LG Energy Solution has said that the US is its most important target market to focus on, as the company reported record quarterly revenues for Q3 2022.
The South Korean company earned KW522 billion (US$367.5 million) operating profit for the three-month period, from KW7.648 trillion (US$5.4 billion) consolidated revenues.
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Revenues were its highest ever recorded, while its profits represented a 166.8% increase from the previous quarter, marking its second highest since Q2 2021, when there were various one-off items that boosted the figures.
LG Energy Solution is active in the electric vehicle (EV), battery energy storage system (BESS) and IT sectors and said that profitability increased in all of its product lines due to increased economies of scale. Average selling price (ASP) reflected higher raw materials costs, while favourable exchange rates also contributed to higher profits.
While the quarterly record should perhaps be put into the context that the company only floated its IPO at the start of this year, it certainly marks a different picture from Q2 this year, when profits were down 24.4% from Q1.
The company attributed that largely to industry headwinds, such as global supply chain issues and temporary lockdowns in China as well as the time gap between raw material costs rising and the company’s ability to reflect that in pricing of finished products.
LG Energy Solution does not breakout figures for sales by segment, although a source close to the company has told Energy-Storage.news previously that it is being considered.
Therefore, while separate performance metrics for the energy storage system segment are not publicly available, company CFO Chang Sil Lee noted that an increase in sales of grid ESS for the North American market was a contributor to its increased revenues.
Inflation Reduction Act a driver to ‘reshape’ battery industry
LG Energy Solution had said in the previous quarter that it is building more production capacity in the US – it aims to put 45% of its footprint in North America by 2025, versus 35% in Asia and 25% in Europe.
Yesterday, the company went further and said the North American market is its most important for its revenue and growth potential.
Unsurprisingly, it cited the Inflation Reduction Act (IRA) as a huge factor in that. While it is probably equally unsurprising that it primarily discussed forecasted rapid growth in the US EV market because of IRA incentives and fuel efficiency standards, LGES said that those new policies will reshape the world’s battery industry.
The company said 250GWh-260GWh of annual production capacity in North America has been secured and that 70% of its total order backlog of KW370 trillion is from North American customers.
It did however note that it will expand and diversify its portfolio in the region with more ESS products and solutions as well as cylindrical battery cells and pouch cells for EVs.