LG Energy Solution said its operating profit climbed 25.7 percent in the third quarter to 756 billion won ($564 million), as rising orders for large-scale battery storage systems in North America combined with a rebound in electric vehicle battery sales, according to the Korea Herald and the Korea Times.
- LG Energy Solution's third-quarter operating profit reached 756 billion won ($564 million), a 25.7 percent increase from a year earlier, according to the Korea Herald and the Korea Times.
- Quarterly sales hit a record 9.64 trillion won ($7.2 billion), up 59 percent year-on-year and 27.6 percent from the prior quarter, the Korea Times reported.
- The operating margin for the quarter stood at 7.8 percent, per the Korea Times.
- Around 417 billion won of the result came from US manufacturing incentives; stripping that out, operating profit was 339.1 billion won, the Korea Herald noted.
- The company raised its full-year revenue growth forecast to 35-40 percent, up from an earlier midteens-to-20-percent range, according to the Korea Times.
What happened
The South Korean battery maker posted record quarterly sales of 9.64 trillion won ($7.2 billion), a 59 percent jump from the same period last year and a 27.6 percent increase from the previous quarter, the Korea Times reported. The operating margin for the quarter came in at 7.8 percent.
Roughly 417 billion won of that profit reflected incentives the company received for battery production in North America under US clean-manufacturing policy. With that amount set aside, operating profit for the quarter was 339.1 billion won, which the Korea Herald described as evidence that the underlying battery business is becoming more profitable on its own. Beyond storage batteries, the company pointed to stronger shipments of higher-voltage, medium-nickel pouch cells for electric vehicles, along with steady output of its newer cylindrical battery formats, as additional growth drivers. CFO Lee Chang-sil said results also benefited from improved operations at the firm’s Polish factory and better efficiency at newly opened storage-battery production lines.
Why it matters
The results suggest that battery demand tied to renewable energy storage is becoming a bigger profit driver for LG Energy Solution, not just a side business supporting its core EV battery operations. Our read: this diversification could help cushion the company against swings in EV sales, which have been uneven in some markets this year.
The scale of the jump in sales and profit also signals that the North American storage market is expanding quickly enough to reshape how the company allocates production capacity between EV batteries and grid-storage units.
Background
Battery makers in South Korea have increasingly looked to energy storage systems as a growth area alongside electric vehicles, since such systems are used to store power from renewable sources and stabilize electricity grids. Demand for this kind of technology has been rising in markets that are expanding renewable power capacity, giving battery suppliers a new revenue stream beyond the auto industry.
LG Energy Solution has also benefited from government support tied to domestic battery manufacturing in North America, which has helped offset cost pressures as the company scales up newer production sites.
What to watch
Following the strong quarter, LG Energy Solution raised its full-year revenue growth forecast to a range of 35 to 40 percent, up from its earlier projection of midteens to 20 percent growth, the Korea Times reported. The company said it still expects its operating margin to stay in the mid-single-digit range for the year.
Investors and industry watchers will likely focus on whether the company’s storage-system shipments keep accelerating into the fourth quarter, and whether EV battery demand continues to recover at a similar pace, according to the outlook detailed in the Korea Times report.
Frequently asked questions
Why did LG Energy Solution's profit rise so sharply in the third quarter?
The increase was driven by stronger orders for grid-scale battery storage in North America and a recovery in electric vehicle battery sales, according to the Korea Herald and Korea Times.
How much of the profit came from US government incentives?
About 417 billion won came from North American manufacturing incentives; excluding that amount, operating profit was 339.1 billion won, the Korea Herald reported.
Did the company change its outlook for the rest of the year?
Yes, LG Energy Solution raised its full-year revenue growth target to 35-40 percent from a prior forecast of midteens to 20 percent, while keeping its operating margin goal in the mid-single digits, per the Korea Times.
Sources
- The Korea Herald: LG Energy Solution Q3 profit climbs 26% on strong ESS demand
- The Korea Times: LG Energy Solution posts record Q3 sales on rising ESS shipments
This article was prepared with AI assistance from the reports listed above and automatically checked against them. See About for how we work.