Ecopro eyes earnings recovery on stronger nickel supply chain

Ecopro expressed confidence in a second-half earnings rebound, pointing to the normalization of its Indonesian nickel smelter operations and a broader push to strengthen its supply chain. The company said a temporary disruption at the Indonesian smelter weighed on profitability in the second quarter, but forecast a recovery beginning in the third quarter as production returns to normal. It also outlined a strategy to expand investment in raw material supply chains — including nickel and lithium — to build long-term cost competitiveness.

"As the Indonesian nickel smelter enters full ramp-up and facility operations normalize, we expect a gradual earnings recovery starting in the third quarter," Ecopro said during its second-quarter earnings conference call Tuesday. "In the fourth quarter, the IMIP smelter, including Green Eco Nickel (GEN), is expected to reach full capacity, enabling further earnings improvement."

The company reported consolidated second-quarter sales of 820.8 billion won ($574 million), a slight increase from 818.3 billion won in the previous quarter. Operating profit, however, fell to 32.9 billion won from 56.4 billion won the prior quarter.

Ecopro attributed the decline to a temporary drop in utilization rates at its Indonesian nickel smelter. In its lithium business, sales volumes fell as the effect of advance orders from customers faded, but profitability improved as rising lithium prices were reflected in selling prices.

Ecopro identified strengthening its nickel supply chain as a key second-half priority. At the group level, the company plans to secure upstream resources through the IMIP smelter in Indonesia and the BNSI nickel smelter led by Ecopro BM, while boosting cost competitiveness through a lithium project in Nevada and North American supply chain partnerships. The company also said it intends to develop urban mining and semiconductor materials as future growth pillars.

On Ecopro BM's rights offering to fund investment in the BNSI nickel smelter, the company said the move was "a strategic investment to strengthen the supply chain, not simply for working capital or debt repayment." Ecopro BM plans to deploy the proceeds toward the BNSI nickel smelter in Indonesia and a cathode material factory in Hungary.

Addressing concerns about the financial burden on the holding company, Ecopro said it holds approximately 600 billion won in cash and cash equivalents and can secure sufficient investment funding through internal cash flow and external borrowing alone. "We are not considering any additional capital-raising at the holding company level," it said.

Ecopro also forecast that its subsidiary Ecopro HN would benefit from the semiconductor industry boom. "Order fulfillment driven by the semiconductor market upswing is gaining momentum, and sales have expanded on the back of a stable supply base for overseas LNG power plants," the company said. "In the second half, profitability is expected to improve further through a higher-margin product mix, driven by new customer acquisition, large-scale order-based environmental plant sales, and a concentration of semiconductor-related orders."