LG Energy Solution has reported revenue of KRW 33.7 trillion (up 31.8 percent) and an operating profit of KRW 2.2 trillion (up 78.2 percent) in 2023.
Chang Sil Lee, CFO of LG Energy Solution, attributed the impressive financial results to the company’s proactive response to escalating market demand in North America.
“We have achieved high annual revenue growth of more than 30 percent for two consecutive years by actively responding to strong market demand in North America,” Chang Sil Lee said in its earnings report.
The successful operations in North America included the ramp-up of the GM JV (Ultium Cells) plant in Ohio and investments in a stand-alone production facility in Arizona for cylindrical and energy storage systems (ESS) batteries. Furthermore, partnerships with Hyundai Motors and a supply agreement with Toyota expanded the company’s customer portfolio.
LG Energy Solution strategically bolstered its supply chain by sourcing IRA-compliant critical minerals from U.S. FTA countries and reinforcing regional cooperation for recycling initiatives.
In the fourth quarter of 2023, LG Energy Solution reported revenue of approximately KRW 8 trillion, a 2.7 percent decrease on a quarterly basis and a 6.3 percent decrease year-on-year. Despite the quarterly dip, the operating profit for the same period marked KRW 338.2 billion, reflecting a 53.7 percent decrease on-quarter and a 42.5 percent increase on-year. Notably, the operating profit included an estimated IRA tax credit amounting to KRW 250.1 billion.
Market Outlook and Strategic Initiatives
Addressing the global electric vehicle (EV) market outlook, LG Energy Solution foresees a temporary slowdown in growth for 2024, with the global EV market expected to grow in the mid-20 percent range. Despite market uncertainties, the company remains optimistic about demand recovery, citing automakers’ aggressive price cuts and a sustained commitment to launching mid- to low-end EV models.
To secure competitive superiority, LG Energy Solution outlined key business initiatives. These include focusing on technology leadership across all segments, establishing structural cost competitiveness, and accelerating efforts for future readiness. The company also expressed confidence in maximizing its first-mover advantage in North America, where it operates eight production facilities.
Amidst political uncertainties, LG Energy Solution anticipates the global trend toward carbon neutrality and electrification to persist, with regional policies favoring supply chain localization playing in the company’s favor.
The company announced this year’s guidance, projecting a mid-single digit percentage year-on-year increase in annual consolidated revenue. LG Energy Solution plans to maintain capex at a similar level to the previous year while preparing for the expansion of its North American production facilities.
In a forward-looking move, LG Energy Solution aims to produce lithium-sulfur batteries by 2027, expedite the development of dry electrodes, and implement a new stacking process for manufacturing. The estimated capacity eligible for IRA tax credits in 2024 is anticipated to be around 45-50GWh, more than double the previous year.