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 U.S. EV subsidies, reducing EV battery shipments by over 10%.

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

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

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

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

Financial highlights

• Operating margin improved by 3.5 percentage points to 5.7% YoY, driven by product mix and cost-competitive materials.

• EBITDA for 2025 was approximately KRW 5 trillion, with an EBITDA margin of 21.3%.

• CapEx for 2025 was KRW 10.4 trillion, down 20% YoY, with a further 40%+ reduction planned for 2026.

• Year-end cash and cash equivalents were KRW 3.8 trillion.

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

Outlook and guidance

• 2026 revenue targeted to grow by mid-teen to 20% YoY, with triple-digit ESS sales growth expected.

• Operating profit margin targeted at mid-single digits, with profit growth from increased ESS supply and operational efficiency.

• CapEx to be reduced by over 40% YoY, focusing on cash flow management and maximizing existing line utilization.

• Cash flow management prioritized, with minimized new investments and focus on operational efficiency.