LG Energy Solution flags 26% rise in Q3 operating profit
Battery cells with the logo of LG Energy Solution are displayed at the company headquarters in Seoul, South Korea, April 23, 2024. REUTERS/Kim Hong-Ji
SEOUL, Oct 8 : South Korean battery maker LG Energy Solution said on Thursday the company expects its July-September operating profit to rise 25.7 per cent to 756 billion won ($564.09 million).
That compared with an LSEG SmartEstimate forecast for an operating profit of 309 billion won, which is weighted toward analysts who are more consistently accurate.
Here are some details:
• LGES, which supplies Tesla, General Motors and Hyundai Motor among others, has been grappling with a prolonged slowdown in EV demand.
• Revenue likely rose 59 per cent to 9.6 trillion won from a year earlier, according to LGES' regulatory filing.
• The quarterly earnings guidance includes tax credits provided under the US Inflation Reduction Act for the company's battery production in the United States, LGES said in a statement. Excluding those credits, the company would have posted an operating profit of 339.1 billion won.
• Analysts attributed the better-than-expected operating profit to a one-off gain from a North American automaker, which paid compensation for falling short of minimum purchase commitments amid weak EV demand.
• To offset weakness in the EV market, LGES has been expanding its energy storage system (ESS) business, where demand is being supported by rising electricity needs from artificial intelligence data centres.
• Analysts said AI-driven data centre demand for ESS is emerging as a growth driver for battery makers. However, they cautioned that LGES' ESS business remains loss-making and that the timing of a turnaround has been pushed back.
• LGES said it plans to announce detailed quarterly results on November 3.
($1 = 1,340.2200 won)
