- LG Energy Solution records KRW 6.1287
trillion in consolidated revenue and KRW 157.3 billion in operating profit
- Despite market uncertainties, the company bears fruits in
expanding U.S. operation and developing new business
areas
- LG Energy Solution to focus on strengthening fundamental
competitiveness by improving investment efficiency and
cost-competitiveness
SEOUL,
South Korea, April 24,
2024 /PRNewswire/ -- LG Energy Solution (KRX: 373220)
today announced its first quarter
earnings, along with its key achievements in expanding U.S.
production operations and new businesses.
The company posted consolidated revenue of KRW 6.1287 trillion, a 23.4 percent decrease
quarter-on-quarter. It also marked approximately 30 percent
decrease from the same period last year. The company's first
quarter operating profit was KRW 157.3
billion, a 53.5 percent decrease quarter-on-quarter and 75.2
percent decrease year-on-year, with a margin of 2.6 percent.
"Revenues from cylindrical EV batteries have increased by
double-digit, as we have taken active response to demands from the
strategic customer," said Chang Sil
Lee, CFO of LG Energy Solution. "However, total revenue
declined due to demand weakening in the upstream market, in
addition to prolonged metal price impact on average selling prices
(ASP)."
"The operating profit was affected by fixed cost burden from
revenue decrease and utilization rate adjustment caused by EV
demand slowdown, as well as the increased costs of metal expenses
from lagging consumption of raw material inventories," Lee
said.
The figure includes the estimated IRA tax credit amount of
KRW 188.9 billion, which has also
declined due to demand slowdown and the temporary suspension of
production lines in the Michigan
facility's retooling. Excluding the IRA tax credit, the company
would have recorded quarterly operating loss of KRW 31.6 billion.
- Stable operation and continued business achievements amid
market uncertainties
LG Energy Solution, despite global EV demand slowdown and
subsequent market uncertainties, has continued with its investments
for future-preparedness and successfully made key achievements in
its stable global operation and major business areas.
In the first quarter, the company's GM joint venture (JV) plant
in Tennessee started production,
with successful first shipment to customer in early April. The JV
is expected to gradually expand its average annual production
capacity to 50GWh, providing innovative batteries that will power
GM's upcoming models with BEV3[1] platform.
LG Energy Solution achieved another significant milestone in its
operation with the Arizona
manufacturing complex. Consisting of the company's first
stand-alone cylindrical and ESS battery plants in North America, the complex will secure the
average annual production capacity of 53GWh. The company aims to
reinforce its technological leadership in North America with the 46-Series cylindrical
batteries and LFP ESS batteries that will be manufactured in the
Arizona complex, and offer
proactive response to local customers.
Also, to create a virtuous cycle for growth, LG Energy Solution
has been committed to developing new business areas, namely battery
software and related services. As part of such efforts, LG Energy
Solution entered into strategic partnership with Qualcomm
Technologies. In battery-related services, LG Energy Solution
officially launched its battery swapping stations, with 20 stations
now installed in Seoul. Through
these new businesses, the company will pursue technological
leadership in not just battery manufacturing and sales, but in
battery-related software and service areas.
Lastly, in the first quarter, LG Energy Solution enhanced its
resiliency against market uncertainties by expanding its global
supply chain and securing investment resources. To establish a
sound supply chain, the company signed supply agreements on LFP
cathode materials (160,000 tons for five years) with Changzhou
Liyuan and IRA-compliant lithium concentrate (85,000 tons annually)
with WesCEF.
To secure investment resources and mitigate short-term financial
burden, LG Energy Solution issued the largest-ever KRW-denominated
corporate bond and signed a long-term lease agreement on its
cylindrical EV battery plant in Arizona.
- The company to pursue fundamental strengths this year,
focusing on investment efficiency and cost-competitiveness
LG Energy Solution also announced a whole-year action plan,
aiming to heighten its fundamental competitiveness.
First, in response to EV demand dynamics, LG Energy Solution
will proactively improve its investment and cost efficiency. It
will adjust capex size and execution speed as per priority, and
optimize the capacity efficiency by maximizing each facility's
production capacity. The company will also improve its operational
cost structure by optimizing the logistics and utility costs.
In addition to heightened efficiency, the company plans to
strengthen cost innovation on raw material costs. It will reduce
material costs through expanding direct sourcing from critical
minerals to precursors, and secure cost strength through investing
in value chains.
At the same time, to continue the growth momentum, LG Energy
Solution will further diversify its global production footprint
based on solid partnership with JV partners. In the second quarter,
the company's JV with Hyundai Motor Group in Indonesia (10GWh) has started mass production,
and JV with Stellantis in Canada
(45GWh) will start operation as well in the second-half of this
year.
Lastly, the company seeks to expand its product lineup,
capitalizing on its unmatched technological leadership. Its Ochang
plant in Korea will start mass producing 46-Series cylindrical
batteries in the third quarter. After starting to produce ESS LFP
batteries in Nanjing, China last year, the company will increase the
supply to the North American and European markets, responding to
the demand from power grid projects.
"Despite challenging market outlook this year, we will establish
a solid foundation for unmatched technological leadership by
reinforcing our fundamental competitiveness and providing
differentiated values to our customers," said David Kim, CEO of LG Energy Solution.
About LG Energy Solution
LG Energy Solution (KRX: 373220), a split-off from LG Chem, is a
leading global manufacturer of lithium-ion batteries for electric
vehicles, mobility, IT, and energy storage systems. With 30 years
of experience in revolutionary battery technology and extensive
research and development (R&D), the company is the top
battery-related patent holder in the world with over 58,000
patents. Its robust global network, which spans North
America, Europe, and Asia, includes battery manufacturing
facilities established through joint ventures with major
automakers. Committed to building sustainable battery ecosystem, LG
Energy Solution aims to achieve carbon neutrality across its value
chain by 2050, while embodying the value of shared growth and
promoting diverse and inclusive corporate culture. To learn more
about LG Energy Solution's ideas and innovations, visit
https://news.lgensol.com.
[1] BEV3: Battery Electric Vehicle, Generation 3
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SOURCE LG Energy Solution