LG Energy Solution (LGES) announced its 2023 full-year earnings, reporting a steady increase in consolidated revenue and operating profit.
The South Korean company reported a steady increase in consolidated revenue to KRW 33.7 trillion and an increase in operating profit to KRW 2.2 trillion. The LGES’ earnings report showed that the company’s consolidated revenue increased by 31.8% while its operating profit increased by 78.2%.
LG Energy Solution’s earnings in the final quarter of 2023 saw mixed results. While overall revenue dipped slightly compared to both the previous quarter and year-over-year, their operating profit actually increased year-over-year. This positive trend was partially fueled by tax credits from the U.S. government, specifically the Inflation Reduction Act (IRA).
LGES 2023 Earnings breakdown:
- Revenue: KRW 8 trillion, down 2.7% from the previous quarter and 6.3% from the same period last year.
- Operating Profit: KRW 338.2 billion, a 53.7% drop from the previous quarter but a 42.5% increase compared to the previous year. This includes an estimated KRW 250.1 billion KRW from the IRA tax credit, which grew 16% from the previous quarter due to a solid performance from LGES factories in the United States.
- Excluding the tax credit: Operating profit would be KRW 88.1 billion without the IRA tax incentive, indicating a more moderate but still positive year-over-year growth.
Last year marked the first year LGES had full-fledged operations in North America, which might have contributed to its financial performance in 2023.
“We gained speed with the successful ramp-up of [the] GM JV (Ultium Cells) plant in Ohio, as well as investments in our stand-alone Arizona production facility for cylindrical and energy storage systems (ESS) batteries. With the second joint venture with Hyundai Motors and the supply agreement with Toyota, we have also diversified our customer portfolio,” commented Chang Sil Lee, the Chief Financial Officer of LG Energy Solution.
The IRA’s tax credits also appear to have continued to LGES’ successful 2023 earnings. The Asian battery supplier seems prepared to fully comply with the IRA’s requirements in 2024.
“Last year, we have also established [a] sound supply chain by expanding sourcing of IRA-compliant critical minerals from the U.S. FTA countries and reinforcing strategic cooperation for recycling business with partners by region,” added Lee.