LG Energy Solution Q2 profit more than doubles
Published: 27 Jul. 2023, 10:45
Updated: 27 Jul. 2023, 16:56
LG Energy Solution's profit more than doubled in the second quarter, although it missed the market consensus by far due to the one-off recall cost of General Motors' Bolt EVs.
The Korean battery maker logged 460.6 billion won ($362 million) in operating profit in the second quarter, up 135.5 percent on year.
But it fell considerably short of the market consensus of 701.2 billion won compiled by market tracker FnGuide.
"The fall came as we reflected 151 billion won as a one-off cost for GM's Bolt EV recall [which involved replacing battery packs and modules due to fire risks]," Lee Chang-sil, chief finance officer at LG Energy Solution, said in a conference call Thursday morning.
Revenues posted an all-time high of 8.8 trillion won, a 73 percent jump year-on-year increase, in line with the analyst consensus.
Net profit surged 417 percent to 465.1 billion won, but missing the market estimate of 627.1 billion won.
The figures are also attributed to "the Inflation Reduction Act [IRA] tax credit where we reflected 110.9 billion won," Lee added.
The IRA grants domestic battery manufacturers a 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 predicted a weak third quarter, although sales will increase further in the fourth quarter.
Lee also gave details about the company's future direction in diversifying its portfolio.
"We will set up a manufacturing line for our 4680 battery cells in the Ochang plant in North Chungcheong by this year," he said. "Some part of NCM battery lines will be switched to LFP batteries at our China plant."
Lithium iron phosphate, or LFP, batteries are increasingly favored by global automakers with their fewer risks and low cost. Around 95 percent of the market is controlled by Chinese manufacturers, including CATL.
LG Energy Solution shares fell 6.9 percent to close at 540,000 won Thursday.
BY SARAH CHEA, SHIN HA-NEE [[email protected]]
with the Korea JoongAng Daily
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