South Korea: Ecopro BM Holds Steady with ESS Despite EV Slump... Q3 Operating Profit at 120 Million Won

ESS revenue surged 173% quarter-over-quarter to 123.6 billion won, while power battery revenue declined 3.3% despite a 16% increase in sales volume. The company is advancing cost competitiveness through its Hungary production base and Indonesia refinery.

EcoPro BM partially offset the slowdown in demand for cathode materials for electric vehicles (EVs) with demand related to artificial intelligence (AI) data centers and energy storage systems (ESS), maintaining its seventh consecutive quarter of operating profit. While increased sales of products for ESS and power applications demonstrated the potential for diversifying its business portfolio, total revenue declined compared to the previous quarter, and operating profit remained at 12 billion won. As the company moves to break away from an EV-centric business structure, the key issue is whether new demand sources will establish themselves as stable revenue streams.

EcoPro BM announced on the 5th that it recorded revenue of 557.9 billion won and operating profit of 12 billion won for the third quarter of this year on a consolidated basis. Revenue decreased by 3.3% from 576.7 billion won in the previous quarter. Although the company has maintained operating profits for seven consecutive quarters since the first quarter of last year, it is difficult to assess an improvement in profitability solely based on the fact that it continued to post profits despite declining revenue. The third-quarter operating margin was approximately 2.2%, which remains at a low level.

By business segment, revenue from EV cathode materials decreased to 256.1 billion won from the previous quarter. This was influenced by the slowdown in the North American EV market and inventory adjustments by European automakers. In contrast, revenue from ESS cathode materials surged by 173% from the previous quarter to 123.6 billion won. Revenue for power applications, driven by the expansion of semiconductor production facilities and data center construction, also increased by 16% to 169.7 billion won. As AI infrastructure investment emerges as a new demand source for battery material manufacturers, this trend is helping to offset the sluggishness in the EV sector.

However, it remains to be seen whether the increase in ESS and power application revenue has reached a stage where it can lift overall performance. Combined, the revenue from these two segments totals 293.3 billion won, accounting for more than half of total revenue, yet overall revenue still declined compared to the previous quarter. Growing new demand and converting it into stable profits are separate challenges. Detailed data on product-specific selling prices, costs, and profitability must be disclosed to evaluate the actual profit contribution of the ESS and power application businesses.

EcoPro BM forecast that performance in non-EV sectors, including ESS, would maintain a robust trend in the fourth quarter, driven by AI data center investments and the expansion of the renewable energy market. However, revenue volatility in its core business may persist depending on the timing of EV demand recovery and regional battery inventory adjustments. For ESS demand to continuously fill the gap left by the EV sector, it must be supported not only by securing customers and expanding supply volumes but also by effective profitability management.

The company is also building overseas production bases. The Debrecen plant in Hungary currently operates two production lines and plans to supply cathode materials to European finished vehicle customers. This local production hub is intended to comply with the European in-region battery material application standards that will be strengthened after 2027. However, for local production to become a competitive advantage, the company must increase its operating rate and secure stable supply volumes from customers. It is also necessary to examine the impact of initial production costs and local operating costs on profitability.

Ecopro BM is also advancing investments in a nickel refinery in Indonesia to secure its raw material supply chain. The company has completed its equity investment in the BNSI nickel refinery and plans to prepare for commercial operation in the first half of 2027. The strategy aims to build a supply chain connecting nickel raw material procurement to cathode material production, thereby enhancing cost competitiveness and raw material supply stability. However, it is crucial to determine how much actual raw material procurement costs will decrease after the refinery begins operations and whether economic viability can be achieved considering investment and operating costs.

Ultimately, Ecopro BM’s medium- to long-term competitiveness depends on how effectively it translates the expansion of demand sources beyond EVs and the internalization of its raw material supply chain into substantial revenue. The surge in ESS sales demonstrated the potential for business diversification, but it has not yet reversed the overall performance trend. The future performance will be determined by the stabilization of production at the Hungary plant, the commercial operation of BNSI as planned, the recovery of EV demand, and the profit contribution of the ESS business.