- LG Energy Solution posts KRW 6.1619
trillion in consolidated revenue and KRW 195.3 billion in operating profit
- Despite continued EV demand slowdown, the company
makes meaningful progress in EV and ESS
battery businesses, and enhances its fundamental
competitiveness in supply chain and R&D
- In response to slower-than-expected EV market
growth, LG Energy Solution to focus on optimizing
operation and improving profitability, while continuing to pursue
technological and cost competitiveness
SEOUL,
South Korea, July 24,
2024 /PRNewswire/ -- LG Energy Solution (KRX: 373220)
today announced its second quarter
earnings, along with its business achievements and key action plans
to counter slower-than-expected EV market growth.
The company posted consolidated revenue of KRW 6.1619 trillion, a 0.5 percent increase
quarter-on-quarter and 29.8 percent decrease year-on-year. The
operating profit was KRW 195.3
billion, a 24.2 percent increase quarter-on-quarter and 57.6
percent decrease year-on-year, with operating profit margin of 3.2
percent.
"EV demand slowdown and the impact of declining metal prices on
average selling price (ASP) continued through this quarter," said
Chang Sil Lee, CFO of LG Energy
Solution. "However, the revenue slightly increased
quarter-on-quarter, thanks to increased shipments in response to
new EV model launch by customers and revenue growth from ESS
batteries for power grids."
"The operating profit was affected by fixed cost burden due to
utilization rate adjustment," Lee said. "However, the IRA tax
credit effect more than doubled from the previous quarter thanks to
increased volume in North America,
driving a 24.2 percent quarter-on-quarter increase in operating
profit."
The operating profit includes the estimated IRA tax credit
amount of KRW 447.8 billion.
Excluding the IRA tax credit, the company would have recorded
quarterly operating loss of KRW 252.5
billion.
- 2Q Progress: Business achievements and enhanced fundamental
strengths
Despite ongoing global EV demand slowdown and subsequent market
uncertainties, LG Energy Solution continued its venture into more
diverse product lineup, successfully landing new supply agreements
in both EV and ESS battery businesses.
The company signed off its first large-scale (39GWh) supply
agreement for LFP[1] batteries with Renault Group's
Ampere, a meaningful achievement in the LFP segment that is
currently dominated by Chinese battery manufacturers. LG Energy
Solution also reaffirmed its technological leadership through this
agreement, as it became first in the world to apply cell-to-pack
(CTP) technology to a pouch form factor.
The company also started successful mass production and shipment
from its joint venture plant with Hyundai Motor Group in
Indonesia, adding another EV
battery production hub in Asia for
a proactive response to rapidly-growing EV demands in the
region.
The company also made significant progress in its ESS battery
business, as it secured a large-scale supply agreement for power
grids in Arizona (4.8GWh).
Capitalizing on its expertise as a comprehensive solution provider,
LG Energy Solution will deliver a total ESS solution including
system integration (SI) from LG Energy Solution Vertech, Inc.,
offering differentiated customer value.
Along with business achievements, the company also concentrated
on heightening its fundamental competitiveness. LG Energy Solution
further reinforced its raw material supply chain by successfully
securing lithium spodumene through offtake and investment
agreements with a lithium producer with mines in Australia.
The company also drew achievements in battery-related
technologies, including developing AI algorithms for cell designs
that are optimized to customer needs. It also signed an MoU with
Analog Devices, Inc. on advancing cell temperature measurement
technology.
- Key action plans to counter slower EV market
growth
In response to slow EV market growth, LG Energy Solution revised
down its annual guidance, with its annual consolidated revenue now
expected to decrease by more than 20 percent from last year. The
company also lowered this year's expected capacity eligible for the
IRA tax credit from 45~50GWh to 30~35 GWh, due to adjustments in
ramp-up speed in response to changing customer demands.
Despite unfavorable market environment expected in the
second-half of the year, the company is looking forward to a
meaningful increase in shipments, in line with the rising demand in
North America and Europe thanks to new EV model launches. It
also expects increased revenue from pouch-type mobility & IT
batteries due to customers' demands for premium batteries. ESS
battery business is expected to benefit from increased sales from
power grid projects.
At the same time, to counter continued market uncertainties, LG
Energy Solution will prioritize optimizing operation and improving
profitability. The company will maximize the utilization rate at
each site by adjusting ramp-up speed, scaling down investment, and
converting existing lines for other applications. Moreover, it will
execute capex based on strategic priorities.
Also, the company will secure competitive edges in both products
and future technologies. It will first establish differentiated
product portfolio by launching 4680 cells and expanding the
production of ESS LFP batteries. At the same time, the company will
accelerate the development of future battery technologies by
setting up pilot lines for dry electrode production in its facility
in Ochang, Korea.
Lastly, the company will stay committed to improving cost
competitiveness by expanding the scope of direct sourcing from
critical minerals to precursors and increasing investment in
upstream suppliers. It will also continue to enhance production
efficiency by simplifying production processes and advancing smart
factory technologies.
"Despite experiencing more headwinds than previously expected,
we will remain agile through transitions and establish strong
fundamental competitiveness, delivering differentiated values to
our customers," said David Kim, CEO
of LG Energy Solution. "With these efforts, we aim to solidify our
position as a front-runner leading the future of battery
industry."
About LG Energy Solution
LG Energy Solution (KRX: 373220), a split-off from LG Chem, is a
leading global manufacturer of lithium-ion batteries for electric
vehicles, mobility, IT, and energy storage systems. With 30 years
of experience in revolutionary battery technology and extensive
research and development (R&D), the company is the top
battery-related patent holder in the world with over 58,000
patents. Its robust global network, which spans North
America, Europe, and Asia, includes battery manufacturing
facilities established through joint ventures with major
automakers. Committed to building sustainable battery ecosystem, LG
Energy Solution aims to achieve carbon neutrality across its value
chain by 2050, while embodying the value of shared growth and
promoting diverse and inclusive corporate culture. To learn more
about LG Energy Solution's ideas and innovations, visit
https://news.lgensol.com.
[1] LFP: lithium, iron, phosphate
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SOURCE LG Energy Solution