LG Energy Solution has successfully improved its performance in the third quarter of this year, driven by growth in its energy storage system (ESS) business and increased shipments of electric vehicle batteries.
On November 3, LG Energy Solution announced that it recorded revenues of 9.64 trillion won and an operating profit of 756 billion won. Revenue increased by 59% compared to the same period last year and rose by 27.6% from the previous quarter. Operating profit grew by 25.7% year-on-year and surged by 567.3% from the prior quarter.
The operating profit for the third quarter includes 416.9 billion won from North American production subsidies under the U.S. Inflation Reduction Act (IRA). Excluding this amount, the operating profit was 339.1 billion won.
Despite the increase in operating profit, the company reported a return to net loss. The loss from continuing operations before tax for the third quarter was 231.2 billion won, a reversal from a profit of 552.8 billion won in the same period last year. The net loss also reached 296.9 billion won, compared to a profit of 536.1 billion won during the same time last year.
The improvement in quarterly performance was led by increased shipments of ESS and expanded sales of electric vehicle batteries. Notably, enhanced operational efficiency at the Poland factory, increased supply of cylindrical batteries, and improved productivity at new ESS production facilities contributed to the profitability.
Lee Chang-sil, Chief Financial Officer of LG Energy Solution, stated, "In the third quarter, overall sales saw significant growth, with a 28% increase from the previous quarter, driven by a substantial rise in ESS shipments and growth in both pouch and cylindrical EV products."
In the ESS sector, the company achieved new orders related to AI data centers. LG Energy Solution signed its first direct supply contract for battery energy storage systems (BESS) with a global tech giant. It was also selected as the only 'DSX Ready BESS Partner' among domestic battery companies by NVIDIA.
The company expects additional orders in the fourth quarter as it is in discussions with multiple clients regarding new ESS projects. In the electric vehicle battery segment, it has secured contracts to expand supply volumes of next-generation high-voltage mid-nickel products, strengthening its revenue base in the European market.
Production facility utilization rates have also improved. New lines for North American ESS cell production and container system assembly have been added, positively impacted by increased demand for cylindrical batteries and the restart of the joint venture plant with General Motors in the U.S.
LG Energy Solution plans to accelerate global production capacity expansion, focusing on ESS. By the end of this year, it aims to secure over 50 GWh of ESS production capacity in North America, with plans to expand to over 70 GWh by the end of next year, including new prismatic battery production lines.
The Arizona plant, the first cylindrical battery production base in North America, is also set to complete production preparations by the end of the year.
In its Ochang energy plant in South Korea, the company is concentrating on developing next-generation batteries. It has begun producing sodium-ion battery samples for ESS this year and plans to supply test products to North American clients next year. Production of lithium iron phosphate (LFP) based tabless 2170 cylindrical batteries is also targeted for mass production in the first half of next year.
In response to tightening supply chain regulations in the U.S. and Europe, LG Energy Solution is diversifying its sources for LFP cathode materials and strengthening its supply chain for key materials such as anode materials and electrolytes from non-PFE sources.
Lee added, "We plan to actively respond to market changes while reinforcing our strategy of selection and concentration to maximize operational efficiency with limited resources."
* This article has been translated by AI.
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