LG Energy Solution has achieved its highest quarterly revenue ever in Q3 this year.
On the 26th, LG Energy Solution held an earnings announcement meeting, reporting a Q3 revenue of 7.6482 trillion won and an operating profit of 521.9 billion won.
The revenue increased by 89.9% compared to the same period last year (4.0274 trillion won), and by 50.8% compared to the previous quarter (5.0706 trillion won), marking the largest quarterly figures on record. The operating profit turned positive compared to a loss of 372.8 billion won from the same period last year, and increased by 166.8% compared to the previous quarter (195.6 billion won). Excluding one-off factors such as license agreement payments and provisions reflected in the second quarter of last year (724.3 billion won), this is also the highest figure.
LG Energy Solution’s CFO, Lee Chang-sil, stated, “The increase in electric vehicle battery shipments to North American and European customers, the full-scale supply of ESS (Energy Storage Systems) products for North American power grids, and the response to new IT model demands contributed to achieving record quarterly sales.”
He also added, “In Q3 this year, the economy of scale effects from revenue growth, price adjustments reflecting the rising costs of key raw materials like metals, and improvements in productivity led to enhanced profitability across all product lines. Additionally, the favorable exchange rate environment due to the strong dollar was a major factor in the improved performance.”
Regarding the outlook for Q4, he stated that the company would strive to achieve solid results despite challenging external management conditions.
On this day, LG Energy Solution not only outlined its Q3 performance but also presented specific plans to expand its market competitiveness in North America, which is expected to experience the fastest growth.
Indeed, the North American electric vehicle market is projected to grow at an average annual rate of 33% until 2030, outpacing growth rates in Europe (26%) and China (17%) over the same period. Additionally, various policies aimed at activating the green energy industry, such as the Inflation Reduction Act, are expected to accelerate battery demand.
For this reason, LG Energy Solution previously announced a long-term business goal of tripling its annual revenue and achieving double-digit operating profit margins within five years, focusing on penetrating the North American market.
LG Energy Solution plans to strengthen its competitiveness in the North American market across four areas: geography, customers, products, and smart factories.
First, it will consistently expand production capacity in North America to accelerate market dominance. LG Energy Solution is currently constructing joint battery production facilities with major automakers such as GM (Ultium 1, 2, 3), Stellantis, and Honda in North America. Including the standalone factory in Michigan, LG Energy Solution’s production capacity in North America is expected to reach 250 to 260 GWh by 2025, the largest compared to global battery companies.
In the customer and product segments, the company will continue its efforts to secure additional core customers and expand its supply chain, while also enhancing its product responsiveness through the production of EV pouches, ESS (Energy Storage Systems), and cylindrical batteries in North America.
The company will also focus on building smart factories. A smart factory refers to a system where all decision-making is based on data generated by machines rather than human experience and capabilities. LG Energy Solution plans to establish a global integrated management system through the digitization of all production processes, aiming for yield improvement, quality stabilization, and productivity enhancements.
In light of the implementation of the US Inflation Reduction Act next year, the company will focus its efforts on building a North American supply chain by increasing the localization of key raw materials.
In terms of key materials such as cathodes, anodes, and electrolytes, LG Energy Solution is actively pursuing localization in North America based on partnerships with major collaborators. For metals such as nickel, lithium, and cobalt, the company plans to utilize mining and refining companies located in countries that have signed free trade agreements with the US to meet regional production requirements.
LG Energy Solution stated, “Through these efforts, we aim to drastically increase the localization rates from North America and FTA partner countries to 63% for cathodes and 72% for key minerals within five years.”
Additionally, the company plans to consistently expand investments and long-term supply agreements with metal suppliers to increase direct procurement of key metals like lithium to over 50%. It will also continue to strengthen partnerships with specialized companies in battery recycling to establish a closed-loop resource recycling system encompassing the entire lifecycle—from raw material production to consumption and recycling.
Furthermore, LG Energy Solution announced that its order backlog was 370 trillion won as of the end of September this year.
LG Energy Solution CEO Kwon Young-soo emphasized, “Based on a solid order backlog, we will enhance our position as a global leader through unparalleled revenue growth and profitability, differentiated production capabilities based on smart factories, and strategic partnerships with global automakers. This way, we aspire to become the most trusted and loved profitable No.1 company.”
Lee Sang-jin daedusj@autodiary.kr