LG Energy Solution (373220) Q4 2024 earnings summary

Executive summary

• 2024 revenue declined 24% year-over-year to KRW 25.6 trillion, impacted by EV market volatility, lower metal prices, and weak European demand, despite strong North American sales growth over 70% year-over-year.

• Annual operating profit dropped 73% year-over-year to KRW 575.4 billion, with an operating margin of 2.2%, while Q4 saw an operating loss of KRW 225.5 billion including IRA tax credits and a larger loss of KRW 602.8 billion excluding them, due to shipment decline, product mix, and one-off obsolete inventory disposal.

• EBITDA for 2024 was KRW 3.6 trillion, with an EBITDA margin of 14.1%.

• Net loss for Q4 was KRW 411 billion, with non-operating losses mainly from FX translation, mostly hedged.

• Mass production began at new joint ventures in the U.S., Canada, and Indonesia, with record-high yield and expanded product portfolio.

Financial highlights

• Q4 2024 revenue was KRW 6.45 trillion, down 6% sequentially from Q3 2024.

• North American sales volume grew over 70% year-over-year, offsetting declines in Europe.

• Q4 EV battery volume in North America declined over 20%, and ESS project delays further pressured revenue.

• IRA tax credit for Q4 was KRW 377.3 billion, down 19% quarter-over-quarter.

• Net income for 2024 was KRW 339 billion, with a net margin of 1.3%.

• Gross margin for 2024 was 13.3%, down from 14.6% in 2023.

• Year-end assets rose to KRW 60.3 trillion, up KRW 14.9 trillion from prior year, mainly due to new facility investments.

• Cash and cash equivalents at year-end 2024 were KRW 3.9 trillion, with a decrease of KRW 1.2 trillion.

Outlook and guidance

• 2025 revenue expected to grow 5–10% year-over-year, driven by new plant mass production in North America and new product shipments.

• Annual CapEx to be reduced by 20%-30% year-over-year, prioritizing critical investments and maximizing existing capacity.

• Capacity eligible for North American tax credits expected to increase over 40% to 45-50 GWh.

• Q1 2025 expected to be the bottom for volume, with gradual recovery anticipated from Q2 and a more robust recovery after 2026.