Are the Big Three Battery Makers Set for a Comeback?... Returning to Profitability Despite Market Slump

LG Energy Solution: 7.56 Trillion Won in Sales, 113.3 Billion Won in Operating Profit
Samsung SDI Returns to Profitability After Seven Quarters
SK On Posts 821.8 Billion Won in Operating Profit

The nation's three major battery companies all returned to profitability in the second quarter of this year, laying the groundwork for a rebound in performance. As demand for energy storage systems (ESS) and batteries for artificial intelligence (AI) data centers continues to grow—and with shipment volumes and factory utilization rates recovering across the materials industry—expectations for a market recovery are also rising.

According to industry sources on July 31, LG Energy Solution, Samsung SDI, and SK On all posted operating income in the second quarter of 2026, marking a return to profit. Despite the slow recovery of the electric vehicle market, demand associated with ESS and AI data centers has driven this improvement in performance. One-off factors such as the U.S. Advanced Manufacturing Production Credit (AMPC) and compensation from client companies also contributed to the enhanced profitability.

LG Energy Solution recorded sales of 756.02 billion won and operating profit of 113.3 billion won in the second quarter, turning profitable after two consecutive quarters of losses. Expanded ESS production in North America, increased sales of cylindrical batteries, and improved factory utilization in Europe drove this result. In the first half of the year, ESS sales rose 4.6 times year-on-year, and the company secured over 3 trillion won in new orders, including AI data center projects.

Samsung SDI also posted sales of 376.88 billion won and operating profit of 203.8 billion won in the second quarter, returning to profitability after seven quarters. Profitability improved significantly thanks to higher sales of uninterruptible power supplies (UPS) and battery backup units (BBU) for AI data centers, increased sales of batteries for European electric vehicles, as well as the benefit from U.S. AMPC credits and tariff refunds.

SK On similarly returned to profitability with operating profit of 821.8 billion won in the second quarter, as announced in the earnings release of SK Innovation. Expanded sales in Asia, client compensation, and increased tax credits under the U.S. Inflation Reduction Act (IRA) all drove performance improvements. SK Innovation's total operating profit also reached 3.4873 trillion won, buoyed by improved results from both SK Enmove—which oversees the lubricants business—and SK On.

Industry insiders say the rebound in cell manufacturers' performance is sending positive signals to the materials sector as well. Rather than aggressively expanding production following the electric vehicle market slowdown, companies are now seeing results from strategies focused on raising the utilization rates of existing facilities.

Electrolyte producer ENCHEM reported a 23% quarter-on-quarter increase in total shipments in the second quarter, reaching 16,860 tons. During the same period, shipments of electrolyte for ESS grew by 45%, outpacing the overall increase. By supplying ESS volumes to plants in China and North America, the company is aiming to increase the utilization of its existing global production hubs.

Cathode materials company L&F continued its positive trend thanks to increased shipments of high-nickel products and improved facility utilization. On the other hand, some materials companies are still burdened by fixed costs, but there is growing optimism for gradual recovery in the second half of the year.

ECOPRO BM plans to respond to demand from European finished vehicle makers (OEMs) based on its Hungarian plant, which has now started mass production, while also expanding product supply for power applications as AI data centers are built out. The Indonesian nickel smelting project is also cited as a mid- to long-term factor in strengthening cost competitiveness and improving profitability.

A POSCO FUTURE M spokesperson said, "The overall atmosphere in the battery materials sector is gradually improving compared to before," and added, "While it's difficult to explain this trend with specific numbers, we can definitely feel the market is gradually coming back to life."

However, industry observers note that to ensure this improvement is not merely temporary, expansion in actual shipments and continued recovery of factory utilization rates will be essential. Since the battery materials industry is a capital-intensive process industry requiring large-scale upfront investment, only when secured production capacity is linked to actual client orders can companies reduce depreciation and fixed cost burdens and achieve stable improvement in profitability.

An industry official said, "The battery market landscape is shifting from a focus on sheer production capacity to one where client shipments and factory utilization determine performance. With new demand from areas such as ESS and AI data centers expanding, it will be important to monitor whether the recovery spreads not only among cell producers but also to the materials industry in the second half of the year."

Jaebeom Park, Senior Research Fellow at POSCO Research Institute, stated, "Although the electric vehicle market remains sluggish, companies that have responded effectively to the ESS market appear to be recovering faster. Over the long term, demand for electric vehicles in the United States is also expected to rebound, and as the ESS market is projected to see sustained growth, the industry as a whole is likely to benefit."

He added, "However, performance gaps may emerge depending on how much market share each company's main product lines secure, and a clearer evaluation of each company's strategic direction will only be possible after next year."

This content was produced with the assistance of AI translation services.