This file photo, provided by LG Energy Solution Ltd. on Sept. 3, 2021, shows the showroom at its R&D center in Daejeon, 164 kilometers south of Seoul.
SEOUL, July 27 (Korea Bizwire) — LG Energy Solution Ltd. (LGES) said Wednesday it aims to boost annual sales by more than threefold and achieve double-digit operating profit margins in the next five years through active foreign expansion and by securing stable supply.
Unveiling the mid-to long-term strategies, the South Korean battery maker said it will expand its North American foothold to as much as 45 percent in terms of portion in regional portfolio by 2025, from the current 7 percent.
LGES said it will boost the global production capacity to 540 gigawatt hours by the end of 2025.
“We have four JV deals under way in North America, including the ones with GM and Stellantis. This means that we have high priority for the North American market,” LGES CFO Lee Chang-sil said in an earnings call.
It will seek to “expand joint ventures with major OEMs in North America, supply of cylindrical batteries and development of new form factors and continue to explore new business opportunities” to achieve the targets, Lee said.
LGES revised up the revenue forecast for this year to 22 trillion won (US$16.7 billion) from 19.2 trillion won. It also readjusted the capital expenditure for 2022 to 7 trillion won from 6.3 trillion won earmarked previously.
As of June 2022, the world’s second-largest battery maker had an order backlog of more than 310 trillion won.
LGES said it plans to secure a new production base for cylindrical batteries to respond to growing demand, besides its existing plant in Poland that mainly produces pouch batteries.
This file photo, provided by LG Energy Solution Ltd. on March 12, 2021, shows its battery plant under construction in Ohio, the United States, through the joint venture with General Motors Co.
Along with the business plans, LGES reported that it suffered an 85.7 percent on-year decline in the second-quarter net profit but attributed the decline to the one-off gains from last year.
Net income reached 89.9 billion won in the April-June period, compared with 630.3 billion won the previous year. Operating profit came to 195.6 billion won, down 73 percent from 724.3 billion won a year ago, with sales edging down 1.2 percent to 5.07 trillion won.
Last year’s second-quarter profit included the gains from license settlement and provisions it received from domestic rival SK over a trade secret case.
Excluding the settlement, the second-quarter operating profit shrank by 50 billion won on-year and sales grew by 930 billion won from a year earlier, LGES said.
“The profitability also slightly declined due to China’s COVID-19 lockdowns, the global logistics crisis and the timing gap in applying the increased raw metals costs from the pass-through pricing,” CFO Lee said.
“But sales have stably increased on sales growth of EV cylindrical batteries and additional pass-through contracts for raw materials,” Lee said.
In April last year, LG Chem, Energy Solution’s parent firm, reached a 2 trillion-won settlement with SK Innovation in the United States over trade secrets related to EV battery technology that LG accused SK of stealing when SK recruited LG employees en masse.
Shares of LGES slipped 0.13 percent to 393,500 won on the main Seoul bourse on Wednesday, underperforming the broader KOSPI’s 0.11 percent gain. The earnings results were released before the market opened.
(Yonhap)
