LG Energy Solution, Last Year's Operating Profit 768.5 Billion Won Record High, Turned Profitable After 3 Years... "Battery Investment 6.3 Trillion Won This Year" (Comprehensive)

"Last Year's Operating Profit Reflects GM·ESS Recalls, SK Settlement"

"This Year's Sales Target 19.2 Trillion Won... Expanding Production Capacity in US and China"

Kwon Young-soo: "Securing Quality and Profitability is Basic... Boldly Proceeding with Future Investments"

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 succeeded in turning its operating profit positive for the first time in three years last year, driven by increased demand for electric vehicle batteries.

LG Energy Solution announced on the 8th that its provisional consolidated sales for last year were KRW 17.8519 trillion, operating profit KRW 768.5 billion, and operating profit margin 4.3%. Sales increased by 42% compared to the previous year, and operating profit recorded the highest surplus ever, turning positive for the first time in three years since 2018 (KRW 290.2 billion). This amount includes one-time factors such as costs related to General Motors (GM) and energy storage system (ESS) recalls, and settlement money received from SK Innovation. Excluding one-time costs, sales were KRW 16.8597 trillion and operating profit KRW 917.9 billion.

The sales target of KRW 18.9 trillion was not met. Regarding this, LG Energy Solution explained, "Due to external management challenges such as vehicle semiconductor supply shortages 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 KRW 12.57 trillion in 2020."

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

LG Energy Solution was listed on the Korea Composite Stock Price Index (KOSPI) on the 27th of last month and announced its management performance separately for the first time. Previously, performance was disclosed as part of the battery business division of its parent company LG Chem. LG Energy Solution set its sales target for this year at approximately KRW 19.2 trillion, about 8% higher than last year and about 14% higher excluding one-time factors. When setting the target, it reflected factors such as ▲annual growth in electric vehicle market demand ▲expansion of cylindrical battery sales ▲priority supply of volumes related to customer semiconductor supply issues and recall responses.

Additionally, it announced plans to invest about KRW 6.3 trillion in electric vehicle battery facilities this year. This is a 58% increase from last year's total investment of KRW 4 trillion, 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 proceed boldly with investments for future preparation." He continued, "Through this, we will strive to become a company trusted and loved by customers."

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