Seoul: LG Energy Solution Ltd., South Korea's preeminent battery manufacturer, announced on Wednesday a 6.8 percent increase in its net profit for the first quarter, driven by U.S. tax credit support despite challenges from a global slowdown in electric vehicle (EV) demand.
According to Yonhap News Agency, the company's net profit for the January-March period rose to 226.6 billion won (US$158.3 million) on a consolidated basis, up from 212.1 billion won a year earlier, as reported in a regulatory filing. Operating profit saw a significant increase of 138.2 percent, reaching 374.7 billion won, while sales climbed 2.2 percent to total 6.26 trillion won.
LG Energy Solution credited its improved financial performance primarily to the Advanced Manufacturing Production Credit (AMPC) under the U.S. Inflation Reduction Act. This credit amounted to 457.7 billion won for the quarter, marking a 21 percent increase from the previous quarter. Without the AMPC, the company faced an operating loss of 83 billion won, although this was a marked improvement from the 602.8 billion won loss seen in the preceding quarter.
The company also noted that stronger-than-expected shipments to key clients, advantageous exchange rates, and internal cost-cutting measures contributed to the positive earnings results. In response to the stagnating demand for EVs, LG Energy Solution has been undertaking key restructuring and diversification strategies, including the conversion of its Michigan facility in the United States to focus on energy storage systems (ESS) production.
Looking ahead, LG Energy Solution plans to carefully manage its EV battery inventories while expanding its ESS business, which holds significant growth potential. The company is also aiming to increase orders and develop battery cells for new applications, such as humanoid robots and drones.