LG Energy Solution (373220) Q4 2025 earnings summary

Executive summary

• 2025 revenue declined 7.6% YoY to KRW 23.7 trillion due to lower metal prices and the end of US EV subsidies, reducing EV battery shipments by over 10%.

• ESS revenue grew 40% YoY, driven by US demand and LFP capacity, offsetting some EV weakness.

• Profitability improved YoY through better product mix, cost-competitive sourcing, and North American production incentives.

• Working capital efficiency increased via inventory reduction, supply chain optimization, and asset management through capacity reallocation and non-core asset sales.

• Product and customer diversification advanced, with new 46 Series production and significant ESS and battery order backlogs.

Financial highlights

• Q4 2025 revenue was KRW 6.1 trillion, up 7.7% QoQ but down YoY; Q4 operating loss was KRW 122 billion due to upfront ESS ramp-up costs and lower high-margin EV pouch sales.

• Annual operating profit rose 133.9% YoY to KRW 1.3 trillion, aided by North American production incentives.

• EBITDA for 2025 was KRW 5,037 billion, with an EBITDA margin of 21.3%.

• Net income for 2025 was KRW 81 billion, with a net margin of 0.3%.

• North America production incentive decreased to KRW 333 billion in Q4 2025.

Outlook and guidance

• 2026 revenue targeted to grow by mid-teen to 20% YoY, with ESS sales expected to more than triple and stable cylindrical battery growth.

• Company-wide operating profit margin aimed at mid-single digits, with significant CapEx reduction of over 40% planned.

• Focus on cash flow management, minimizing new investments, and maximizing existing asset efficiency.