LG Energy Solution Q2 operating profit more than doubles

[Courtesy of LGES]

LG Energy Solution Ltd. (LGES), South Korea’s leading battery manufacturer, said on Thursday that its operating profit for the second quarter came to 460.6 billion won ($362.6 million) . The second-quarter operating profit is up 135.5 percent from a year ago but down 27.3 percent from the previous quarter.

The second-quarter operating profit included an amount of 151 billion won related to the electric vehicle recall provision for General Motors’ Chevrolet Bolt EV.

On July 7, LGES had announced its projected operating profit for the April-June period as 611.6 billion won without the recall provision.

The latest figure reflected a one-time provision for the cost increase of materials incurred during the recall process. LG and LG Electronics shared the burden equally, each accounting for 50 percent of the cost.

The company clarified that there were no changes in the quantity or scope of the recall, and the impact was solely attributed to the rise in material costs.

The second-quarter operating profit also included an amount of 110.9 billion won related to the Advanced Manufacturing Production Credit (AMPC) under the U.S. Inflation Reduction Act (IRA). According to the IRA, battery cell and module manufacturers in the U.S. are eligible for certain subsidies starting this year.

The projected AMPC amount reflected in the first-quarter operating profit was 103 billion won.

LGES reported a continuous growth in sales for the past six consecutive quarters. Second-quarter sales reached 8.77 trillion won, up 73 percent from a year ago, and which is a slight 0.3 percent increase compared to the previous quarter.

LGES currently operates eight production facilities in North America, and as the factories there gain stability in production and quality, the AMPC tax deduction is expected to increase further.