152% Increase Year-on-Year... Profit Achieved for the First Time in Six Quarters
AMPC Uncertainty Resolved, North American Production Efficiency Improved
"We Will Enhance Core Competitiveness and Focus on Operational Efficiency"
LG Energy Solution posted results in the second quarter of this year that exceeded market expectations. The company managed to remain profitable and partially defend its profit structure even without including the Advanced Manufacturing Production Credit (AMPC) under the Inflation Reduction Act (IRA). The recent controversy over the future of the AMPC was resolved when President Donald Trump signed the "One Big Beautiful Bill Act (OBBBA)," ensuring that the policy will remain unchanged until 2032 and putting an end to policy uncertainty for now.
On July 7, LG Energy Solution announced in a regulatory filing that its consolidated operating profit for the second quarter of this year was provisionally tallied at 492.2 billion won. This represents a 152.0% increase compared to the same period last year and exceeded market consensus. During the same period, revenue was 5.5654 trillion won, a decrease of 9.7%.
The AMPC amount for this quarter was 490.8 billion won, and even excluding this, the company recorded a profit of 1.4 billion won. Compared to the previous quarter, the first quarter (an operating loss of 83 billion won), the profit structure has clearly improved. This is the first time in six quarters since the fourth quarter of 2023 that the company has posted a profit excluding subsidies. LG Energy Solution explained, "Increased production efficiency and volume in North America, as well as product mix adjustments, contributed to these results."
By region, the North American market led the improvement in performance. According to Samil PwC Management Research Institute, the combined North American market share of Korea's three battery companies reached 54% in the first quarter of this year, nearly doubling from 26.7% in 2021. LG Energy Solution has recently secured full ownership of all assets, including three Ultium Cells joint venture plants with GM, and is working on refurbishing local energy storage system (ESS) production lines, thereby strengthening its business base in North America.
On the product side, the mass production and expanded shipments of lithium iron phosphate (LFP) batteries for ESS in the United States contributed to revenue stability. The normalization of operating rates at North American plants, including the conversion of the Michigan plant from EV to ESS lines, also helped reduce fixed costs and improve profitability.
At the shareholders' meeting in March, LG Energy Solution CEO Kim Dongmyung said, "Once the current crisis passes, the true winner will emerge," adding, "LG Energy Solution will use this period to enhance its fundamental competitiveness and focus on operational efficiency, turning it into an opportunity for even greater growth in the future."
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