LG Energy Solution anticipates profit surge as EV demand accelerates

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LG Energy Solution anticipates profit surge as EV demand accelerates

LG Energy Solution's headquarters in Yeouido, western Seoul. [YONHAP]

LG Energy Solution's headquarters in Yeouido, western Seoul. [YONHAP]

 
LG Energy Solution has estimated a jump in excess of 200 percent in its operating profit for the March-June period, driven by strong demand for electric vehicles.

 
The local battery maker on Friday said that its second-quarter operating profit came in at 611.6 billion won ($468.1 million), up 212.7 percent from the same period last year, in its preliminary earnings guidance.

 
The figure missed the analyst consensus of 688.2 billion won compiled by FnGuide.  

 
Revenue increased 73 percent on year to 8.77 trillion won, beating expectation of 8.75 trillion won.

 
Net profit was not provided in the guidance.

 
LG Energy Solution said the operating income includes the 110.9 billion won it received in U.S. incentives from the Advanced Manufacturing Production Credit under the new Inflation Reduction Act on promoting green technologies.

 
Analysts attributed the lower-than-expected profit to the supply in Europe that may have slowed compared to the previous quarter as customers delayed purchases when metal prices fell.

 
"We believe that European customers expected secondary battery prices to drop amid falling mineral prices and slightly delayed their purchases," Cho Chul-hee, an analyst at Korea Investment & Securities, said in a note.

 
"The battery supply of the joint venture with General Motors (GM), Ultium Cells in North America, was probably smaller than expected, as GM's output fell short of the targets," Cho added.

 
The supply to Tesla has most likely increased in a stable fashion, with the world's No. 1 electric car maker having reported the record delivery of its vehicles in the second quarter that beat market estimates, analysts said.

 
The company will release the final earnings report later this month.
 

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