Choi Jae-won’s ‘Saving Personal SK’ sweats, unsure battery restoration, group enterprise reorganization may also be troublesome

[비즈니스포스트] He’s answerable for SK Group’s enterprise reorganization technique. Jaewon Choi The CEO and Senior Vice Chairman of SK On is combating the continual working deficit and monetary burden of the battery, SK On, since its launch in 2021.

For the reason that group has determined to develop batteries as a future core enterprise together with semiconductors, they have to proceed to spend money on the battery enterprise to develop SK On into a number one world firm, nonetheless, in a state of affairs the place it’s troublesome to foretell when there shall be a requirement for batteries for electrical automobiles will come again, the deficit is growing As a result of it’s.

As well as, funding prices, together with joint ventures promised by electrical automobile producers, ought to be shut to eight trillion received this yr, however there are monetary issues at even deliberate funding tasks.

Accordingly, Vice Chairman Choi is specializing in the restoration of SK On within the total enterprise reorganization of the group, and he’s experiencing issues within the enterprise reorganization itself.

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In response to securities business protection on the third, the principle outlook is that the worldwide battery market will enhance barely within the second half of this yr in comparison with the primary half, however the forecast is for a restoration in demand for electrical automobiles, which is extra apparent. an indication of efficiency enchancment, nonetheless unclear.

It’s thought of optimistic for battery corporations that the costs of battery uncooked supplies resembling lithium and nickel have stopped falling and have gotten more and more steady. In response to the Korea Assets Data Service, the value of lithium carbonate rose from 86.5 yuan per kg in the beginning of this yr to 103.5 yuan on the finish of Could.

There’s a time lag for uncooked materials costs to be mirrored in product costs, so a rise in steel costs within the first half of the yr is unlikely to result in higher battery efficiency. Nevertheless, efficiency is predicted to enhance barely from the second half of the yr attributable to a rise in battery common promoting value (ASP).

Nevertheless, it’s understood that battery corporations’ expectations for cargo volumes are nonetheless low. There are nonetheless no indicators that the electrical automobile market has handed the short-term demand stagnation stage (chasm), and there are considerations that gross sales of electrical automobiles and batteries will proceed within the second half of the yr attributable to continued excessive rates of interest in the USA. States and uncertainty about assist for electrical automobiles as a result of outcomes of the November presidential election.

There are strategies that if former President Donald Trump, who’s unfriendly to the transfer to electrical automobiles, wins the presidential election, carmakers will possible be extra tolerant of electrification.

Automakers have little incentive to take dangers and speed up electrification earlier than the presidential election. Moreover, there may be evaluation that if the US Federal Reserve’s (FRB) base rate of interest determination is delayed, demand for electrical automobile purchases will lower attributable to excessive rates of interest, and battery gross sales may additionally go down. Particularly, there are optimistic forecasts that this electrical automobile and battery decline won’t finish within the second half of this yr, however will proceed for a number of extra years.

Particularly, SK On is predicted to face extra company stress attributable to enterprise uncertainty than its opponents. It’s because the corporate has suffered losses each time since its launch, leading to damaging working money move and a poor monetary construction.

The corporate is setting this yr’s efficiency goal on the break-even level (BEP), however the safety business expects SK On to proceed working within the pink this yr. The typical working loss (consensus) of securities corporations for SK This yr is about 600 billion received.

SK On’s debt ratio is 188% as of the primary quarter of this yr, which is larger than LG Power Answer (85%) and Samsung SDI (72%). The dependence on loans is 53%, which can be larger than LG Power Answer (26%) and Samsung SDI (18%).

SK On’s whole loans are 19 trillion received, which is greater than LG Power Answer (13 trillion received) and Samsung SDI (6 trillion received).

On this troublesome state of affairs, there’s a large burden of useful resource funding (CAPEX). The corporate has earned a useful resource funding quantity of about 7.5 trillion this yr. On the finish of the primary quarter, the corporate’s money and money equivalents are 3.3216 trillion received, and because it can’t cowl the funding of assets with its personal cash alone, it’s able the place it wants an quantity elevate a certain quantity of exterior funding.

SK Group sees SK On as a key accomplice that can play a key function of their enterprise going ahead, and gives group-wide assist to lift funds for SK On.

The group set a path to reorganize its enterprise portfolio by reviewing all the companies it operates from the bottom up. SK On, they deal with the sale of varied belongings of some associates and exterior gross sales. of non-core companies This comes collectively.

For instance, a plan to promote SK IE Expertise, a battery merchandise affiliate, is being thought of. Nevertheless, SK Innovation, the mother or father firm of SK On and SK IE Expertise, stated in a latest public announcement, “We’re contemplating a number of steps to alter the battery enterprise portfolio, resembling promoting a portion of shares of SK IE Expertise, however no particular determination has been made up to now.”

There’s hypothesis that the sale of shares in SK Incheon Petrochemical and SK Enmove underneath SK Innovation may also be promoted. SK nMove can be contemplating becoming a member of SK On and itemizing it.

Nevertheless, like SK On, battery merchandise affiliate SK IE Expertise can be dealing with enterprise uncertainty attributable to stagnant demand for electrical automobiles. Presently, SK IE Expertise’s market capitalization is greater than 3 trillion received, however enterprise circles say that it isn’t straightforward to discover a purchaser prepared to pay a big sum of cash​​​​​​ unsure enterprise circumstances.

Refinery and petrochemical associates resembling SK Chemical compounds and SKC, that are prone to promote their shares, have the benefit of being money cows that generate massive earnings, however have the drawback of restricted progress potential as a result of nature of the enterprise, making them engaging. within the funding finance market Evaluation means that it isn’t on the market.

For that reason, some within the funding finance business predict that the reorganization of SK Group’s enterprise portfolio won’t be as straightforward because it appears.

Some specialists stated, “The entire SK Group could fall right into a liquidity disaster as a result of the battery business doesn’t know when it can come again,” they usually stated, “We want progress stability within the interval safe the longer term via daring selections and focus.” Narrator Ryu Geun-og