LG Energy Solution Q2 Operating Profit 195.3 Billion KRW... AMPC Record High (Comprehensive)

Full-scale mass production at GM joint venture Plant 2 and new car launch impact
AMPC subsidy 447.8 billion won 'record high'
After subsidy deduction, -252.5 billion won... second consecutive quarter deficit

Data provided by LG Energy Solution

LG Energy Solution announced its preliminary second-quarter results, recording sales of KRW 6.1619 trillion and an operating profit of KRW 195.3 billion.

According to LG Energy Solution on the 8th, the company's sales in the second quarter of this year decreased by 29.8% compared to the same period last year, and operating profit fell by 57.6%. Compared to the previous quarter (Q1), sales increased by 0.5% and operating profit rose by 24.2%. Although the year-on-year decline in performance continues, the quarterly downward trend has stopped. The company stated, "Despite the continued weakness in overall front-end market demand due to price linkage effects from the decline in major metal prices such as lithium and the slowdown in electric vehicle demand, we actively responded to volume for North American automaker customers and expanded sales of ESS (energy storage systems) for power grids, resulting in a slight increase compared to the previous quarter."

The tax credit under the U.S. Inflation Reduction Act (IRA) Advanced Manufacturing Production Credit (AMPC) system (45X) amounted to KRW 447.8 billion. Excluding this amount, the company recorded an operating loss of KRW 252.5 billion. The scale of AMPC subsidies in Q2 this year is the largest since the company began reflecting subsidy benefits in its results in Q1 last year. LG Energy Solution's AMPC benefits were KRW 100.3 billion in Q1 last year, KRW 110.9 billion in Q2, KRW 215.5 billion in Q3, and KRW 250 billion in Q4. Although the AMPC benefit slightly decreased to KRW 188.9 billion in Q1 this year, it more than doubled in Q2, allowing the company to fully enjoy the AMPC benefits.

The company said, "Major customers increased demand due to new car launches and volume expansion from the full-scale mass production and shipment start of the GM joint venture's second plant, resulting in KRW 447.8 billion, a 137% increase compared to the previous quarter," adding, "We continue efforts to fundamentally strengthen competitiveness despite the electric vehicle chasm (temporary demand slowdown) this year."

Meanwhile, LG Energy Solution is expanding its influence in the mid-to-low-priced battery market, having recently succeeded in signing a large-scale supply contract for electric vehicle LFP (lithium iron phosphate) batteries with Renault. This is the company's first large-scale supply contract for electric vehicle LFP batteries, demonstrating its growing capabilities not only in technology and product competitiveness but also in price competitiveness.

Additionally, the company is promoting the conversion of some electric vehicle lines at its global plants to ESS production. Unlike the electric vehicle market, where demand is temporarily slowing in the short term, the ESS market is steadily growing. Through line conversion, the company expects to actively respond to demand, increase the operating rate of currently running plants, and reduce fixed cost burdens.

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