LG Energy Solution Rebounds to Profit in Q2 Amid Surging North American ESS Shipments and EV Market Challenges
LG Energy Solution demonstrated a strong return to profitability in the second quarter of this year. This significant turnaround was primarily fueled by a surge in battery energy storage systems (ESS) shipments, bolstered by expanding production capabilities across North America. This growth effectively mitigated the persistent slowdown observed in the global electric vehicle (EV) market.
The company’s preliminary earnings report, released Tuesday, highlighted a robust 24.8 percent year-on-year increase in revenue, reaching 7.56 trillion won ($5 billion). While operating profit saw a 77 percent decline compared to the previous year, it successfully rebounded into positive territory after reporting a loss in the first quarter.
Excluding 241 billion won in production tax credits from the U.S. Inflation Reduction Act (IRA), LG Energy Solution’s revenue stood at 7.32 trillion won, resulting in an operating loss of 127.7 billion won for the quarter.
This quarter marked a crucial milestone for LG Energy Solution, achieving its first quarterly revenue exceeding the 7 trillion-won threshold—excluding IRA tax credits—since the fourth quarter of 2023. This performance signals a promising, gradual recovery in global market demand across its battery solutions.
Industry experts attribute this notable sales growth predominantly to a significant increase in ESS shipments. LG Energy Solution has actively expanded its production capacity in North America, a key driver. The company recently commenced mass production of lithium iron phosphate (LFP) batteries specifically for ESS applications at its Michigan plant and plans further output expansion through its Ohio joint venture with Honda.
Additional contributors to the positive results included consistent shipments of mid-priced EV batteries to European clients, strong demand from strategic partners for cylindrical EV batteries, and increased deliveries of its innovative 46-series cylindrical batteries.
Operating profitability saw improvements despite persistent challenges within the North American EV market, where dampened demand led to temporary production suspensions at some of its U.S. joint venture facilities.
An industry source commented, “The earnings turnaround was significantly aided by reduced ramp-up costs at LG Energy Solution’s North American ESS facilities, coupled with robust sales of cylindrical batteries and mid-priced pouch batteries tailored for the European market.”
Analysts anticipate an even stronger earnings rebound for LG Energy Solution in the second half of the year, driven by accelerating ESS demand and the stabilization of EV battery inventories.
Shinhan Securities projects the ESS business is entering a robust new growth phase, forecasting a 46 percent rise in second-half revenue compared to the first half. This growth is expected to be anchored by a substantial 6 gigawatt-hour supply contract with U.S.-based DTE Energy. The firm also foresees steady earnings improvement fueled by stronger European shipments of both mid-nickel and LFP batteries, alongside solid demand for cylindrical batteries.
Similarly, NH Investment & Securities forecasts a broader earnings recovery throughout the second half of the year. This is primarily attributed to an easing of weakness in the U.S. EV market, a renewed cycle of battery restocking by automakers, and continuously expanding ESS demand.
Meanwhile, LG Energy Solution confidently maintains its full-year revenue growth guidance in the range of 15 to 20 percent.
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