LG Energy Solution Ltd., the pure-play vehicle battery maker under South Korea’s LG Group, saw its operating profit soar more than 78 percent in 2023 from a year ago thanks to its cost-cutting efforts and tax benefits from the U.S. Inflation Reduction Act (IRA).

LG Energy Solution announced a preliminary operating profit of 2.16 trillion won ($1.6 billion) for 2023, up 78.2 percent from a year ago, on sales of 33.7 trillion won, up 31.8 percent. Net profit stood at 1.6 trillion won, up 110.1 percent.

For the fourth quarter, LG Energy Solution posted an operating profit of 338.2 billion won, up 42.5 percent from the same period a year ago but down 53.7 percent from the previous quarter.

Revenue reached 8 trillion won in the October-December period, down 6.3 percent on year and down 2.7 percent on quarter. Net profit fell 31 percent on year and 54.7 percent on quarter to 190.3 billion won.

Shares of LG Energy Solution were trading 4.76 percent higher at 385,500 won as of 10:50 a.m. on Friday.

“While actively responding to strong growth in demand in North America, sales have continued to achieve over 30 percent high growth for two straight years,” said Lee Chang-sil, executive vice president and chief financial officer and chief strategy officer at LG Energy Solution, during a conference call on Friday. “Operating profit also increased by 78 percent compared to the previous year, thanks to cost improvement efforts such as logistics cost reduction, yield and productivity improvement, and benefits from the IRA tax deduction.”

LG Energy Solution projected the global electric vehicle (EV) market to grow by a mid-20 percent range this year, slowing from an above 30 percent growth in previous years.

LG Energy Solution, however, noted that there are factors that can sustain the growth momentum, such as aggressive price reductions by finished automakers amid sluggish EV demand and supply of cheaper models that help trigger consumers’ purchase sentiment.

The company projected 2024 sales growth to be in the mid-single digit range. LG Energy Solution plans to keep its capital expenditures at a similar level to last year’s 10.9 trillion won in 2024.

By Pulse

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