Tianneng Power International has warned of a potential half-year profit fall of up to 66% as high raw material costs hit its mainstay lead acid battery business — but said long-term prospects are strong.

The China-based lead battery major, part of the Tianneng Group, issued the profit warning on August 7, saying revenue for the six months ended last June is expected to be down by 5%-8% compared to the year ago period.

Upstream raw material prices such as for sulfuric acid, which remain at relatively high levels, are to blame — along with intensified competition in downstream industries, Tianneng said in its Hong Kong stock exchange filing.

Another contributory factor was the additional VAT deduction applicable to advanced manufacturing companies in mainland China.

However, Tianneng said lead acid battery sales remained generally stable, thanks to the firm’s leading market position and solid customer base. Meanwhile, its Li ion battery business, synergies in battery recycling operations and expansion into overseas markets is proceeding steadily.

Interim first-half results are expected to be published toward the end of this month.

International expansion

In terms of expansion, Tianneng has revealed it commissioned a manufacturing base in Indonesia last June. The company plans to establish a “full-lifecycle lead battery industry chain” in the country and expand into lithium motive power, energy storage systems, start-stop and industrial power batteries.

Separately, Tianneng said it had signed a cooperation agreement with US lead and lithium giant Clarios last May, focusing on the raw material supply chain, waste battery recycling, and full lifecycle management.

Tianneng said in 2018 was considering setting up a factory in another, unspecified Asian country, to produce 100,000 tonnes of lead batteries a year.

Batteries International discussed pressures on the global battery supply chain amid geoopolitical upheaval earlier this year with lead market veteran, Farid Ahmed. Read the full article here: From Hormuz to Houston: Ripple effect transforming battery world