LG Energy Solution's net drops by 48 percent in first quarter
The results beat estimates, with the Korean battery company reporting a net profit of 226.6 billion won ($180 million) during the January-March period compared to the market forecast of 180.6 billion won.
Quarterly revenue totaled 4.3 trillion won, up 2.1 percent, while operating profit came in at 258.9 billion won, a 24.1 percent drop.
"Solid demand for electric vehicle cylindrical batteries and sharing material cost increases with the automakers helped offset the bad business environment from increases in material costs, automotive chip shortages and the conflict between Russia and Ukraine," said Lee Chang-sil, chief financial officer, LG Energy Solution Tuesday.
"Factory automation boosted productivity leading to earnings that beat market expectations."
LG Energy Solution supplies cylindrical batteries to Tesla, which delivered a record number of vehicles during the first quarter despite shortages of chips and other components.
The battery company will raise its capital expenditure budget by 10 percent to 7 trillion won this year.
It will use the funds to build independent or joint venture factories in North America. The company said it aims to manufacture 520 gigawatt-hours of batteries by 2025 after achieving 200 gigawatt-hours this year.
It is currently establishing a third factory with General Motors in Michigan and one with Stellantis in Canada.
The 7-trillion-won expenditure will also be used to expand a cylindrical battery factory in Nanjing, China. The company said it plans to raise cylindrical battery production capacity at that site this to 60 gigawatt-hours from 40 gigawatt-hours.
The company's battery order backlog stood at 300 trillion won as of end of the first quarter, up by approximately 15 percent from the end of last year.
"Revenue for the second quarter is expected to grow double digits from the first quarter," Lee said. "Profitability will also stay around the same level as this quarter."
LG Energy Solution went public in January, opening at 510,000 won. It traded at 417,500 on Tuesday, down 1.42 percent on the day, after releasing results.
BY JIN EUN-SOO [email@example.com]