Seoul: LG Energy Solution Ltd. announced a significant rise in its third-quarter operating profit, driven by increased sales of energy storage systems (ESS) and strategic cost-cutting measures. The company reported a 34 percent surge in operating profit for the July-September period, reaching 601.3 billion won (US$422 million), as detailed in a recent regulatory filing.

According to Yonhap News Agency, despite the growth in operating profit, LG Energy Solution experienced a 17.1 percent decline in revenue, amounting to 5.69 trillion won. Additionally, net profit fell by 4.5 percent from a year earlier, totaling 536.1 billion won. The operating profit exceeded market expectations by 16 percent, as per a survey by Yonhap Infomax, although estimates for net profit were not provided.

Lee Chang-sil, the company’s chief financial officer, attributed the revenue decrease to changes in the U.S. electric vehicle subsidy program in September, which impacted sales of pouch-type battery cells for electric vehicles. However, he noted that overall sales increased by 2.4 percent compared to the previous quarter, driven by strong performance in the ESS sector, which compensated for losses in other areas.

The company highlighted the growth in its ESS supply during the third quarter, aligning with U.S. efforts to reduce reliance on China in this sector. LG Energy Solution anticipates continued sales growth as discussions with partners for new projects progress. The company also secured significant contracts with various ESS partners, including a notable 13 gigawatt hours (GWh) supply agreement with a U.S. residential ESS company during the third quarter.

Despite these developments, shares of LG Energy Solution fell by 5.35 percent to 486,500 won on the Korea Composite Stock Price Index (KOSPI), in contrast to the KOSPI’s 0.14 percent increase.