Electric vehicle battery giant LG Energy Solution sees sales grow 8% in 2022
SEOUL — Battery maker LG Energy Solution Ltd (LGES) said on Tuesday it aims to increase sales by around 8% in 2022, seeing a recovery in market conditions for electric vehicle (EV) batteries as that a global chip shortage will likely ease later in the year.
The newly listed South Korean company, which accounts for one-fifth of the global electric vehicle battery market, posted profits in the October-December quarter, even as the chip shortage affecting automakers resulted in weaker than expected demand for batteries.
LGES, which last month became South Korea’s second-largest listed company in the the country’s largest IPO ever, posted an operating profit of 76 billion won ($63.5 million) for the fourth quarter, it said in its first earnings report.
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That compares with a profit estimate of 150 billion won by two analysts polled by Refinitiv and a loss of 479 billion won in the same period a year earlier.
Analysts noted that the global chip shortage had affected demand from automakers, hurting the company’s results. LGES competitors SK On and Samsung SDI Co Ltd had reported a similar impact on battery demand in the fourth quarter.
Revenue for the company, which supplies Tesla Inc and General Motors Co among others, rose 2% to 4.4 trillion won from a year earlier.
LGES said it has set this year’s capital expenditure budget at 6.3 trillion won, up 58% from the previous year, to finance the capacity expansion of its global manufacturing facilities to to meet the demands of its batteries.
“LGES will continue to move forward with bold investment plans needed for the long term. We are confident that our future-ready business model will definitely help us lead the industry,” said the CEO of LGES. LGES, Youngsoo Kwon, in a statement.
LGES did a stellar market debut at the end of January, reaching a market capitalization of around $98 billion, second only to Samsung Electronics Co Ltd on the local stock exchange, reflecting an optimistic outlook for the electric vehicle battery industry.
Its shares have since risen another 8.5% and added another 3.5% on Tuesday, compared to a 1.2% rise in the broader KOSPI market.
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Global electric vehicle sales, estimated at 2.5 million vehicles in 2020, are expected to increase more than 12 times to reach 31.1 million by 2030 and account for nearly a third of new vehicle sales, according to the Deloitte consulting firm.
At the end of January, LGES announced its intention to invest a total of $2.6 billion with GM to build their third joint battery plant in the United States, aimed at guaranteeing an annual capacity of approximately 50 gigawatt hours (GWh) of batteries by 2025, enough to power about 700,000 EVs. The two companies are already building two joint battery factories in Ohio and Tennessee.
($1 = 1,196.8700 won)