KUALA LUMPUR, Dec 4 (Bernama) -- Bursa Malaysia rallied to close broadly higher on Wednesday amid strong buying interests mainly in utility and technology stocks, with the benchmark index gaining 0.44 per cent. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 7.13 points to 1,614.09 from Tuesday’s close of 1,606.96. The index opened marginally higher at 1,606.97 and moved between 1,606.53 and 1,616.03 throughout the day. Advancers thumped decliners 727 to 381 on the broader market, with 522 counters unchanged, 781 untraded and 10 suspended. Turnover advanced to 3.60 billion units valued at RM3.30 billion versus 3.32 billion units valued at RM3.30 billion on Tuesday.
Swedish battery manufacturer Northvolt is in talks to sell its industrial battery division, Northvolt Systems Industrial, by year-end, as it seeks to address a severe funding shortfall. An internal memo reveals the company has been negotiating with a large industrial buyer for two months and is aiming to finalize a deal in the coming weeks.
The sale marks a critical shift for Northvolt, which is restructuring to focus on battery cell production, stepping away from its ambition to be an all-encompassing EV battery manufacturer and recycler.
Background and Financial Challenges
- Chapter 11 Filing: Northvolt filed for US Chapter 11 protection on Nov 21 after failing to secure $1.2 billion in long-term funding from stakeholders.
- Profitable Operations at Risk: The industrial battery division, one of the few profitable parts of Northvolt’s portfolio, manufactures batteries for heavy machinery like forklifts and drill rigs.
- Clients: Major customers include Swedish mining equipment maker Epiroc and Finnish engineering group Konecranes.
Details of the Sale
- The division operates primarily in Poland, including at the Northvolt Dwa factory.
- Urgent Deadline: If a buyer is not found, Northvolt will shut down the business, as it cannot afford to continue operations beyond this year.
- Talks with a "large industrial company" are ongoing, with Northvolt aiming to finalize the sale soon.
A Northvolt Poland spokesperson said, "We're optimistic towards reaching a positive outcome, and that's what we are focused on right now."
Impact on Northvolt’s Business
- Restructuring Plans: If the sale proceeds, Northvolt’s operations will shrink to its battery factory in Skelleftea, northern Sweden, and an R&D facility in Vasteraas.
- Energy Storage Exit: Northvolt also plans to wind down its energy storage business, leading to 130 redundancies in Poland.
- Factory Delays: Planned battery factories in Germany and Canada are expected to face delays.
Customer Concerns
- Epiroc: Stated it would assess the situation carefully, emphasizing the need for continued quality and timely delivery of batteries.
- Konecranes: Denied engaging in talks to purchase the division.
While exiting the industrial and energy storage markets will reduce costs, analysts warn that Northvolt could lose out on opportunities in these growing sectors, particularly as governments and companies increase investments in energy storage to combat high energy prices.
Strategic Reversal
The divestment reflects a significant reversal from Northvolt's September strategy, which sought to find strategic partners rather than exit these markets outright. The company has cited the inability to attract investors as a key reason for the pivot.
Market Dynamics
The global battery industry is under pressure due to slower-than-expected EV adoption. Despite this, sectors like energy storage are experiencing rapid growth, making Northvolt’s exit a missed opportunity, according to analysts.
Andy Palmer, founder of Palmer Automotive, remarked, "Struggling battery makers are pivoting to energy storage, but Northvolt’s financial woes limit its ability to tap into this lucrative market."
Outlook
Northvolt’s restructuring highlights the challenges faced by Europe’s battery sector as it contends with global competition and shifting market demands. The success of this divestment will be critical for Northvolt’s survival as it narrows its focus to core operations.
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