LG Energy Solution's profit up 145%, expectations trounced

LG Energy Solution employees pose with the company's cylindrical batteries [LG ENERGY SOLUTION]

LG Energy Solution's operating profit rose 145 percent in the first quarter boosted by strong sales of electric vehicle batteries and an estimated tax credit from the Inflation Reduction Act (IRA).

In a preliminary earnings announcement on Friday, the company said its operating profit in the January-to-March period came to 633.2 billion won ($480.1 million), a 144.6 percent jump on year.

The figure far beat the market consensus of 484.7 billion won, as reported by market tracker FnGuide.

That's around half of the battery maker's total operating profit last year. The company generated 1.2 trillion won in operating profit in 2022.

Revenues soared 101.4 percent to 8.74 trillion won, also beating the market expectation of 8.37 trillion won.

Neither net profit nor segmentation were provided.

"We reflected an estimated tax credit of 100.3 billion won in our first quarter report," LG Energy Solution said in a statement.

"Under the Advanced Manufacturing Production Credit, the IRA grants domestic battery manufacturers a tax credit of $35 per kilowatt-hour for battery cells and an additional $10 per kilowatt-hour for battery modules manufactured and sold in the United States from 2023."

LG Energy Solution currently produces batteries in Ohio with General Motors, and in Michigan independently.

Excluding the tax credit, the operating profit came in at 532.9 billion won, up 105.8 percent on year.

LG Energy Solution will announce its full earnings report including net profit and breakdown on April 26.

A total of 75.2 gigawatt-hour of batteries were used in electric vehicles worldwide in January and February, according to SNE Research, up 39 percent compared to same period last year.

LG Energy Solution was the third largest battery maker, with 13.3-percent share, losing its second-place position to BYD.

CATL held 33.9 percent of the market, while BYD had 18.2 percent.

LG Energy Solution shares were unchanged at 580,000 won Friday.

BY SARAH CHEA [chea.sarah@joongang.co.kr]