This photo, taken March 15, 2023, shows LG Energy Solution Ltd.’s exhibition booth at InterBattery 2023 in southern Seoul. (Yonhap)
SEOUL, April 26 (Korea Bizwire) — LG Energy Solution Ltd. said Wednesday its first-quarter net profit more than doubled from a year earlier, in line with the earlier earnings forecast, on strong electric vehicles (EV) demand in North America and benefits from a new U.S. law on EV subsidies.
Net profit for the three months ended in March rose to 562 billion won (US$419.6 million) from 226.6 billion won during the same period of last year, South Korea’s top battery maker said in a regulatory filing.
Operating income reached 633.2 billion won in the January-March period, compared with 258.9 billion won the previous year. Sales more than doubled to 8.74 trillion won from 4.34 trillion won.
The earnings exceeded market expectations. The average estimate of net profit by analysts stood at 345 billion won, according to a survey by Yonhap Infomax, the financial data firm of Yonhap News Agency.
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.
LGES said the operating profit reflected the 100.3 billion won tax benefits from the Inflation Reduction Act (IRA).
Under the IRA, an EV needs to have half of its battery components manufactured or assembled in North America to qualify for $3,750 in credit.
It gives another $3,750 in credit to an EV produced with 40 percent of its critical minerals sourced from and processed in the United States or elsewhere that have free trade agreements with Washington.
South Korea’s battery sector is cited among those expected to benefit from the IRA.
LGES put the expected amount of tax credits from the IRA at 15-20 gigawatt hours (GWh) for this year, given the operating factories in Michigan and Ohio.
In the second quarter and toward the latter half, a sharp decline in metal prices will likely impact its revenue to some extent but barely affect the profitability, LGES CFO Lee Chang-sil said in an earnings call.
Even with the falling metal prices taken into account, the company is expected to achieve the 30 percent top line growth target it has set for this year, Lee said.
LGES said it is considering producing the lithium iron phosphate (LFP) batteries for EVs, in addition to the LFPs for energy storage systems, to diversify its product lineups to low to mid end.
Shares in LGES rose 2.9 percent to 567,000 won on the main Seoul bourse Wednesday, outperforming the broader Korea Composite Stock Price Index’s 0.17 percent fall. The earnings results were released after the opening bell.
(Yonhap)
