Shift in Sales Mix from Chinese Consumer Equipment to Korean EVs and Energy Storage Systems

「At the affiliated company W-SCOPE CHUNGJU PLANT CO., LTD., shipments of separators for ESS applications were delayed in the first quarter, but shipments began in the second quarter and sales volume increased.」

「In the U.S. market, battery manufacturers were seen shifting applications from EVs to ESS in anticipation of increased demand from large-scale data centers going forward.」

「Our policy is to restore business performance and achieve compliance with the tradable-share market capitalization criterion by diversifying product applications and sales destinations and increasing revenue.」

「Sales for automotive applications decreased 25.0% year on year to ¥22,338 million. Sales for consumer applications also decreased 53.4% year on year to ¥7,373 million, partly due to the exclusion of WCP from the scope of consolidation, excluding ion-exchange membrane sales.」

「Sales for automotive applications increased 47.2% year on year to ¥21,484 million. For consumer applications, production and shipments declined due to inventory adjustments for certain products, and sales decreased 22.8% year on year to ¥6,519 million. In the ion-exchange membrane business, shipments to a customer's plant in Argentina were completed, and sales of ¥1,059 million were recognized during the current interim consolidated accounting period.」

「Sales of batteries for automotive applications were ¥29,766 million, or 130.9% of the prior-year level. Meanwhile, sales of batteries for consumer applications were ¥15,818 million, or 70.7% of the prior-year level. Production of ion-exchange membranes, a new business, also began, generating sales of ¥2,458 million.」

「Sales to consumer applications fell 26.4% year on year to ¥8,446 million. Sales to automotive applications, however, increased 67.6% year on year to ¥14,598 million, supported by environmental policies in various countries and firm demand from battery manufacturers for EV applications.」

「By customer, demand from South Korean customers for automotive batteries continued to increase, and sales totaled ¥11,463 million, an increase of ¥2,971 million, or 34.9%, year on year.」

「Breakdown of sales by sales region for the most recent 2 consolidated fiscal years Fiscal year ended December 2021 (¥ million): Japan 209; South Korea 8,808; China 6,592; Hungary 12,550; Other Europe and the United States 261; Other 1,544; Total 29,966 Fiscal year ended December 2022 (¥ million): Japan 269; South Korea 13,358; China 2,799; Hungary 25,878; Other Europe and the United States 1,050; Other 1,743; Total 45,100」

「As a result, sales of batteries for automotive applications amounted to ¥8,710 million, an increase of 29.3% year on year. Demand for high-end batteries for consumer applications, including electric tools, cordless appliances and e-bike applications, also grew significantly, with sales reaching ¥11,487 million, up 92.9% year on year.」

「As a result, sales of batteries for automotive applications increased 18.9% year on year to ¥3,979 million, while sales of batteries for consumer applications increased 79.5% year on year to ¥4,920 million.」

「Of this, sales to automotive battery applications were ¥15,195 million, up 27.6% year on year. Demand for power tools and cordless household appliances also increased substantially in consumer applications, with sales of ¥14,770 million, up 124.6% year on year.」

「As a result, sales of batteries for automotive applications amounted to ¥10,917 million, an increase of 48.5% year on year. Demand for high-end batteries for consumer applications also grew significantly, with sales reaching ¥9,412 million, up 109.4% year on year.」

「As a result, sales of products for automotive batteries amounted to ¥3,346 million, up 7.9% year on year. Demand for high-end consumer batteries also increased significantly, with sales of separators for consumer batteries reaching ¥2,741 million, up 93.3% year on year.」

「In particular, sales of products for automotive batteries, the core product, gradually recovered from the third quarter to ¥11,905 million, an increase of ¥6,597 million, or 124.3%, year on year.」

「By region, sales to South Korean customers, where demand for automotive batteries had grown substantially in the third quarter amid a recovery from the COVID-19 pandemic, were ¥10,732 million, up 88.2% year on year. Meanwhile, although demand among Chinese customers showed signs of recovery, sales declined to ¥792 million, down 38.7% year on year, because sales continued to prioritize the collection of receivables,」

「By region, despite the impact of the COVID-19 outbreak during the second quarter, sales to South Korean customers increased 68.7% year on year to ¥6,119 million as demand for automotive batteries grew substantially. Sales to Chinese customers fell to ¥527 million, down 40.5% year on year, as sales declined while priority continued to be given to collecting receivables. Sales to Japanese customers fell sharply to ¥261 million, down 73.3% year on year, amid weak consumer demand.」

「As a result, the automotive segment's share of sales expanded from approximately 63.7% in the fourth quarter of 2019 to approximately 68.6% in the first quarter under review.」

「The company largely completed by around mid-2019 the product development and mass-production infrastructure for high-end automotive batteries that it had been systematically advancing since 2017. From the fourth quarter of the current fiscal year, sales of products in this field grew substantially. As a result, the automotive segment's share of sales increased from approximately 16% for calendar 2018 to approximately 41% for the current full year.」

「Against this market backdrop, by region the company is shifting its sales mix from China to South Korea, while by application it is also shifting from consumer electronics, where demand fluctuates significantly, to EV projects and energy storage systems, where medium- to long-term adoption is expected.」