The following is excerpted from the question-and-answer section of the transcript.
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Question: H. Kwon - JP Morgan Chase & Co, Research Division - Analyst
: [Interpreted] I have 2 questions. The first question is about the business impact due to the ongoing COVID-19 situation. Can you describe the
business impact for Samsung SDI by dividing the first half and the second half of this year? What kind of key risks do you see? And how are you
countering them?
Second question that I have is about CapEx plans. Given, once again, the COVID 19 impact, are there any changes to your CapEx plans this year?
In particular, are you going to maintain your plans of expanding the Hungarian automotive battery plant?
Unidentified Company Representative
[Interpreted] To answer your first question about the impact of COVID-19 on our business and how we plan to respond to that short first half and
second half, despite the spread of COVID-19 during the first quarter, I think we were able to avoid direct impact on our business. But looking forward
to the second quarter where we are, we do expect that there will be a decrease in downstream demand due to COVID-19 during Q2. And so even
though there will be some differences between our business divisions, we do think that in Q2, our sales would also decrease versus our original
plan. For example, the small-sized batteries, which has a higher dependence on the IT downstream sectors, may actually experience a larger relative
impact versus our other business divisions.
From the third quarter, we do think that the situation -- the demand may gradually start to improve. But still, I think due to the ongoing COVID-19
situation, all forecasts are still very fluid. So we are preparing plans for each of the different scenarios, preparing measures. We're also, at the same
time, carefully monitoring the situation on the customer demand side as well as the market situation so that we will be able to operate our business
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APRIL 29, 2020 / 4:30AM, 006400.KS - Q1 2020 Samsung SDI Co Ltd Earnings Call
very flexibly and in a timely manner, depending on these changes. In terms of risk management, we have checked the key risks in our production,
sales and purchasing in these areas, and we are managing them so that we do not experience going forward any disruptions in our business
operation. And we have also been preparing plans of optimizing our resource operation depending on each of these scenarios. We are undergoing
unprecedented challenging business environment, but we will focus all of our capabilities in overcoming the situation so that once we are through
this situation, we will be able to take the company to the next level.
Interpreted To answer your second question about our CapEx plans, given the potential change in the demand due to COVID-19, we do plan to
take a flexible approach to our CapEx this year and make adjustments regarding, for example, investment size or schedules, as needed, according
to the market situation. That being said, in the case of the automotive batteries, we have been carrying out capacity expansion plans according to
the mid- to long-term volume plan which we have already agreed with our customers. And currently, there have been no particular changes to
our expansion plan. So in that regard, regarding the Hungary plant that you've mentioned, the Hungary plant expansion is also underway as
originally scheduled.
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