Performance Announcement Conference Call

[Samsung SDI 1Q24 Performance Announcement Conference Call - Hana Securities 2nd Battery Kim Hyun-soo, Hong Ji-won]

Earnings Release : https://bit.ly/4aeQyA9

<1Q24 Performance>
- Sales KRW 5.13 trillion
  (YoY -4.2%, QoQ -7.8%)
- Operating profit KRW 267.4 billion
  (YoY -28.8%, QoQ -14.2%)
- Operating margin 5.2%
  (YoY -1.8%p, QoQ -0.4%p)
- Controlling Net Income KRW 273.1 Billion
  (YoY -37.8%, QoQ -45.0%)

<Performance Review and Forecast>
1. Battery segment: KRW 4.518 trillion in sales (YoY -5%, QoQ -8%) and KRW 214.5 billion in operating profit (YoY -29%, QoQ -14%)

i) a medium- and large-sized battery
- 1Q24: Starting supply of high value-added products (P5, P6), sales and profits increased year-on-year due to AMPC effects, ESS sales and profitability declined due to off-season impacts and some PJT delays
- 2Q24: Automotive batteries are expected to maintain strong profitability through maintaining sales of existing products and expanding new P6; ESS is expected to expand sales of electric SBB and increase data center demand

ii) Small battery
- 1Q24: The prototype decreased sales due to the impact of mobility-oriented customer inventory, but the electric tools maintain sales and profitability based on long-term supply contracts, and the pouch improves sales and profitability due to strong sales of new Flagship smartphones
- 2Q24: Promote securing profitability and stable volume based on long-term supply contracts, securing new 46-Pi customers and preparing for mass production, and Fauci plans to push for a new first-in product in the second half of the year

2. Electronic materials segment: KRW 549.1 billion in sales (YoY -1%, QoQ -3%) and KRW 52.9 billion in operating profit (YoY -10%, QoQ -38%)
- 1Q24: OLED materials have decreased sales and operating profit compared to the previous quarter due to seasonal off-season and semiconductor materials have decreased due to temporary inventory adjustment
- 2Q24: Polarized film is expected to increase sales in response to demand during the peak TV season in the third quarter, semiconductor materials are expected to improve their performance due to the full-fledged improvement of memory market, and OLED materials are expected to decrease sales due to sluggish demand due to the seasonal off-season

<Q&A>
1. Future Investment Plan
- Long-term investment plan to proceed as planned
- Malaysian and Hungarian factories, new US JV plants, and new products are actively investing in them
- CAPEX is expected to increase compared to last year

2. [Battery] All-Solid Battery Plan and Market Outlook
- Preparation for mass production in '27 through key material and technology verification and efficient SCM review
- Market scope expected to expand on rising demand for all-solid batteries and lower costs

3. [Battery] 46-Pi Battery Mass and Business Plan
- Production line setup scheduled to be completed within the first half of the year
- Based on the technology accumulated for a long time, full-scale mass production is scheduled to begin within this year
- Not only automakers but also various customers, including mobility companies, are expected to win orders from '25

4. [Battery] Current Status of Low Cost Battery Business
- 'Aim for mass production in 26 years'
- The mid- to low-priced battery market has high price sensitivity, but efforts to secure an appropriate level of margin through product differentiation
- To secure high density, high-speed charging, and cost competitiveness, we will gain a competitive advantage by developing form factors and construction methods

5. an internalization plan
- Efforts are being made to expand internalization to stabilize supply and demand and reduce costs in the mid to long term
- Planning to maintain a certain level of internalization through STM

6. [AMPC] Current Status of Amounts and Future Forecasts
- After the release of the details of AMPC in December 23, an expert review confirmed that products produced by U.S. subsidiaries are eligible for application
- It was temporarily reflected in the tax credit amount (46.7 billion won) 1Q24 that occurred from last year to the first quarter of this year
- As Stellantis will begin shipping in 25, the amount of AMPC tax credit is expected to increase significantly in the future

7. [Sales] Sales Status and Forecast due to slowing demand for electric vehicles in Europe
- The proportion of sales to Europe was not particularly high, and sales were not significant because they were evenly distributed with the Americas
- Although EV growth in Europe is weak, global demand is expected to gradually recover from the second half of this year
- In the mid- to long-term, sales are expected to grow high due to the expansion of the EV market following the implementation of eco-friendly policies

8. [Electronic Materials] Prospects due to the expansion of AI market
- Positive impact expected for all business segments (ESS, semiconductors, small pouches, etc.)
- Demand for ESS for power and UPS for backup is expected to increase significantly as demand for data center power will more than double
- Demand for high value-added products (high-capacity batteries, on-device devices, etc.) is also expected to increase, which is expected to drive sales in the future

9. [Electronic Materials] Performance forecast as semiconductor business improves
- Semiconductor Market Expected to Grow Big Compared to Last Year
- Sales of flagship products (EUV, EMC, etc.) are expected to grow by more than 20% year-on-year due to increased sales