LG Energy Solution recorded its highest annual sales last year with 25 trillion won in revenue and 1 trillion won in operating profit. This year, the company plans to increase annual sales by more than 25-30% through the establishment of new production facilities and the stable operation of existing ones, focusing on sales expansion in North America.

On the 27th, LG Energy Solution held its 2022 fourth-quarter earnings conference and announced that it achieved an annual revenue of 25 trillion 598.6 billion won and an operating profit of 1 trillion 213.7 billion won. This represents a substantial increase of 43.4% in revenues (compared to the previous year’s revenue of 17 trillion 851.9 billion won) and a 57.9% increase in operating profit (compared to 768.5 billion won from the previous year).

LG Energy Solution’s CFO, Lee Chang-sil, stated, “In the second half of last year, the increase in demand for EVs and ESS (Energy Storage System) for the power grid led to growth in shipments across all product lines, and the expansion of sales prices linked to the rise in key raw material costs drove us to achieve our maximum annual revenue. Furthermore, the economies of scale from increased sales volume, cost reductions through improved productivity, and the expansion of competitively-priced metal sourcing contributed to a significant increase in operating profit compared to the previous year.”

Last year’s fourth-quarter revenue was 8 trillion 537.5 billion won, and the operating profit was 237.4 billion won. The revenue increased by 11.6% compared to the previous quarter (7 trillion 648.2 billion won) and by 92.3% compared to the same period last year (4 trillion 439.4 billion won), setting a record for the highest revenue on a quarterly basis. Analysts attribute revenue growth to the full-scale operation of GM JV phase 1 and the expansion of ESS sales for the power grid. Operating profit decreased by 54.5% compared to the previous quarter (521.9 billion won) but increased by 213.6% compared to the same period last year (75.7 billion won).

LG Energy Solution explained, “In the fourth quarter of last year, although economies of scale and productivity improvements from increased product shipments persisted, temporary declines in operating profit were reflected due to performance bonuses resulting from strong annual results and increased costs associated with external ESS replacements. However, excluding one-time costs, the performance was at a similar level to the previous quarter.”

LG Energy Solution has set a target to increase annual revenue by 25-30% compared to last year. They also plan to increase investments for expanding global production capacity by more than 50% from the previous year’s 6.3 trillion won.

The company stated, “We anticipate this annual revenue growth through new construction and stable operation of global production facilities, as well as expanded sales in North America. We will continuously improve our operating profit margin through ongoing cost improvements and differentiated product competitiveness.”

Last year, LG Energy Solution strengthened its strategic partnerships with major global automakers, marking a significant year with events such as the full-scale production launch of GM JV phase 1 and the announcement of new joint ventures with Honda and Stellantis in North America. This year, the company plans to increase its global production capacity to 300 GWh, which is sufficient to produce about 4.3 million high-performance pure electric vehicles.

LG Energy Solution aims to actively expand the production capacity of its global manufacturing plants in North America, Europe, and Asia this year to maintain its global competitiveness. In the rapidly growing North American EV market, production capacity is expected to be expanded to 55 GWh through the operation of GM JV phase 1 and phase 2 by the end of this year, while the production plant in Wroclaw, Poland, will reach 90 GWh, and production facilities in Korea and China are expected to expand to 155 GWh.

As of the end of last year, LG Energy Solution’s order backlog was 385 trillion won.

The company also projected that the global battery market size is expected to grow by about 33% this year compared to last year (670 GWh), reaching 890 GWh.

In terms of regions, the North American market is expected to see the steepest growth in electric vehicles, with a growth rate in the mid-60s for this year, driving overall growth in the global electric vehicle battery market. Europe is projected to grow in the mid-40s, while China is expected to show growth in the mid-20s.

This year, LG Energy Solution plans to focus on four core tasks to respond to the expanding global battery market demand: ▲ Differentiation in product competitiveness ▲ Implementing smart factories ▲ Establishing SCM (Supply Chain Management) systems ▲ Readiness for the future.

To differentiate product competitiveness, the company will develop more segmented, market-tailored products, including high-nickel cathodes, silicon anodes, new cylindrical form factors, and LFP batteries. The policy includes enhancing system-level product competitiveness by improving space utilization at the cell level and strengthening pack and BMS (Battery Management System) capabilities through BMS algorithm development.

LG Energy Solution will also focus on building smart factories that make all decisions based on data generated by machines rather than relying on human experience and capabilities. The plan includes establishing a smart factory basis for all production processes through predictive maintenance, automation, and intelligence, aiming for yield and productivity improvement and quality stabilization.

Additionally, it plans to establish a more efficient SCM system through localizing key materials and expanding upstream investments to secure a stable raw material sourcing system. This includes ongoing development of next-generation battery technologies like lithium-sulfur and solid-state batteries, and thoroughly preparing for future initiatives.

LG Energy Solution’s CEO, Kwon Young-soo, emphasized, “This year, we will continue to strengthen our fundamentally superior product competitiveness and differentiated global production capabilities based on strong execution to provide the best customer value in the world.”

Lee Sang-jin daedusj@autodiary.kr