LG Energy Solution Returns to Profit in Q2, Eyes ESS Growth

LG Energy Solution has returned to operating profit in the second quarter, a significant turnaround after two quarters of losses. This recovery was bolstered by North American production subsidies, specifically the Advanced Manufacturing Production Tax Credit (AMPC) under the U.S. Inflation Reduction Act, which amounted to 241 billion won. The company also saw increased shipments of energy storage systems (ESS) and cylindrical batteries, contributing to a revenue increase of 24.8% year-on-year.

Despite the overall operating profit of 113.3 billion won, excluding the subsidies, LG Energy Solution incurred an operating loss of 127.7 billion won. However, the company has strategically positioned itself for future growth by securing over 3 trillion won in new ESS orders in the first half of the year. These orders include significant projects for AI data centers, signaling a growing demand for robust energy storage solutions.

The company is actively expanding its ESS production capabilities in North America, with plans to have five production sites operational by the end of the year, aiming for stabilization by mid-2025. LG Energy Solution also intends to strengthen its comprehensive ESS solutions business, which encompasses battery cell supply, software, and system integration. In the electric vehicle (EV) battery sector, the company is focusing on mid-to-low-priced products and expanding the production of its 46-series cylindrical batteries, anticipating opportunities from evolving European safety regulations and vehicle structures.

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Driven by increased shipments of mid-to-low-priced products for EVs and cylindrical batteries, and the expansion of North American ESS production capacity, revenue increased compared to the previous quarter. We returned to profitability in two quarters due to improved operating rates in Europe, increased sales of high-margin cylindrical products, and eased fixed cost burdens from increased North American ESS production.