LG Energy Solution Announces First Quarter 2022 Financial Results

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Apr 26, 2022, 21:52 ET

LG Energy Solution posts quarterly revenue of KRW 4.34 trillion; operating profit at KRW 258.9 billion
Battery manufacturer sets capital expenditures for 2022 at KRW 7 trillion
LGES annual global manufacturing capacity will reach 520GWh by 2025

SEOUL, South Korea, April 26, 2022 /PRNewswire/ -- LG Energy Solution (LGES; KRX: 373220) today reported its first quarter results, buoyed by steady demand for its cylindrical battery cells and enhanced productivity through automated manufacturing system.

In what was LG Energy Solution's first official earnings report since going public, the battery manufacturer said its consolidated revenue came in at KRW 4.34 trillion in the January-March span, down 2.2% on-quarter. The company logged KRW 258.9 billion in operating profit and operating margin at 6%.

LG Energy Solution largely attributed the slight drop in revenue to the rising costs of raw materials, ongoing global semiconductor shortage and supply chain disruption caused by the military conflict between Russia and Ukraine and periodic COVID lockdowns. The company also added prioritizing replacing recalled batteries also dragged down the sales in the first quarter.

Despite the unfavorable commodity market conditions with prices of key battery materials such as nickel, lithium and cobalt skyrocketing, LG Energy Solution said it managed to uphold steady operating profit with solid sales of cylindrical battery cells, improved productivity due to automation, and a cost pass-through mechanism to cover rising prices of aforementioned earth metals.

Looking at the year as a whole, LG Energy Solution targeted annual sales of KRW 19.2 trillion, an increase of 8% on-year, as major partnering automakers plan to expand their EV lineups.

The company said it will invest about KRW 7 trillion in global capital expenditures to maximize its battery manufacturing capacity. LGES projected its annual production capacity to reach 200GWh this year, and 520GWh by 2025. By region, the company's battery capacity in 2025 would account for 41% in North America, which would be the largest share in the region, 37% in Asia and 22% in Europe.

LG Energy Solution also outlined its actions aimed at improving profitability amid spiraling metal prices. In addition to solidifying partnership with its suppliers, LGES said it will secure raw materials through long-term agreements and strategic equity investments. In response to the fluctuating metal prices, LGES will expand the coverage of the cost pass-through schemes by adding copper, aluminum and manganese to the existing list of lithium, nickel and cobalt.

The company revealed plans to fully transform all its facilities into smart factories to make data-driven decisions in plant operation as well as enable automatic calibration to ultimately reduce manufacturing cost while reinforcing manufacturing competitiveness. The company is also on course to strengthen its organizational structure with its newly appointed Chief Digital Officer.

To secure product competitiveness, LGES is working on a solution that can better control thermal propagation in pouch battery packs. For competitive pricing, the battery manufacturer said it continues to develop new cathode materials, while introducing high-capacity cylindrical battery cells in new form factors.

LG Energy Solution is ensuring product quality by implementing a unified operational process that comprehensively covers from identifying the root cause of battery defects to customer support. With it, LGES plans to advance automated inspection process and eventually reduce the range and the volume of recalled batteries.

"Despite global economic uncertainties, LG Energy Solution will continue to make prudent investments to revamp quality and raise product competitiveness," said Youngsoo Kwon, CEO of LG Energy Solution. "As a responsible and loyal business to our partners, shareholders and investors, LGES will lead the energy industry toward a battery-powered future with unrivaled competitiveness."

About LG Energy Solution

LG Energy Solution (KRX: 373220) is a global leader delivering advanced lithium-ion batteries for Electric Vehicles (EV), Mobility & IT applications, and Energy Storage Systems (ESS). With 30 years of experience in advanced battery technology, it continues to grow rapidly towards the realization of sustainable life. With its robust global network that spans the US, Europe, Asia, and Australia, LG Energy Solution is more committed than ever to developing innovative technologies that will bring the future energy a step closer. Under its ESG vision "We CHARGE toward a better future," LG Energy Solution is doing its utmost to prioritize environment, fulfil social responsibilities and shape sustainable future. For more information, please visit https://www.lgensol.com.

SOURCE LG Energy Solution