LG Energy Solution Q1 Sales 4 Trillion Won... "7 Trillion Won Facility Investment"

Operating Profit 258.9 Billion KRW... 24.1% Decrease
"7 Trillion KRW Facility Investment This Year... Sales Target 19.2 Trillion KRW"

[Asia Economy Reporter Moon Chaeseok] LG Energy Solution held an earnings conference on the morning of the 27th and announced that it recorded Q1 sales of KRW 4.3423 trillion and operating profit of KRW 258.9 billion. Compared to Q1 of last year, sales increased by 2.1%, while operating profit decreased by 24.1%. The operating profit margin was 6%.

Lee Chang-sil, Executive Vice President and Chief Financial Officer (CFO) of LG Energy Solution, explained, "Despite several factors increasing management uncertainty such as rising raw material prices, shortage of automotive semiconductors, and supply difficulties due to the Russia-Ukraine conflict, we achieved results exceeding market expectations thanks to steady demand for cylindrical batteries for EVs (electric vehicles)." He also cited minimizing market impact through price linkage of major raw material costs and improving productivity through process automation as reasons for the improved performance.

LG Energy Solution plans to invest approximately KRW 7 trillion this year in facility investments to expand global battery production capacity. With various new projects underway, including new and expanded joint ventures and standalone factories in the North American region and expansion of cylindrical production lines in China, the total expected investment scale has increased. Through these investments, the company plans to expand global production capacity from about 200 GWh (gigawatt-hours) at the end of this year to 520 GWh by 2025.

The sales target for this year is set at KRW 19.2 trillion, an increase of about KRW 1.3 trillion compared to last year (KRW 17.9 trillion). LG Energy Solution plans to achieve the sales target by leveraging the effects of new car launches from major clients and expanding sales of key products, including cylindrical batteries for EVs.

Recent Performance Trends of LG Energy Solution. (Source: LG Energy Solution)

On the same day, LG Energy Solution also disclosed plans for profitability improvement through the earnings announcement. To improve profitability, the company decided to respond more actively to metal supply and raw material price fluctuations. It plans to secure stable supply volumes and enhance price competitiveness by expanding long-term supply contracts and strategic equity investments with major raw material suppliers such as lithium, nickel, and cobalt.

The scope of price-linked metals will also be expanded from the existing lithium, nickel, and cobalt to include copper, aluminum, manganese, and others. For non-metal raw materials such as anode materials, electrolytes, binders, and separators, the company plans to reflect price increase factors in product prices to reduce future risks.

Furthermore, LG Energy Solution plans to accelerate cost reduction and manufacturing competitiveness enhancement by building smart factories based on automation, informatization, and intelligence across all production bases worldwide.

LG Energy Solution also presented measures to secure product competitiveness through fundamental structural improvements. For pouch-type products, it plans to improve safety and cost by securing heat diffusion suppression pack solutions and developing EV and ESS products based on new materials such as cobalt-free. For cylindrical products, it aims to enhance competitiveness by developing new high-capacity form factor products.

Kwon Young-soo, Vice Chairman and CEO of LG Energy Solution, said, "Although the global business environment remains challenging, we will continue to strengthen product competitiveness and quality capabilities."

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