Seoul: LG Energy Solution Ltd. announced on Thursday a notable 34 percent increase in its third-quarter operating profit, driven primarily by a surge in sales of energy storage systems (ESS) and strategic cost-cutting measures. The operating profit for the July-September period reached 601.3 billion won (US$422 million), as detailed in the company's regulatory filing.
According to Yonhap News Agency, despite the surge in operating profit, the company's revenue saw a decline of 17.1 percent, totaling 5.69 trillion won. Net profit also dipped by 4.5 percent from the previous year, coming in at 536.1 billion won. The operating profit surpassed the market consensus by 16 percent, based on a survey conducted by Yonhap Infomax, the financial data division of Yonhap News Agency. However, estimates for net profit were not available.
Lee Chang-sil, the chief financial officer of LG Energy Solution, explained that sales were impacted by modifications in the U.S. electric vehicle subsidy program in September, specifically affecting pouch-type battery cells used in electric vehicles. Nonetheless, when compared with the previous quarter, overall sales rose by 2.4 percent, bolstered by the robust performance of the ESS business, which compensated for losses in other sectors.
The company highlighted that its ESS supply increased during the third quarter, amid U.S. initiatives to reduce reliance on China in this area. LG Energy Solution is optimistic about continued sales growth, as it is currently negotiating new project partnerships. Additionally, the company secured significant contracts with various ESS partners, including a notable supply agreement of 13 gigawatt hours (GWh) with a U.S. residential ESS firm during the third quarter.
Despite these developments, LG Energy Solution's stock experienced a 4.57 percent decrease, trading at 490,500 won on the main bourse as of 10:43 a.m. The third-quarter financial report was released while the market was open.