LG Energy Solution publishes quarterly revenue for KRW 7,648,000,000,000 and an operating profit of 522 billion KRW in the 3rd quarter of 2022
Strong quarterly performance made possible by increased profitability across all product lines and a favorable foreign exchange rate
The company secures global leadership and improves its profitability thanks to its commercial strategies targeting the North American market
Seoul, South Korea, October 25, 2022 /PRNewswire/ — LG Energy Solution (LGES; KRX: 373220) today announced its third quarter financial results, marking record quarterly revenue and improved operating profits. The company also announced specific business strategies for the North American market, which is considered the most important for LGES’ continued revenue and profitability growth.
LGES announced its financial results for the third quarter of KRW 7,648,000,000,000 consolidated turnover and 522 billion KRW in operating income. Revenue for the third quarter of 2022, the highest quarterly record on record, increased 50.8% and operating profit 166.8% from the previous quarter. Compared to the same period last year, revenues increased by 89.9% and operating profit marked a turnaround. The third quarter also marked the highest operating profit, excluding the second quarter of 2021, which included one-time factors such as provisions related to recalls and a lump sum payment of license fees from another player. Of the industry.
“We have increased shipment of EV batteries due to improving demand in the EU and North Americawhich ultimately resulted in increased revenue,” said Chang Sil Lee, CFO of LG Energy Solution during the conference call. “Increased sales of energy storage systems (ESS) for power grids in the North American market and batteries for recently launched computing devices also contributed to the strong quarterly performance.”
Profitability increased across all product lines due to economies of scale driven by revenue growth, reflecting increased costs including raw material prices in ASP, improvements general productivity and favorable exchange rates.
LGES also announced its specific business strategies targeting the North American market based on the company’s mid to long-term corporate strategy it disclosed earlier this year, aiming to triple revenue and achieve a double-digit operating profit margin in five years.
The company’s objective to increase its presence in North America mainly stems from the positive market forecast as the region’s electric vehicle market is expected to grow by 33% (compound annual growth rate, CAGR) by 2030. This growth rate is significant compared to the European and Chinese markets, of which 26% and 17% growth rate is expected over the same period, respectively.
New U.S. government clean energy policies, such as the Inflation Reduction Act (IRA) and tighter regulations on energy efficiency (Corporate Average Fuel Economy standards), are also driving LGES’ strategy to the North American market. These new policies are reshaping the global battery industry by: 1) increasing the proportion of EV OEM production, 2) reinforcing the importance of securing EV and EV battery manufacturing facilities in the United States , and 3) accelerating the establishment of local supply chains for raw batteries. materials.
Responding to these ongoing market transitions, LGES initially aims to expand its production capacity by North America, accelerating its efforts to secure global market leadership. The company has now secured 250-260 GWh of generation capacity in North America by 2025, including joint venture (JV) factories with leading OEMs, such as General Motors (GM), Stellantis and Honda. The order book at September 2022 stands at KRW 370 trillionof which 70% come North America.
The company also plans to diversify its customer portfolio and expand its product line in North America with pocket-type EV batteries, energy storage systems (ESS) and cylindrical batteries. These initiatives will be further supported by smart factories established through the digitalization of the entire manufacturing process.
LGES’ other core strategy is to strengthen its local supply chain for key battery raw materials through strategic partnerships with key suppliers, as well as secure metals and metal refineries in North America and FTA countries with the United States. The company will also increase direct metal sourcing through equity investments and long-term supply agreements. With these measures in place, LGES expects to locate 72% of the supply of critical minerals (major cathode materials, including lithium) within five years. This objective will be further reinforced by the establishment of a closed-loop system for the collection and recycling of used batteries.
“We are poised to strengthen our global leadership with continued revenue and profitability growth,” said Youngsoo Kwon, CEO of LG Energy Solutions. “We will continue to focus on improving operational capability and productivity through smart factories, as well as establishing strategic partnerships with Car manufacturers.”
About LG Energy Solutions
LG Energy Solution (KRX: 373220), a spin-off from LG Chem, is one of the world’s leading manufacturers of lithium-ion batteries for electric vehicles, mobility, computing and energy storage systems. With 30 years of experience in breakthrough battery technology and extensive research and development (R&D), the company is the world’s largest battery-related patent holder with over 25,000 patents. Its strong 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 NV , Hyundai Motor Group and Honda Motor Co., Ltd. At the forefront of green business and sustainability, LG Energy Solution aims to achieve carbon neutrality by 2050, while embodying the value of shared growth and promoting a diverse and inclusive corporate culture. To learn more about LG Energy Solution ideas and innovations, visit https://news.lgensol.com.
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SOURCE LG Energy Solutions