'Black Ink Turnaround' LG Energy Solution, 3Q Revenue 7.6482 Trillion KRW... Quarterly Record High (Comprehensive)

Operating Profit of 521.9 Billion KRW... Successful Turnaround to Profit Compared to Last Year
Excluding One-Time Factors, Highest Ever Except for Last Year's 2Q

LG Energy Solution CEO Vice Chairman Kwon Young-soo. Photo by LG Energy Solution

[Asia Economy Reporter Choi Seoyoon] LG Energy Solution announced on the 7th that its consolidated operating profit for the third quarter of this year reached 521.9 billion KRW, turning profitable compared to a loss of 372.8 billion KRW in the same period last year.

Sales increased by 89.9% from last year to 7.6482 trillion KRW. This is the highest quarterly sales since the launch of LG Energy Solution.

Operating profit is also the highest ever, excluding the second quarter of last year (operating profit of 724.3 billion KRW), which included one-time factors such as license fee settlements and provisions.

The battery industry and securities firms cite the following factors for the strong performance: ▲ raw material price linkage effect ▲ increased production and sales due to strong electric vehicle sales from major customers ▲ exchange rate appreciation.

LG Energy Solution has been consistently implementing price linkage with customers to minimize the impact of large fluctuations in the prices of key raw materials and to secure stable profitability. They have emphasized that this effect will be fully reflected starting from the third quarter.

At the earnings conference call for the second quarter this year, LG Energy Solution stated, "We have been working on linkage for major metals, have completed linkage with most customers, and expect the full effect to be realized from the third quarter."

The metal price linkage aims to minimize the impact of fluctuations in major raw material prices to maintain stable profitability. LG Energy Solution said, "We have intensively conducted metal linkage with major clients, which was a strategically very significant outcome," and added, "From July, almost all linked costs have been applied, so we expect this to positively affect overall profitability."

Factors contributing to the strong performance also include increased shipments of pouch-type batteries due to strong sales of the North American Ford Mustang Mach-E electric vehicle and expanded production of Volkswagen ID series electric vehicles. It is also reported that shipments of cylindrical batteries have increased due to Tesla's expanded electric vehicle production.

Additionally, given LG Energy Solution's business characteristics with a high proportion of overseas sales, the strong dollar trend is analyzed as a major factor in improving performance.