LG Energy Solution reaps record $550 million profit in Q3

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LG Energy Solution reaps record $550 million profit in Q3

Published: 11 Oct. 2023, 11:05 Updated: 11 Oct. 2023, 17:00

SARAH CHEA
chea.sarah@joongang.co.kr

Ultium Cells employees work at its battery manufacturing plant in Lordstown, Ohio. Ultium Cells is a 50:50 joint battery venture between LG Energy Solution and General Motors. [LG ENERGY SOLUTION]

LG Energy Solution reported a record high of 731.2 billion won ($550 million) in operating profit in the third quarter thanks to the strong sales of EV batteries in the U.S. market and an estimated tax credit from the Inflation Reduction Act (IRA).

The result is up by 40 percent on year, according to its preliminary earnings announcement on Wednesday, and beat the market consensus of 675.1 billion won compiled by FnGuide.

Revenues rose 7.5 percent to 8.2 trillion won, falling slightly short of the market expectations of 8.3 trillion won.

No data on net profit or segmentation were provided.

The strong performance came from solid electric vehicle sales in North America while demand remains sluggish in the European markets.

"We reflected an estimated tax credit of 215.5 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.

Excluding the tax credit, the operating profit came in at 515.7 billion won.

The Korean company recently inked a 10-year battery deal with Toyota Motor and announced a four trillion won investment to build a dedicated production line in its Michigan plant.

LG Energy Solution currently is operating or constructing two independent plants and six joint plants in the North America region.

The company's annual production capacity will be around 300 gigawatt-hours by 2026, enough to make around 4.1 million EVs.

LG Energy Solution is the world's No. 2 battery maker as of the first half after CATL, with 16.5 percent market share.

LG Energy Solution shares closed at 492,000 won on Wednesday, up 7.3 percent from the previous trading day.

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