Stories
LG Energy Profit More Than Doubles Estimates Driven by Energy-Storage Demand
- •LG Energy Solution reported a preliminary third-quarter operating profit of 756 billion won, easily beating the average analyst estimate of 365.5 billion won.
- •Revenue reached 9.6 trillion won, outpacing the forecasted 8.5 trillion won.
- •The strong earnings were driven by US manufacturing incentives, subsidies for American-made EV batteries, and surging demand for energy-storage systems.
- •The company is shifting production capacity to energy-storage systems to meet rocketing demand from data centers amidst softening global EV battery sales.
- •Following the announcement, LG Energy shares rose as much as 7% in Seoul.
Key Questions Answered
LG Energy Solution reported a preliminary third-quarter operating profit of 756 billion won, more than double analyst estimates, driven by surging demand for energy-storage systems, US manufacturing incentives, production tax credits, and subsidies for American-made electric-vehicle batteries. The restart of output at North American joint-venture facilities and rising EV shipments to Europe also contributed to the strong financial results.
LG Energy has been shifting its production capacity toward energy-storage systems to cater to rocketing demand from data centers as global sales of its batteries for electric vehicles soften. Additionally, the company is expanding its production footprint in the United States to maximize benefits from the Advanced Manufacturing Production Credit scheme.
LG Energy is considering supplying batteries for drones and unmanned weapons systems to the US government and major defense contractors because demand from electric vehicles has sputtered. This potential strategic shift allows the South Korean battery maker to capture growing defense demand and tap into a major new source of business funding as energy storage and defense replace slow EV adoption in North America.
