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LG Energy Solution Reports Solid 3Q Operating Profit, Aims to Enhance Product Competitiveness Across All SegmentsBy PRNEWSWIRE
Published : Oct. 25, 2023 - 15:10
- Revenue increases 7.5 percent, operating profit up 40.1 percent year on year, primarily due to stable increase of production volume at GM JV (Ultium Cells) plant in Ohio, as well as product mix improvement
- The company to focus on reinforcing product competitiveness across all segments
- To proactively respond to customer demands, the Arizona battery facility to produce 46-Series cylindrical batteries instead of the originally planned 2170 cells
SEOUL, South Korea, Oct. 25, 2023 /PRNewswire/ -- LG Energy Solution (LGES; KRX: 373220) today announced its third quarter earnings, posting a robust quarterly operating profit. The company also shared its strategies to further reinforce its fundamental competitiveness to maintain a strong global market position.
LG Energy Solution posted consolidated revenue of KRW 8.22 trillion, a 6.3 percent decrease quarter-on-quarter and a 7.5 percent increase year-on-year. The company posted operating profit of KRW 731.2 billion, a 58.7 percent increase quarter-on-quarter and a 40.1 percent increase year-on-year.
The figure includes the estimated IRA tax credit amount of KRW 215.5 billion, which also increased 94 percent from the previous quarter, driven by the production and sales improvement from the newly ramped-up capacity in the U.S. Excluding the estimated IRA tax credit effect, the operating profit would be KRW 515.7 billion with a margin of 6.3 percent.
"With demand slowdown in Europe, EV production adjustment from OEMs, and reflection of metal price into average selling price (ASP) erosion, we saw a modest decline in our quarterly revenue," explained Chang Sil Lee, CFO of LG Energy Solution. "Nonetheless, operating profit increased thanks to product mix improvement, enhanced productivity of new lines, and efforts for expense efficiencies."
- Strategies to Enhance Product Competitiveness
With external challenges expected to continue in the fourth quarter from slowing EV demands in Europe and China, and decreasing prices of major raw materials including lithium and nickel, LG Energy Solution plans to focus on product competitiveness and unique prospects such as solid EV demands in North America and potential growth of its energy storage system (ESS) business.
In premium EV segment where the company has already secured strong leadership with its high-nickel NCMA batteries, LG Energy Solution aims to further enhance product safety by improving thermal management technology through design optimization, and by developing module and pack cooling system.
The company also plans to boost the energy density of its high-nickel NCMA batteries by increasing the proportion of nickel to over 90 percent, and at the same time, achieve fast-charging time of less than 15 minutes by adopting high-capacity, high-efficiency silicon anodes.
With such advancements, the company plans to expand supply support in line with OEMs' needs for premium EV segment. This month, LG Energy Solution already secured a 10-year supply agreement (20GWh/year) with Toyota for battery modules consisting of high-nickel NCMA pouch-type cells.
LG Energy Solution will also strengthen its product portfolio targeting mid- to low-end EV segment, namely high-voltage mid-nickel NCM solution with a cost advantage, manganese-rich batteries, and LFP/LMFPbatteries.
High-voltage mid-nickel NCM batteries, which the company aims to start production by 2025, are expected to bring a cost reduction of 10 percent with the reduced proportion of nickel and cobalt, along with enhanced energy density and thermal stability.
- Arizona Facility to Become Key Production Hub for 46-Series Cylindrical Batteries in North America
LG Energy Solution has decided to utilize its Arizona battery facility as the production hub for 46-Series cylindrical batteries in North America. To pre-emptively respond to market demands for 46-Series, the company modified its original plan for the facility, which was to produce 2170 cells at an annual production capacity of 27GWh, and instead will produce 46-Series at an expanded annual capacity of 36GWh. Expected date for start of production remains unchanged, scheduled for late 2025.
The company will manufacture cylindrical batteries in its other facilities, as well: a pilot production line for 46-Series cylindrical batteries will be established in Ochang, Korea, with the start of production expected in the second-half of 2024. The Nanjing facility in China will serve as the main production hub for 2170 cylindrical batteries, focusing on responding to market demands in China and Europe, and diversifying production portfolio including light electric vehicles (LEV).
"In response to constantly evolving and diversified market needs, we will secure differentiated production competitiveness across all segments, ranging from premium and mainstream to affordable," said Youngsoo Kwon, CEO of LG Energy Solution. "This will become our core engine for consistent mid-to-long term growth, upon which we will become a global leader providing the world-best value to our customers."
About LG Energy Solution
LG Energy Solution (KRX: 373220), a split-off from LG Chem, is a leading global manufacturer of lithium-ion batteries for electric vehicles, mobility, IT, and energy storage systems. With 30 years of experience in revolutionary battery technology and extensive research and development (R&D), the company is the top battery-related patent holder in the world with over 25,000 patents. Its robust global network, which spans North America, Europe, Asia, and Australia, includes battery manufacturing facilities established through joint ventures with major automakers such as General Motors, Stellantis N.V., Hyundai Motor Group, and Honda Motor Co., Ltd. At the forefront of green business and sustainability, LG Energy Solution aims to achieve carbon neutral operations by 2050, while embodying the value of shared growth and promoting diverse and inclusive corporate culture. To learn more about LG Energy Solution's ideas and innovations, visit https://news.lgensol.com.
 NCMA: nickel, cobalt, manganese, aluminum
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