LG Energy Solution successfully transitioned to profitability in the second quarter of this year compared to the previous quarter; however, it remains in the red when excluding North American production subsidies. Despite growth in revenue and a return to profit, the company still faces challenges in restoring profitability in its core operations.
On July 30, LG Energy Solution announced that its consolidated operating profit for the second quarter was 113.3 billion won, a 77% decrease from the same period last year.
During the same period, revenue reached 7.56 trillion won, up 24.8% from 6.06 trillion won a year earlier and 15.3% from 6.55 trillion won in the previous quarter. While operating profit fell 77% compared to the previous year (492.1 billion won), it marked a return to profit compared to the previous quarter (20.78 billion won). The amount of North American production subsidies reflected in the second-quarter results was 241 billion won.
Lee Chang-sil, Chief Financial Officer of LG Energy Solution, stated, "Revenue increased by 15% compared to the previous quarter, driven by higher shipments of mid-range products for electric vehicles (EVs) and cylindrical batteries, as well as expanded production capacity for North American energy storage systems (ESS). Notably, ESS shipments grew by over 30% compared to the previous quarter, particularly in North America and Europe, demonstrating significant growth."
The growth of the ESS business has been particularly notable. EV revenue grew 4.6 times year-on-year, and its share of total revenue expanded to the high 20% range. In the first half of the year, the company secured over 3 trillion won in new contracts, including projects for hyperscale AI data centers.
LG Energy Solution anticipates continued growth in the ESS market due to the expansion of AI technology and increased investment in data centers, which will drive stable demand for power supply.
In response to the rapid growth in North American power demand, LG Energy Solution plans to steadily expand its production capacity for pouch LFP-based ESS this year and aims to secure production lines for prismatic batteries next year, enhancing its position as a leading ESS supplier to maximize customer benefits from the Investment Tax Credit (ITC).
On the same day, LG Energy Solution announced key initiatives for the second half of the year to accelerate growth, including improving ESS profitability and expanding order momentum, securing EV order opportunities, and enhancing product sophistication and next-generation battery preparations.
In the ESS sector, the company will focus on stable operations at its five North American production sites and expand production capacity for packs and links while actively pursuing contracts for large-scale renewable energy projects and data center power infrastructure.
In the EV sector, LG Energy Solution is preparing to operate its Arizona 46-series production line, which has improved equipment efficiency by 50% compared to previous models, by the fourth quarter of this year. The company plans to enhance production efficiency in both the U.S. and Europe through gradual increases in the operating rates of its North American joint plants and expanded shipments of mid-range solutions from its Polish factory.
In the next-generation battery field, LG Energy Solution plans to respond to the BBU and robotics markets with its new high-output tabless 2170 product and aims to ship samples of sodium-ion batteries to ESS and automotive customers next year. Additionally, the company plans to prepare a pilot line applying dry electrode processes for the demonstration production of competitively priced solid-state batteries within the year.
However, industry experts point out that the potential reduction of North American production subsidies and the pace of recovery in EV demand remain key variables affecting performance. While ESS has established itself as a new growth axis, it may be challenging to completely move away from subsidy dependence without a recovery in EV business profitability.
* This article has been translated by AI.
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