AMPC Up 21% from Previous Quarter...
830 Billion KRW Loss Excluding AMPC
LG Energy Solution posted better-than-expected strong results in the first quarter of this year, benefiting from the Advanced Manufacturing Production Tax Credit (AMPC) under the U.S. Inflation Reduction Act (IRA).
LG Energy Solution announced on the 7th that its consolidated operating profit for the first quarter of this year was tentatively estimated at 374.7 billion KRW, a 138.2% increase compared to the same period last year. The AMPC amount increased by 21% from the previous quarter to 457.7 billion KRW; excluding this, the company recorded an operating loss of 83 billion KRW. In the fourth quarter of last year, excluding the AMPC amount (377.3 billion KRW), the company posted a loss of 602.8 billion KRW.
First-quarter sales were tentatively estimated at 6.265 trillion KRW, up 2.2% from the same period last year. Compared to the previous quarter, sales decreased by 2.9%, but operating profit turned positive.
Despite the fixed cost burden due to decreased volume, shipments of major customer usage volumes were more robust than expected, and the effect of exchange rate increases also positively impacted the results. Shipments related to some sample provisions for energy storage systems (ESS) and original equipment manufacturers (OEMs) were also reflected.
However, sales slightly decreased compared to the previous quarter due to ongoing year-end inventory adjustments by some OEMs and a seasonal downturn in the ESS business leading to reduced volumes.
LG Energy Solution stated at last month’s shareholders’ meeting that "while the growth potential of the battery market remains solid, short-term fluctuations are being experienced due to increased policy volatility in major countries," and lowered its annual average growth rate forecast from 30% to around 20% through 2028.
LG Energy Solution’s strategy is to turn the current crisis into an opportunity to fundamentally enhance competitiveness by strengthening product and quality competitiveness, securing structural cost competitiveness, and preparing future technologies, while focusing on operational efficiency.
As part of this, the company formalized the acquisition of the third joint venture with General Motors (GM) in Michigan, Ultium Cells Phase 3, and announced the production of ESS products at the Michigan Holland plant and the Wroclaw plant in Poland.
Through proactive investments, LG Energy Solution is currently operating three plants in the U.S.: the Michigan Holland standalone plant, Ultium Cells Phase 1 in Ohio, and Ultium Cells Phase 2 in Tennessee. Additionally, four plants are under construction: the Ohio Honda joint plant, the Georgia Hyundai joint plant, the Michigan Lansing standalone plant (Ultium Phase 3), and the Arizona standalone plant.
Kim Dong-myung, President of LG Energy Solution, emphasized at the shareholders’ meeting, "Once the current crisis passes, the true winners will be revealed," adding, "LG Energy Solution will use this period to enhance fundamental competitiveness and operational efficiency, turning it into an opportunity for a greater leap forward in the future."
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