LG Energy Solution Q4 net profit takes 31% nosedive amid slow EV demand

[LG ENERGY SOLUTION]

LG Energy Solution, Korea's top battery manufacturer, announced a 31 percent decline in net profit for the fourth quarter of 2023 on-year due to a deceleration in the demand for electric vehicles (EVs).

Net profit for the three-month period that ended Dec. 31 fell to 190.3 billion won ($142 million) from 275.6 billion won during the same period of 2022, the company said in a statement Friday.

"The EV sales slowdown and falling metal prices [which affect car battery prices] ate away at the quarterly bottom line," a company spokesperson said.

But operating profit jumped 43 percent on-year to 338.2 billion won in the fourth quarter from 237.4 billion won, boosted by U.S. tax credits and robust sales in the United States.

Increased car battery production and sales in the U.S. and local tax credits pushed up the operating income despite high interest rates and the EV sales slowdown in Europe and China since late last year, LGES said.

The Inflation Reduction Act, signed into law by U.S. President Joe Biden in August 2022, requires 50 percent of the value of battery components to be assembled in North America to receive a $3,750 credit and 40 percent of the value of critical minerals sourced from the U.S. or a free trade partner for a separate $3,750 credit.

Tax credits worth 250 billion won were reflected in its quarterly operating profit, the company said.

Sales fell 6.3 percent to 8 trillion won in the December quarter from 8.54 trillion won a year ago.

For all of 2023, net income more than doubled to 1.64 trillion won from 779.8 billion won the previous year.

Operating profit jumped 78 percent to 2.16 trillion won last year from 1.21 trillion won a year ago. Sales were up 32 percent to 33.75 trillion won from 25.59 trillion won.

It is the first time the company's annual operating income and sales have exceeded 2 trillion won and 30 trillion won since its foundation in 2020.

BY SEO JI-EUN, YONHAP [seo.jieun1@joongang.co.kr]