LG Energy Solution’s third-quarter revenue reaches 9.6434 trillion won... “Record quarterly revenue”

[Financial News] LG Energy Solution announced on the 8th that it had posted provisional consolidated revenue of 9.6434 trillion won and operating profit of 756 billion won for the third quarter of this year. Revenue rose 59.0% from a year earlier and 27.6% from the previous quarter, setting a quarterly record. Operating profit increased 25.7% year over year and 567.3% quarter over quarter.
Excluding the estimated 416.9 billion won in Advanced Manufacturing Production Credit (AMPC) under the U.S. Inflation Reduction Act (IRA), operating profit was 339.1 billion won. Revenue excluding AMPC was 9.2265 trillion won. The operating margin was about 7.8% including AMPC and about 3.7% excluding it.
Revenue growth was driven by both electric vehicles and energy storage systems (ESS). In the EV segment, shipments of mid-nickel batteries for Europe continued to increase, while cylindrical battery shipments to strategic customers remained steady. The resumption of operations at a General Motors joint venture (JV) plant in North America and the start of operations at a Hyundai Motor JV also contributed. In the ESS segment, production capacity in North America expanded.
Operating profit rose sharply from the previous quarter for three reasons. Higher North American ESS shipments reduced the fixed-cost burden; increased shipments of pouch-type batteries for affordable EVs in Europe improved capacity utilization; and the company received compensation from some EV customers.
At its second-quarter earnings call, LG Energy Solution had forecast that ESS production in the second half of the year would roughly double from the first half as more North American facilities came online. It also said it expected volumes of pouch-type and cylindrical EV batteries to grow steadily and that it could readily achieve the companywide revenue growth of 20% or more it had projected at the start of the year.
Industry watchers expect revenue to continue growing as North American ESS production ramps up in the second half and EV-related volumes improve. They say profitability will be weighed for the time being by costs to stabilize production systems, including ESS, but should gradually stabilize as higher volumes reduce the fixed-cost burden.
Securities industry analysts also cite the company’s early buildout of North American ESS production capacity and system integration (SI) capabilities as a strength amid increased investment in power grids and AI data centers. They expect demand for pouch-type and 46-series batteries to grow, particularly in Europe.
In a report on the 30th of last month, Shinyoung Securities forecast that expanded North American ESS production capacity and AMPC would drive companywide earnings. It also identified as a positive factor the continued rise in utilization at the company’s Polish plant, driven by high-voltage mid-nickel and affordable lithium iron phosphate (LFP) products supplied to Volkswagen and Renault since the end of last year.
In a report on the 7th, DB Securities said that building up U.S. ESS production capacity in advance and entering the SI business were in line with U.S. power-grid security policy. It said that, given the valuation multiples of U.S. SI companies such as Tesla and Fluence Energy, a premium was justified, and that order momentum was expected to build in the second half.
[email protected] Kim Dong-chan Reporter