LG Energy Solution rebounded to profitability in the first quarter as the South Korean battery maker leveraged government subsidies and aggressive cost-cutting to counter persistent weakness in global electric vehicle demand.
The company reported an operating profit of 375 billion won ($278 million) with a 20% EBITDA margin, reversing losses from the previous quarter. Revenue reached 6.3 trillion won ($4.67 billion), down 2.9% from the fourth quarter while rising 2.2% year-on-year.
The profit figures include 458 billion won ($339 million) in U.S. tax credits under the Inflation Reduction Act, without which the company likely would have posted an operating loss. This follows a pattern seen in previous quarters where IRA credits have been critical to maintaining profitability.
LG Energy has paused construction of its energy storage system facility in Arizona and is instead accelerating LFP battery production at its Michigan plant. The company is also acquiring a General Motors joint venture facility in Michigan, reflecting a significant restructuring of its North American operations.
CFO Chang Sil Lee cited “conservative inventory management by automakers” as a key reason for the quarterly revenue decline. Despite market challenges, the company secured new battery contracts, including a 10GWh annual order from a North American automaker.
As the company navigates persistent EV market volatility, it plans to limit expansion while focusing on cost reduction and developing new technologies like dry electrodes. The company is also accelerating its push into the energy storage system market, which shows stronger growth potential than the electric vehicle segment.
