-C (silicon carbide) products.
In addition, POSCO Chemical will enhance its business competitiveness by strengthening its ESG management, such as building strategic partnerships with new clients in North America and Europe, increasing orders, establishing a stable raw material supply chain through POSCO Group, and obtaining Environmental Product Declaration (EPD) certification, which certifies the environmental impact that occurs in the cathode material production process.