LG Energy Solution (373220) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue rose 12% quarter-over-quarter to KRW 8,224 billion, driven by expanded sales to European OEMs, increased production in North America and Indonesia, and strong ESS project revenue.

• Operating profit reached KRW 448.3 billion with a 6.5% margin, including a KRW 466 billion IRA tax credit; excluding this, the quarter saw an operating loss of KRW 17.7 billion.

• Net income for Q3 2024 was KRW 561 billion, reversing a loss in the previous quarter and resulting in an 8.2% net income margin.

• Secured large-scale supply contracts totaling 160GWh, including 50GWh cylindrical batteries for North America and 109GWh pouch batteries for European commercial vehicles.

• ESS revenue saw substantial growth, mainly from grid-scale projects, and new business initiatives include advanced battery management and next-gen R&D.

Financial highlights

• EBITDA for Q3 2024 was KRW 1,241 billion, with an EBITDA margin of 18%, up from 15.1% in Q2 2024.

• Gross profit for Q3 2024 was KRW 1,257 billion, with a gross margin of 18.3%.

• Cash and cash equivalents at quarter-end were KRW 5,385 billion, up from KRW 3,871 billion in Q2 2024.

• Assets as of September 2024 were KRW 56.6 trillion, liabilities KRW 28.1 trillion, and equity KRW 28.5 trillion.

• Non-operating loss of KRW 109 billion due to higher interest expenses and currency-related valuation losses.

Outlook and guidance

• Q4 revenue expected to be similar to Q3, with potential temporary decline in profitability due to product mix and inventory adjustments.

• Plans to diversify product portfolio with new chemistries (LFP, High Voltage Mid-Ni) and form factors, and mass production of 46-series batteries is underway.

• ESS business to focus on large-scale grid projects in North America and launching high-capacity LFP products.

• 2025 outlook remains conservative amid macroeconomic and geopolitical uncertainties, increased competition, and customer internalization of battery production.

• CapEx for next year projected to be significantly reduced, with a focus on essential and efficient investments.