This image provided by LG Energy Solution Ltd. shows a bird’s-eye view of an electric vehicle battery plant to be built in Ohio under its joint venture with Honda Motor Co. (Image courtesy of Yonhap)
SEOUL, Oct. 25 (Korea Bizwire) — LG Energy Solution Ltd. (LGES), South Korea’s leading battery maker, said Wednesday its third-quarter net profit more than doubled from a year earlier on strong demand in the United States and U.S. government’s tax credits.
Net profit for the three months ended in September soared to 420.5 billion won (US$312 million) from 187.7 billion won during the same period of last year, the company said in a statement.
“Strong battery sales in the U.S. propped up the quarterly bottom line amid accelerating electrification. An expanded capacity in (the company’s) U.S. plant and improved productivity also helped,” the statement said.
The bottomline also got a boost from U.S. government tax credits under the Inflation Reduction Act (IRA) that came into effect on Jan. 1 this year.
The IRA gives up to $7,500 in tax credits to electric vehicle (EV) buyers whose vehicles were assembled in North America, and made with minerals mined and processed in the U.S. or countries or regions that have free trade agreements with Washington.
“Tax credits worth 215.5 billion won were reflected in the quarterly operating profit,” the statement said.
This file photo provided by LG Energy Solution shows its domestic plant in Ochang, North Chungcheong Province. (Image courtesy of Yonhap)
Operating profit jumped 40 percent to 731.2 billion won in the third quarter from 521.9 billion won a year ago. Sales rose 7.5 percent to 8.223 trillion won from 7.648 trillion won during the same period.
Looking ahead, the company said sluggish demand for EVs in Europe and China and declining prices of lithium and nickel, key materials used in manufacturing EVs, will serve as major concerns for car battery makers in the fourth quarter.
In the fourth quarter, the company aims to win further EV battery supply deals from global carmakers.
Early this month, LGES signed a deal with Toyota Motor Corp. to supply EV batteries for 10 years through 2035.
With the latest supply deal, LGES has become a battery supplier to the world’s top five carmakers — General Motors Co., Toyota Motor, Hyundai Motor Group, Volkswagen Group and the Renault-Nissan alliance.
From January to September, the company’s net income nearly tripled to 1.448 trillion won from 504.3 billion won in the year-ago period.
Operating profit jumped 87 percent to 1.825 trillion won in the first nine months from 976.3 billion won a year ago. Sales were up 51 percent to 2.574 trillion won from 1.706 trillion won.
In the U.S., LGES currently operates two plants in Michigan and Ohio, with six factories yet to begin operations in the world’s most important automobile market.
In addition to the U.S. plants, the company operates one plant in South Korea, one plant in Poland and is preparing to begin operations at its Indonesian plant.
(Yonhap)
