LG Energy Solution announced that it achieved sales of KRW 8.2235 trillion and an operating profit of KRW 731.2 billion in the third quarter of this year.
At a performance briefing held on the 25th, LG Energy Solution stated that third-quarter sales rose 7.5% compared to the third quarter of last year (KRW 7.6482 trillion) but decreased 6.3% compared to the previous quarter (KRW 8.7735 trillion). Operating profit increased by 40.1% compared to the same period last year (KRW 521.9 billion) and by 58.7% compared to the previous quarter (KRW 460.6 billion).
The amount of tax credit from the U.S. Inflation Reduction Act (IRA) reflected in this operating profit was KRW 215.5 billion. Due to the stable expansion and operation of new production lines, this increased by 94% compared to the previous quarter. Excluding this, the third-quarter operating profit was KRW 515.7 billion, with an operating profit margin of 6.3%.
Q3 Benefited from IRA... Operating Profit Up 40% YoY
Lee Chang-sil, Vice President and CFO of LG Energy Solution, said, "Sales fell about 6% compared to the previous quarter due to weak demand in Europe, adjustments in electric vehicle production by some customers, and a decline in metal prices in the first half. However, operating profit increased due to expanded sales focused on high-margin products, increased productivity of new North American lines such as the GM JV Phase 1, and cost efficiency efforts."
LG Energy Solution's current order backlog in the third quarter surpassed KRW 500 trillion. Including the Toyota contract, it secured over KRW 500 trillion, and various cooperation discussions with new and existing clients are underway, with expectations for additional orders and market expansion by year-end. Cumulative capital expenditures (Capex) executed by the end of the third quarter this year reached KRW 7.6 trillion, already exceeding last year's total Capex of KRW 6.3 trillion. This year, due to new expansions such as the U.S. GM joint factory, the company plans to execute investments exceeding KRW 10 trillion annually.
On the 10th, LG Energy Solution headquarters on Yeouidaero, Yeongdeungpo-gu, Seoul. Photo by Jinhyung Kang aymsdream@
On the same day, LG Energy Solution detailed plans to 'fundamentally strengthen product competitiveness.' The challenging business environment is expected to continue in the fourth quarter due to slowing electric vehicle demand in Europe and China and falling prices of key raw materials such as lithium and nickel. LG Energy Solution plans to focus on solid growth based on electric vehicle demand in North America and growth in the ESS (Energy Storage System) business segment.
For premium products like high-nickel NCMA (Nickel-Cobalt-Manganese-Aluminum), performance will be differentiated through enhanced safety via improved thermal management technology and the application of new materials. The nickel content, previously in the high 80% range, will be increased to over 90% to raise energy density, and safety will be further enhanced through design optimization and development of module and pack cooling systems as part of thermal management solutions. Additionally, rapid charging time will be reduced to under 15 minutes by utilizing high-capacity, high-efficiency silicon anode materials.
Through this, LG Energy Solution plans to expand orders related to premium electric vehicles from major customers. In fact, earlier this month, LG Energy Solution agreed to supply modules equipped with high-nickel NCMA-based pouch cells at an annual scale of 20 GWh for 10 years starting in 2025 to Toyota, the world's largest automaker.
U.S. Arizona Plant to Become Key Hub for 46-Series Cylindrical Batteries
Efforts to strengthen the product portfolio targeting the mid-to-low-priced electric vehicle market will also accelerate. LG Energy Solution announced its goal to start producing low-cost lithium iron phosphate (LFP) batteries for electric vehicles (EVs) from 2026. Lee Chang-sil, Vice President and CFO of LG Energy Solution, stated during the earnings conference call, "We plan to expand our product portfolio to respond to the low-cost EV battery market."
He added, "We are actively developing LFP-based products, combining the advantages of pouch cells such as cell weight and space utilization, and pursuing cell structure improvements and process innovations to produce new EV LFP and LMFP (Lithium Manganese Iron Phosphate) based products." He further explained, "We are preparing to consecutively launch these products (LFP and LMFP batteries) in 2026 and 2027." LFP batteries are cheaper than the ternary NCM (Nickel-Cobalt-Manganese) batteries that the domestic battery industry has focused on, although their driving range for electric vehicles is shorter.
LG Energy Solution has decided to utilize its new production plant in Arizona, U.S., as a key production base for the North American '46-series' (46mm diameter cylindrical batteries). Reflecting increasing demands from several automaker customers for 46-series products, the company revised its initial plan to build a 27 GWh cylindrical 2170 battery production plant. Production capacity will be expanded from the original 27 GWh to 36 GWh. The pilot line for the 46-series being established at the Ochang Energy Plant is scheduled to begin mass production in the second half of next year.
Kwon Young-soo, Vice Chairman and CEO of LG Energy Solution, said, "We will establish differentiated product competitiveness across all product lines from premium to mid-to-low-priced, making it a core driver for sustainable mid- to long-term growth, and become a global leading company that provides the world's best customer value."
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