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Photo courtesy of Yonhap News |
[Alpha Biz= Kim Jisun] LG Energy Solution reported a significant operating loss in the first quarter, underscoring weakening profitability amid a global electric vehicle (EV) slowdown.
On April 7, the company announced preliminary results showing revenue of KRW 6.555 trillion and an operating loss of KRW 207.8 billion, compared with a profit a year earlier. The loss widened by more than 70% from the previous quarter and exceeded market expectations.
U.S. subsidies under the Inflation Reduction Act (IRA) played a critical role in limiting losses. LG Energy Solution received KRW 189.8 billion in tax credits during the quarter; excluding this, the operating loss would have expanded to nearly KRW 397.5 billion.
The downturn was driven by slowing EV demand—often referred to as the “chasm” phase—prompting automakers to reduce battery orders and adjust inventories. At the same time, falling plant utilization rates significantly increased fixed cost burdens, while declining prices for key materials such as lithium and nickel pressured selling prices.
The company’s average plant utilization rate fell below 50% for the first time last year, further eroding cost efficiency.
Looking ahead, market expectations hinge on whether the first quarter marks the bottom of the cycle. Some analysts anticipate a gradual recovery in the second quarter driven by new model launches in North America, though risks remain from reduced subsidies in Europe and intensifying competition from Chinese LFP batteries.
LG Energy Solution is scheduled to release its final earnings and host a conference call on April 30.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
