Battery biz to break even after 3 yrs
South Korea’s SK Innovation will be investing 16% more in terms of capital expenditure (CAPEX) than planned by spending up to 3.5 trillion won ($2.9 billion), the company said on July 26 in a conference call announcing its second quarter earnings.
In the first quarter, the company had put the expenses at 3 trillion won.
SK Innovation also said that its battery business is expected to break even by 2021 despite the concerns about the possibility of a joint venture deal with Volkswagen being canceled.
“We have spent 1.5 trillion won for CAPEX investment in the first half of this year, and we plan to spend up to 3.5 trillion won by the year’s end,” said Lee Myoung-young, head of SK Innovation’s headquarters for finances. “Of the total, around 1 trillion won will be spent on our battery business because next year, we plan on expanding the manufacturing facilities.”
Industry sources say the firm appears to have spent more on plant and equipment than anticipated because the completion date for the lithium battery LiBS plant in Jeungpyeong was pushed up by about a month, while the plant in Poland is being built at a faster speed.
On materials, SK Innovation is expected to spend around 500 billion won.
Regarding annual plans, however, the firm took a step back, saying that it might not be able to deliver on its previous pledge to invest 1.5 trillion won every year into facilities for battery and material business by the first quarter of 2022.
Instead, the company said uncertainties may crop up after the year 2020.
Market experts interpreted the remarks to indicate that it would invest more aggressively into facilities at a faster pace to get faster results.
Touching the possible backlash of Japan’s trade sanctions against key materials used by South Korean tech companies, SK Innovation said that while it’s pursuing different avenues for minimizing risk and enhancing yield rates, there won’t be big repercussions.
In the second quarter, SK Innovation logged sales of 13.1 trillion won, and an operating profit of 497.5 billion won that surpassed the market consensus.
The firm also held a board meeting to decide on 1600 won per share as cash dividends for shareholders. This marks the third consecutive year the firm has handed out dividends since it first began in 2017.
The Elec is South Korea’s No.1 tech news platform.