LG Energy Solution's Operating Profit Surges 133.9% Last Year... Growing Expectations for ESS Expansion

Revenue Down 7.6% to 23.67 Trillion Won
Aiming for 10-20% Revenue Growth This Year
Honda JV Sale Expected in Q1

LG Energy Solution has achieved an operating profit margin of over 130% as it ramped up energy storage system (ESS) production in North America. Building on this growth, LG Energy Solution has set a target of 10-20% revenue growth compared to last year and aims to further strengthen its profitability.

On January 29, LG Energy Solution announced that its consolidated operating profit for last year reached 1.3461 trillion won, a 133.9% increase from the previous year. However, revenue decreased by 7.6% to 23.6718 trillion won. Net profit dropped sharply by 76.1% to 80.8 billion won. In the fourth quarter of last year, revenue increased by 7.7% quarter-on-quarter to 6.1415 trillion won, but the company posted an operating loss of 122 billion won, turning into the red. Excluding 332.8 billion won in North American production subsidies, the operating loss amounted to 454.8 billion won.

A researcher from LG Energy Solution is examining a dry electrode at the Daejeon Technology Research Institute on March 13 last year. Photo by LG Energy Solution

At the earnings briefing held on the same day, Lee Changsil, Vice President of LG Energy Solution, stated, "Last year, various policy changes affecting the electrification pace of electric vehicles (EVs) led to an overall contraction in demand, resulting in a 7.6% year-on-year decrease in total revenue. However, our sales strategy focused on high-profit products and the full-scale launch of North American ESS production drove a 133.9% increase in operating profit compared to the previous year."

LG Energy Solution attributed its performance to strengthening future competitiveness through: ▲enhancing market responsiveness by optimizing asset operations, ▲managing risk by improving asset portfolio efficiency, and ▲expanding its product and customer base.

Vice President Lee explained, "We accelerated mass production by designating the Michigan Holland plant as our North American ESS production hub, and improved production line utilization by converting idle EV lines at our Poland plant and North American joint ventures to ESS production. In Europe, we began producing mid-priced products such as high-voltage mid-nickel and LFP, and started shipping to customers from the fourth quarter of last year."

LG Energy Solution plans to finalize the sale of the Honda joint venture building within the first quarter and intends to use the proceeds to fully repay the joint venture's borrowings. The company expects that the sale of the Honda JV building will improve its financial structure.

With the ESS market entering a growth phase, LG Energy Solution anticipates continued growth in North America this year. Accordingly, the company has set a new order target exceeding last year's record of 90 GWh. It also plans to nearly double its global ESS battery production capacity, aiming to reach over 60 GWh by the end of this year. A significant portion of this production capacity will be concentrated in North America, where rapid growth is expected. LG Energy Solution will secure ESS production capacity at minimal cost by utilizing its Michigan Holland and Lansing standalone plants, as well as part of its joint venture plants.

Kim Dongmyung, President of LG Energy Solution, stated, "This year, we will translate our efforts in portfolio rebalancing and operational efficiency into tangible results, and turn opportunities into achievements through intense focus."