LG Energy Solution Turns Profitable After 3 Years... "Battery Investment of 6.3 Trillion Won This Year" (Update)

2021 Full Year and Q4 Consolidated Preliminary Results Announcement
Last Year's Operating Profit 768.5 Billion Won... "Reflecting GM·ESS Recalls, SK Settlement"
"This Year's Sales Target 19.2 Trillion Won... Expanding Production Capacity"

Kwon Young-soo, Vice Chairman and Chief Executive Officer (CEO) of LG Energy Solution. (Photo by LG Energy Solution)

[Asia Economy Reporter Moon Chaeseok] LG Energy Solution earned over 700 billion KRW in operating profit last year, successfully returning to profitability on an annual basis for the first time in three years.

LG Energy Solution announced on the 8th that its provisional consolidated sales for last year were 17.8519 trillion KRW, operating profit was 768.5 billion KRW, and operating profit margin was 4.3%. These figures include one-time factors such as costs related to General Motors (GM) and energy storage system (ESS) recalls, as well as settlement money received from SK Innovation. Excluding one-time costs, last year's sales were 16.8597 trillion KRW, and operating profit was 917.9 billion KRW. The operating profit marked a return to profitability for the first time in three years since recording a 209.2 billion KRW profit in 2018. In 2019, operating losses were 454.3 billion KRW, and in 2020, 165.6 billion KRW.

The sales target of 18.9 trillion KRW was not met. Regarding this, LG Energy Solution explained, "Due to external business adversities such as a shortage of automotive semiconductors and rising prices of key raw materials, the annual sales target was somewhat missed," but added, "Global electric vehicle demand increased, and based on efforts to improve productivity such as yield (the ratio of defect-free qualified products), sales performance increased by 42% compared to 12.57 trillion KRW in 2020."

Last year's fourth-quarter sales rose 10.2% from the previous quarter to 4.4394 trillion KRW, and operating profit turned positive to 75.7 billion KRW during the same period. LG Energy Solution attributed the fourth-quarter sales increase to "an increase in shipments of pouch and cylindrical electric vehicle batteries due to the expansion of new electric vehicle launches by global automakers, as well as increased sales of new IT small pouch batteries." Regarding operating profit, although it turned positive compared to the third quarter, which reflected one-time costs related to the GM recall, profitability somewhat declined. External factors such as rising raw material costs and increased logistics expenses acted as adverse factors.

LG Energy Solution announced that its sales target for this year is approximately 19.2 trillion KRW, about an 8% increase from last year's sales. When setting the target, the company reflected factors such as ▲annual growth in electric vehicle market demand ▲expansion of cylindrical battery sales ▲priority supply of volumes related to semiconductor supply issues and recall responses for customers.

Additionally, LG Energy Solution plans to invest about 6.3 trillion KRW in electric vehicle battery facilities this year. This is a 58% increase from last year's total investment of 4 trillion KRW, aiming to maximize production capacity. Major investment projects include the GM joint venture (JV), expansion plans for existing overseas bases such as Michigan in the United States and China, and research and development (R&D) investments.

Kwon Young-soo, Vice Chairman and CEO of LG Energy Solution, emphasized, "Above all, we will do our best to improve the most fundamental quality and secure profitability," and added, "We plan to boldly proceed with investments for future preparation." He continued, "Through this, we will strive to become a company trusted and loved by our customers."

This content was produced with the assistance of AI translation services.