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LG Energy Solution Posts Q1 Loss Amid Middle East Crisis, ESS Costs

LG Energy Solution reported a preliminary operating loss for the first quarter, a sharp reversal from last year's profit. The loss was significantly worse than market estimates and was attributed to higher production costs from the Middle East crisis. Investments in new North American energy storage system production facilities also weighed on results. A U.S. tax credit helped reduce the reported loss, which would have been substantially larger without it.

Key Points: LG Energy Solution Q1 Operating Loss Amid Middle East Crisis

  • Swung to $138M operating loss
  • Sales fell 2.5% to $4.9B
  • Loss 30.4% worse than estimates
  • U.S. tax credit softened total loss
2 min read

LG Energy Solution turns to operating loss in Q1 amid Mideast crisis

LG Energy Solution swings to a Q1 operating loss, missing estimates, due to Middle East crisis costs and North American ESS facility investments.

"the loss apparently came amid higher production costs triggered by the Middle East crisis - Industry Watchers"

Seoul, April 7

LG Energy Solution Ltd, South Korea's leading battery maker, on Tuesday estimated it posted an operating loss in the first quarter, apparently due to the fallout from the US-Iran war.

Operating loss came to 207.8 billion won (US$138.2 million) in the January-March period, shifting from a profit of 374.7 billion won a year earlier, the company said in a regulatory filing.

Sales decreased 2.5 percent to 6.55 trillion won. Data for net earnings was unavailable, reports Yonhap news agency.

The operating loss was 30.4 percent higher than the average estimate, according to a survey by Yonhap Infomax, the financial data firm of Yonhap News Agency.

The company will release its final earnings report later.

While LG Energy Solution did not provide details of the preliminary earnings report, industry watchers said the loss apparently came amid higher production costs triggered by the Middle East crisis.

The company's initial expenditures on its North American energy storage system (ESS) battery production facilities may also have weighed on its performance, they added.

LG Energy Solution said it received a tax credit of 189.8 billion won through the Advanced Manufacturing Production Credit (AMPC) under the U.S. Inflation Reduction Act.

Excluding the AMPC, the company recorded an operating loss of 397.5 billion won in the first quarter, the company said.

Earlier, LG Group Chairman Koo Kwang-mo called for efforts to bolster the power infrastructure business to meet rising energy demand from the artificial intelligence (AI) industry.

Koo visited the headquarters of LG Energy Solution Vertech, a wholly owned U.S. arm of LG Energy Solution Ltd. based in Massachusetts, as the South Korean battery maker aims to expand its presence in the North American energy storage system (ESS) market, according to LG.

- IANS

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Reader Comments

P
Priya S
Interesting read. While they got a huge US tax credit, the loss is still significant. It highlights the risks of heavy overseas investment. Indian companies like Reliance and Tata entering the battery space should note this—expansion is good, but costs and geopolitics can hit hard.
R
Rohit P
The link to AI industry energy demand is crucial. As AI data centers grow, so does the need for efficient ESS. India has a massive opportunity here if we can build the tech and supply chain locally. Hope our startups are paying attention.
S
Sarah B
A respectful criticism: The article mentions "apparently due to the fallout from the US-Iran war" but doesn't explain the mechanism clearly. How exactly does a Middle East crisis increase production costs for a Korean battery maker? More detail would help readers understand the supply chain vulnerabilities.
V
Vikram M
This is why we need stable global relations. Energy security is national security. India is walking a diplomatic tightrope, but it's necessary to protect our economic interests. Jai Hind!
K
Karthik V
The US tax credit saved them from a bigger loss. Shows the importance of government support in green tech. India's production-linked incentives for advanced chemistry cell batteries are a step in the right direction. Hope they are implemented effectively.

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