LG Energy Solution Achieves Record High with 25.5 Trillion KRW in Sales and 1.2 Trillion KRW Operating Profit Last Year

Increase in Shipments Across All Product Lines, Raw Material Costs Linked to Prices
"Aiming for 25-30% Sales Growth Compared to Last Year"
Production Facility Investment Expanded by Over 50%

Data provided by LG Energy Solution

[Asia Economy Reporter Jeong Dong-hoon] LG Energy Solution recorded its highest annual performance last year with sales of 25 trillion KRW and operating profit of 1 trillion KRW. This year, the company plans to expand annual sales by more than 25-30% through new and expanded global production plants, stable operations, and sales expansion centered on the North American region.

On the 27th, LG Energy Solution held a 2022 Q4 earnings conference and announced that it achieved annual sales of 25.5986 trillion KRW and operating profit of 1.2137 trillion KRW last year. This represents an increase of 43.4% and 57.9%, respectively, compared to the previous year's sales (17.8519 trillion KRW) and operating profit (768.5 billion KRW).

Lee Chang-sil, CFO (Chief Financial Officer, Vice President) of LG Energy Solution, stated, "In the second half of last year, demand improved for electric vehicles (EV) and energy storage systems (ESS) for power grids, leading to increased shipments across all product lines. Coupled with expanded price linkage to rising raw material costs, we achieved the highest annual sales. Additionally, operating profit rose significantly year-on-year due to economies of scale from increased sales volume, cost reductions through productivity improvements, and expanded application of competitively priced metal sourcing."

Sales in Q4 last year were 8.5375 trillion KRW, with operating profit of 237.4 billion KRW. Sales increased by 11.6% and 92.3% compared to the previous quarter (7.6482 trillion KRW) and the same quarter last year (4.4394 trillion KRW), respectively, marking the highest quarterly sales ever. The full-scale operation of the GM joint venture (JV) Phase 1 and expanded sales of power grid ESS drove the sales increase. Operating profit decreased by 54.5% compared to the previous quarter (521.9 billion KRW) but increased by 213.6% compared to the same quarter last year (75.7 billion KRW).

LG Energy Solution explained, "In Q4 last year, although economies of scale from increased product shipments and productivity improvements continued, operating profit temporarily declined due to increased ESS external replacement costs from bonuses related to strong annual performance and rising costs. However, excluding one-time costs, results were similar to the previous quarter."

This Year’s Sales Targeted to Rise 25-30% Year-on-Year, Production Facility Investment to Increase by Over 50%

LG Energy Solution set a goal to increase annual sales by 25-30% compared to last year in 2023. Investment to expand global production capacity is also planned to increase by more than 50% from 6.3 trillion KRW last year.

LG Energy Solution stated, "We expect such annual sales growth through new and expanded global production plants and stable operations, as well as sales expansion in the North American region. We will also continuously improve operating profit margins through ongoing cost improvement efforts and product competitiveness differentiation."

Last year, LG Energy Solution had a meaningful year by strengthening strategic partnerships with major global automakers, including the full-scale mass production launch of GM JV Phase 1 and the announcement of new joint plants in North America with Honda and Stellantis. This year, the company plans to increase global production capacity to 300 GWh, enough to produce approximately 4.3 million high-performance pure electric vehicles.

In fact, LG Energy Solution plans to actively expand production capacity at global plants in North America, Europe, and Asia this year to continuously strengthen global competitiveness. In the North American market, expected to have the fastest EV market growth, production capacity will be expanded to 55 GWh by the end of this year through operation of GM JV Phase 1 and Phase 2. The plant in Wroclaw, Poland, will expand to 90 GWh, and production plants in Asia, including Korea and China, will increase capacity to 155 GWh.

As of the end of last year, LG Energy Solution’s order backlog stood at 385 trillion KRW.

"Global Battery Market to Grow 33%", Presents Four Core Tasks to Respond to Demand Expansion

On this day, LG Energy Solution forecasted that the global battery market size will grow about 33% from 670 GWh last year to 890 GWh this year.

By region, the North American market shows the steepest growth in electric vehicles. The North American market is expected to grow by the mid-to-high 60% range this year, driving overall growth in the global EV battery market. Europe is projected to grow by the mid-40% range, and China by the mid-20% range.

This year, LG Energy Solution plans to focus on four core tasks to respond to the expanding global battery market demand: product competitiveness differentiation, smart factory implementation, SCM system establishment, and future preparation.

First, to differentiate product competitiveness, the company will develop more segmented market-customized products such as high-nickel cathode materials, silicon anode materials, new cylindrical form factors, and LFP. It also plans to enhance system-level product competitiveness through pack and BMS capabilities, including improved pack unit space utilization and BMS algorithm development.

LG Energy Solution will also focus on building smart factories where all decisions are made based on machine-generated data rather than human experience and capabilities. By establishing a smart factory foundation across all production processes through predictive maintenance, automation, and intelligence, the company aims to improve yield, productivity, and quality stabilization.

Additionally, the company plans to establish a more efficient SCM system by localizing key materials and expanding upstream investments to secure stable raw material sourcing. It will also fully prepare for the future by continuing next-generation battery technology development such as lithium-sulfur and solid-state batteries, and pursuing new business initiatives.

Kwon Young-soo, CEO and Vice Chairman of LG Energy Solution, said, "This year, based on strong execution capabilities, we will further strengthen fundamental product competitiveness and differentiated global production capabilities to provide the world’s best customer value."