이 기사는 2022년 05월 03일 08:05 thebell 에 표출된 기사입니다.

SK On, the battery unit of SK Innovation, has raised its revenue guidance for this year to around 7.5 trillion won ($5.9 billion) to reflect the effect of its price increases amid rising prices of key metals.

“We project revenue from the battery business to increase to the middle of the 7 trillion won range,” Kim Yang-seob, chief financial officer of SK Innovation, said in the company’s first-quarter earnings call on April 29.

The update marks a 1 trillion increase from the company’s original guidance of around 6.5 trillion won announced in January.

The guidance increase is largely attributed to rising raw material prices. SK On, like other battery makers, passes on metal price increases to its automaker customers.

However, metals whose price changes are reflected to the company’s product prices are limited to lithium, nickel and cobalt, which are used in the cathode, one of the key battery materials. A broad increase in raw material prices is likely to slow profit growth, potentially pushing back the timing to reach break-even, SK On said.

“We are targeting to achieve breakeven operating profit by the fourth quarter in 2022 but the timing could be delayed,” Jin Seon-mi, executive vice president of SK On, said in the earnings call.

Initial operating costs from the battery maker’s new plants in the US and Hungary that started operations in the first quarter are expected to put pressure on profits as well. “It is less likely that the new plants will be able to ramp up to a full capacity during the second quarter,” Jin said.

The company’s labor costs have also increased after proactive hiring, while the impact of a global shortage of semiconductors is still being felt in the battery market.

SK On is continuing to make efforts to improve profitability. The company is in ongoing discussions with some of its customers to reflect changes in prices of more raw materials to its sale prices. It also plans to strengthen partnerships with its raw material suppliers.

SK On expected its new factories to operate in a more stable manner in the second half of this year while projecting the chip shortage would ease after the second quarter.

SK On has aggressively expanded its production capacity in response to a growing demand for electric vehicles. Its overall production capacity is expected to increase to 77 GWh per year by the end of the year and to over 220 GWh by 2025.

The company is expected to spend over 3 trillion won each year on capital expenditures. SK On plans to raise a large portion of that money through equity investments, potentially in the form of joint ventures with automakers. An initial public offering is not an option for now as the battery maker said it would not consider going public until 2025.

“A joint venture formed with a partner could raise funds on its own and there could also be incentives granted from local governments,” Kim said.

SK On is also preparing for a pre-IPO funding round. Meanwhile, in response to a question from an investor, Kim ruled out a possibility of SK Innovation injecting an additional capital into the battery maker, saying that option is not on the table now. (Reporting by Wie-su Kim)