LG Energy Solution(373220) said in a filing on the 30th that second-quarter operating profit on a consolidation basis was tentatively tallied at 113.3 billion won, down 77% from a year earlier.
Operating profit included 241.0 billion won in advanced manufacturing production credit (AMPC) subsidies under the U.S. Inflation Reduction Act (IRA).
Second-quarter revenue rose 24.8% from a year earlier to 7.5602 trillion won, and the net loss turned to a deficit of 328.6 billion won.
Excluding AMPC production subsidies, second-quarter results turn to an operating loss of 127.7 billion won, with an operating margin of minus (-) 1.7%.
Vice President Lee Chang-sil, chief financial officer (CFO) of LG Energy Solution, said, "Revenue increased 15% from the first quarter, helped by higher shipments of mid- to low-priced products for electric vehicles (EVs), increased cylindrical battery shipments, and expanded production capacity for energy storage systems (ESS) in North America," adding, "In particular, ESS grew more than 30% from the first quarter as shipments expanded mainly in North America and Europe."
Lee added, "Profit and loss in the second quarter swung to a surplus in just two quarters, helped by improved utilization in Europe, a higher sales mix of high-margin cylindrical products, and a gradual reduction in fixed-cost burden through increased ESS production in North America."
LG Energy Solution said first-half revenue this year was 14.1152 trillion won, up 10.5% from the first half of last year. The growth of the ESS business was particularly notable. By converting EV production capacity to ESS, the revenue share increased to the high-20% range. Including AI data center projects where the end customer is a hyperscaler, the company secured more than 3 trillion won in new orders.
The company is also pushing to expand production capacity in North America. In May and June, it began operating ESS production lines at the second GM joint venture (JV) plant and at the Honda JV. It plans to secure more than 50 gigawatt-hours (GWh) of ESS production capacity in North America by year-end.
LG Energy Solution projected that the ESS market will continue to grow to ensure stable power supply and demand, driven by the spread of AI technology and increased investment in data centers. In addition to grid ESS linked to existing renewable power generation, demand is also rising for standalone ESS to resolve power supply-demand imbalances and for long-duration energy storage. The company also expects greater diversification in battery applications, including battery energy storage systems (BESS) to reduce power load volatility, as well as uninterruptible power supplies (UPS) and battery backup units (BBU).
At a conference call that day, LG Energy Solution laid out key plans for the second half: ▲ improving ESS profitability and expanding order momentum ▲ securing EV order opportunities and improving utilization ▲ advancing products and preparing next-generation batteries.
First, in the ESS business, it plans to expand pack and link unit production capacity based on five production bases in North America. It also plans to increase orders for large-scale renewable energy projects and data center power infrastructure.
In the EV business, it is targeting to start up the 46 series production line in Arizona in the United States in the fourth quarter. It is also considering a gradual increase in utilization at North American joint plants and expanding shipments of mid- to low-priced solutions from the Poland plant.
In next-generation batteries, it plans to address the battery backup unit (BBU) and robotics markets with a new high-power tabless 2170 product. For sodium-ion batteries, it is planning sample shipments next year to ESS and automotive customers. It will also prepare a pilot line applying dry-electrode processes within the year and push for pilot production of cost-competitive solid-state batteries.