LG Energy Solution reports weaker-than-expected net profit for 2022

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LG Energy Solution reports weaker-than-expected net profit for 2022

Published: 27 Jan. 2023, 13:21

Ultium Cells' production facility in Warren, Ohio. Ultium Cells is a 50-50 battery-making joint venture between LG Energy Solution and General Motors. [LG ENERGY SOLUTION]

LG Energy Solution reported a weaker-than-expected 779.8 billion won ($634.1 million) in net profit for 2022, down 16.1 percent on year, according to its regulatory filing Friday.

However, both operating profit and sales came in at a record high, boosted by strong demand for electric cars and energy storage systems, as well as improved economy of scale, according to the battery maker.

The company’s annual net profit missed the market consensus of 840.8 billion won compiled by FnGuide. LG Energy Solution cited a non-operating loss of 218 billion won caused by the strong dollar and the base effect of the previous year’s one-off profit from an asset sale for the decline in net profit.

Its yearly operating profit jumped 57.9 percent on year to a record 1.2 trillion won, yet fell short of analyst forecast of 1.4 trillion won. Sales saw a 43.4 percent surge to 25.6 trillion won, also a record figure, and beat market expectation.

In the fourth quarter, LG Energy reported a quarterly operating profit of 237.4 billion won, up 213.6 percent on year, and 8.53 trillion won in sales, up 92.3 percent on year.

For this year, LG Energy Solution set an annual growth target of about 25 to 30 percent in sales propelled by production expansion and the U.S. market growth. The battery maker also aims to ramp up investments in global capacity expansion by more than 50 percent compared to last year’s 6.3 trillion won.

Lee Chang-sil, chief finance officer at LG Energy Solution, said that the current global battery market is in an uncertain situation, but forecast 33 percent growth in revenue.

“The market forecast on the global car sales growth has been adjusted downward, and some markets are expected to shrink,” said Lee during a conference call Friday, “but due to carmakers’ aggressive push for electrification and each country’s policy support, the global electric vehicle (EV) sales is expected to grow 20 percent this year.”

Lee explained that “the global battery market is forecast to expand 33 percent on year to 890 gigawatt-hours” thanks to rising long-range EV sales.

LG Energy Solution currently had production capacity of some 200 gigawatt-hours as of the end of last year. The goal is to push up the figure to 300 gigawatt-hours this year, which is enough to produce 4.3 million electric vehicles.

Ultium Cells, a 50-50 joint venture between LG Energy Solution and General Motors, began operation of its first production plant in November last year. LG Energy Solution is also building production facilities with Stellantis and established a battery-making joint venture with Honda as well.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]