LG Energy Solution Ltd. (LGES), South Korea’s leading battery maker, said Tuesday its estimated fourth-quarter operating profit jumped 43 percent from a year earlier, helped by U.S. tax credits and robust sales in the United States.
Operating profit for the three months ended in December surged to an estimated 338.2 billion won (US$258 million) from 237.4 billion won during the same period of 2022, the company said in a statement.
Sales are projected to fall 6.3 percent to 8 trillion won in the fourth quarter from 8.53 trillion won a year ago, it said.
“Increased car battery production and sales in the U.S. and local tax credits helped prop up the bottom line despite high interest rates and the slowing pace of electric vehicle sales in Europe and China since late last year,” the statement said.
The Inflation Reduction Act, signed into law by U.S. President Joe Biden in August 2022, requires 50 percent of the value of battery components to be assembled in North America to receive a $3,750 credit and 40 pe
rcent of the value of critical minerals sourced from the U.S. or a free trade partner for a separate $3,750 credit.
Tax credits worth 250.1 billion won were reflected in its quarterly operating profit, the company said.
For the whole of 2023, operating income likely soared 78 percent 2.16 trillion won from 1.21 trillion won in the previous year.
Sales were up 32 percent to 33.74 trillion won from 25.59 trillion won during the same period.
It is the first time for the company’s annual operating income and sales to exceed 2 trillion won and 30 trillion won since its foundation in 2020.
Its full-year results will be available later this month.
Looking ahead, the company said the slowing demand for EV batteries amid a global economic slowdown will remain a major concern for car battery makers this year.
To ride out unfriendly market conditions, it will strengthen its product portfolio by adding nickel-rich NCMA (nickel, cobalt, manganese, aluminum) lithium ion batteries as well as lithium iron phosphate (L
FP) batteries, the statement said.
An LFP battery is a type of lithium-ion battery known for its enhanced safety features, high energy density and longer life span.
In North America, LGES currently operates two plants in Ohio and Michigan, with six factories, including one in Canada, yet to be completed in coming years.
In addition, the company operates one plant in South Korea, one in Poland and one in China, while preparing to start operations at its Indonesian plant this year.
Source: Yonhap News Agency