LG Energy Solution Q3 operating profit jumps to 756 billion won as ESS shipments surge and utilization at its Poland plant improves

[Financial News] LG Energy Solution's third-quarter operating profit jumped to 756 billion won, about seven times the 113.3 billion won recorded in the previous quarter.
On the 3rd, LG Energy Solution said at an earnings briefing that the increase was driven by a sharp rise in energy storage system (ESS) shipments and improved utilization at its Poland plant. Revenue rose 59% year on year to 9.6434 trillion won.
Revenue was up 27.6% from the previous quarter's 7.5602 trillion won, while operating profit rose 25.7% from the 601.3 billion won recorded in the same period a year earlier. North American production incentives reflected in the third-quarter results, including IRA tax credits, totaled 416.9 billion won.
Chief Financial Officer (CFO) Lee Chang-sil said, "Companywide revenue in the third quarter rose 28% from the previous quarter, with a sharp increase in ESS shipments and volume-driven growth in both EV pouch and cylindrical products."
He added, "In terms of earnings, improved utilization at the Poland plant, continued supply volumes of cylindrical products and productivity gains at new ESS mass-production sites contributed to operating profit of 756 billion won."
LG Energy Solution cited new orders for ESS and electric vehicles (EVs), improved utilization and a stronger supply chain as achievements in the third quarter. In ESS, it signed its first direct supply agreement for a battery energy storage system (BESS) with a big tech company. It also said it was the only domestic battery maker selected as an NVIDIA 'DSX Ready BESS Partner.'
The company said it was discussing supply for new projects with multiple customers, and expected additional orders to follow in the fourth quarter. In EVs, it secured a stable revenue base in the European market by signing a new agreement to expand supply of next-generation high-voltage mid-nickel products.
On the production front, the company brought additional North American ESS cell production lines into operation, along with a new 'Link' line for assembling containerized systems. It said companywide utilization also improved significantly, driven by robust demand for cylindrical EV products and the restart of its joint venture (JV) with U.S. automaker GM. In its supply chain, it strengthened its medium- to long-term partnerships with existing LFP cathode-material suppliers and signed purchase agreements with new partners, bolstering its ability to respond to non-prohibited foreign entity (Non-PFE) regulations. It also signed long-term contracts to supply locally sourced lithium with key materials companies in Canada and the United States.
LG Energy Solution said the United States' August executive order tightening supply-chain security standards for key power-grid equipment, including BESS and inverters, was making the push to build non-Chinese supply chains more pronounced. It expects companies with local production capabilities to gain a competitive edge. The company said that in Europe, a revised recommendation for the Industrial Acceleration Act (IAA), announced in September, is narrowing what qualifies as local production and increasing localization requirements across the region, from production to supply chains.
In North America, the company plans to reach at least 70 GWh of ESS production capacity by the end of next year by adding new prismatic lines and other capacity to the more than 50 GWh planned by the end of this year. Its Arizona plant, North America's first cylindrical battery production site, will continue final preparations through year-end.
In Europe, the Poland plant, which has been converting some of its EV production lines to ESS since last year, will also have the capacity to produce 46-series cylindrical batteries from 2029. The plan is to meet automakers' diverse needs with pouch-type mid- to low-priced solutions and cylindrical high-nickel products. At its domestic Ochang Energy Plant, LG Energy Solution will begin producing samples for sodium-ion battery ESS this year and ship test products to North American customers next year. It is targeting mass production in the first half of next year for LFP-based tabless 2170 cylindrical batteries.
The CFO said, "LG Energy Solution plans to respond proactively to market changes while strengthening its strategy of selection and focus to maximize the efficiency of its business operations with limited resources."
[email protected] Kim Dong-chan Reporter