Record Quarterly Sales of 9.64 Trillion Won; Operating Profit Hits 756 Billion Won
North American ESS Capacity to Exceed 50GWh by Year-End; Focus on New Orders in H2
LG Energy Solution (373220) posted its highest-ever quarterly revenue and an operating profit that more than doubled market forecasts for the third quarter of this year. While expanded shipments of energy storage systems (ESS) in North America and a recovery in EV battery volume in Europe propelled performance, the company also solidified its raw material procurement foundation by securing 240,000 tons of lithium spodumene from Canada on the same day.
Operating Profit of 756 Billion Won, Doubling Market Estimates
According to LG Energy Solution on the 8th, consolidated revenue for the third quarter reached 9.6434 trillion won, marking a 59.0% increase year-on-year and a 27.6% rise quarter-on-quarter. This represents the highest quarterly figure in the company’s history.
Operating profit came in at 756 billion won, an increase of 25.7% from a year ago and 567.3% from the previous quarter. This significantly outperformed the market consensus of 326.4 billion won compiled by financial data provider FnGuide.
The estimated Advanced Manufacturing Production Credit (AMPC) under the U.S. Inflation Reduction Act (IRA) accounted for 416.9 billion won. Excluding this tax credit, the operating profit stood at 339.1 billion won.
The performance improvement was driven by an increase in mid-nickel battery shipments to European EV customers and the scaling up of North American production facilities. In North America, the joint venture plant with GM resumed operations, and the JV plant with Hyundai Motor also began production. Higher capacity utilization due to increased ESS shipments further contributed to profitability.
However, the operating profit excluding AMPC includes compensation payments received from certain EV customers. As the exact amount of these payments was not disclosed, it is difficult to categorize the entire 339.1 billion won as normalized recurring operating profit.
Expanding North American ESS to 50GWh; Focus on H2 Orders
LG Energy Solution plans to expand its North American production capacity for lithium iron phosphate (LFP) batteries for ESS to over 50GWh by the end of this year. With rising demand for ESS due to AI data center expansions and power grid infrastructure investments, the utility of North American production facilities—previously centered on EVs—is broadening.
In a report released today, Shinhan Securities highlighted the potential for new ESS orders and improved profitability in the second half of the year. Of the 90GWh annual target for new orders, the company secured approximately 30GWh in the first half, with the remaining projects expected to be concentrated in the second half.
Lee Jin-myung, a senior analyst at Shinhan Securities, stated, "North American capacity will expand to over 50GWh by year-end, and with the easing of bottlenecks in packs and links, a turnaround to profit is expected in the fourth quarter even excluding the AMPC."
In the EV battery sector, utilization rates improved as shipments of pouch batteries for low-to-mid-priced European EVs increased. Supplies of cylindrical batteries to strategic clients also maintained a stable trend.
Securing 240,000 Tons of Canadian Lithium to Expand Raw Material Base
Concurrent with the earnings announcement, the company detailed an expansion of its North American raw material supply chain. LG Energy Solution announced that it signed a long-term supply agreement with North American lithium producer Elevra Lithium. Under the deal, the company will receive a total of 240,000 tons of lithium spodumene over four years starting late this year.
This translates to approximately 30,000 tons of lithium hydroxide, enough to produce batteries for roughly 700,000 high-performance EVs. The spodumene will be sourced from the North American Lithium mine operated by Elevra Lithium in Quebec, Canada.
The agreement is significant as it secures core raw materials long-term just as the company scales its North American production capacity. This allows LG Energy Solution to diversify its supply sources, which have been heavily concentrated in regions like China, while securing a stable supply of lithium produced in North America.
Lee Kang-yeol, Senior Vice President of the Purchasing Center at LG Energy Solution, stated, "This contract is intended to strengthen our North American raw material supply chain and respond to the rapidly growing North American battery market. Based on a stable supply of lithium spodumene, we will respond more swiftly to customer demand."
The third quarter saw the dual tailwinds of recovering European EV battery volumes and expanded North American ESS shipments. With the commitment to grow North American ESS capacity beyond 50GWh by year-end and the long-term securing of Canadian lithium, the company has broadened its foundation for production growth. Moving into the fourth quarter, key indicators to watch will be whether profitability improvements continue regardless of client compensation effects, and the scale of new ESS orders in the second half.
