LG Energy Solution estimates Q4 operating profit at over $258 million

Sales decreased 6.3 percent to 8 trillion won, according to the company on Tuesday.

LG Energy Solution's energy storage system for charging electric vehicles at its factory in Ochang, North Chungcheong [LG ENERGY SOLUTION]

LG Energy Solution estimates that its fourth-quarter operating profits jumped 43 percent from the previous year, boosted by U.S. tax credits and robust sales in the country.

Operating profit for the quarter surged to an estimated 338.2 billion won ($258 million) from 237.4 billion won during the same period of 2022, the company said in a statement on Tuesday.

Sales are projected to have fallen 6.3 percent to 8 trillion won in the fourth quarter from 8.53 trillion won a year ago, the statement read.

“Increased car battery production and sales in the United States and local tax credits helped prop up the bottom line despite high interest rates and the slowing pace of electric vehicle sales in Europe and China since late last year,” the statement said.

U.S. government tax credits under the Inflation Reduction Act (IRA) came into effect on Jan. 1 of last year.

The IRA gives up to $7,500 in tax credits to electric vehicle (EV) buyers whose vehicles were assembled in North America and made with minerals mined and processed in the United States or countries or regions that have free trade agreements with Washington.

Tax credits worth 250.1 billion won were reflected in the company's quarterly operating profit.

For the whole of 2023, operating income likely soared 78 percent to 2.16 trillion won from 1.21 trillion won in the previous year.

Sales were up 32 percent to 33.74 trillion won, increasing from the 25.59 trillion won recorded at the beginning of the same period.

The company's full-year earnings results will be available later this month.

BY KIM JU-YEON, YONHAP [kim.juyeon2@joongang.co.kr]