SEOUL, - LG Energy Solution Ltd. (LGES), a pivotal player in South Korea's battery manufacturing industry, announced Wednesday that its third-quarter net profit more than doubled compared to the same period last year. The surge is attributed to robust demand from the United States and favorable tax policies.
According to a news release by Yonhap News Agency, the net profit for the quarter ending in September rocketed to 420.5 billion won (US$312 million), up from 187.7 billion won in the corresponding period last year. LGES attributed this substantial increase to strong battery sales in the U.S., amplified by a growth in production capacity at its U.S. facilities and improved productivity.
Additionally, the company benefited from tax credits provided under the U.S. Inflation Reduction Act (IRA), which became effective on January 1 this year. The IRA offers up to $7,500 in tax credits for electric vehicle (EV) buyers under certain conditions, such as the vehicle being assembled in North America and using minerals processed in certain countries. These tax credits were reflected in the quarterly operating profit, contributing 215.5 billion won.
The operating profit for the third quarter climbed 40 percent to 731.2 billion won, up from 521.9 billion won a year earlier. Sales increased by 7.5 percent, reaching 8.223 trillion won from 7.648 trillion won over the same period.
Going forward, LGES highlighted challenges facing the EV battery market, such as weaker demand in Europe and China and falling prices for key manufacturing materials like lithium and nickel. Despite these concerns, the company aims to secure additional EV battery supply contracts with global carmakers in the upcoming quarter.
Earlier this month, LGES inked a 10-year deal with Toyota Motor Corp. for battery supplies through 2035. This agreement positions LGES as a battery supplier to the world's top five car manufacturers, which include General Motors Co., Toyota Motor, Hyundai Motor Group, Volkswagen Group, and the Renault-Nissan alliance.
For the first nine months of the year, the company's net income nearly tripled to 1.448 trillion won, up from 504.3 billion won in the year-ago period. Operating profit jumped 87 percent to 1.825 trillion won, while sales rose by 51 percent to 2.574 trillion won.
Currently, LGES operates two plants in the U.S., specifically in Michigan and Ohio, and has six more factories planned. Outside the U.S., the company runs a plant in South Korea, another in Poland, and is preparing to commence operations at a facility in Indonesia.