▲LG Energy Solution Sales Performance (Unit: 100 million won)


Sales reached KRW 5.706 trillion and operating profit reached KRW 195.6 billion in Q2 2022.
Cylindrical battery sales are on the rise, with sales expected to grow compared to the first half of the year.

LG Energy Solution announced a mid- to long-term business strategy to achieve 'annual sales growth of more than three times and double-digit operating profit margin within five years' and also raised its annual sales target for this year to 22 trillion won.

LG Energy Solution held a second-quarter earnings briefing on the 27th and announced, “We will actively pursue expansion of our North American joint venture with major OEMs, increased supply of cylindrical batteries, and development of new form factors, and continuously discover new business opportunities to achieve sales growth of more than three times within five years.”

He continued, "We will secure technological leadership through the development of differentiated materials and processes, ensure stable operation of the value chain through upstream equity investments and expansion of long-term supply contracts, and strengthen quality manufacturing capabilities based on smart factories, thereby achieving qualitative growth and raising operating profit margins to double digits."

LG Energy Solution Vice Chairman Kwon Young-soo said, “By securing technological leadership and strengthening product competitiveness, we will become the ‘No. 1 profitable company trusted and loved by customers by providing the world’s best QCD (Quality, Cost, Delivery).”“Our ultimate goal is to become this,” he said.

LG Energy Solution decided to focus on the North American market, which is expected to see the fastest growth.

The company plans to expand joint ventures with key customers and increase the supply of cylinders to existing customers and EV startups, thereby further enhancing its market competitiveness.

For the European market, a new cylindrical production base will be established. The Asian market also decided to actively respond to customer demand by entering new production bases outside of China.

An LG Energy Solution official said, “Currently, the proportion of Asia (59%) and Europe (34%) in global production capacity is relatively high compared to North America (7%),” and “We plan to increase production capacity in the North American market to 45% by 2025, establishing a balanced production capacity system of North America (45%), Asia (35%), and Europe (20%).”

For our product portfolio, we will strengthen our pouch/cylindrical dual form factor system and continue our efforts to develop next-generation technologies.

In the case of pouch type, premium types maintain their performance advantage by applying single-particle NCMA cathode materials and silicon anode materials, while popular types secure solutions by applying new materials such as LFP and manganese rich.

For the cylindrical type, the goal is to lead the market by securing mass production technology for a new form factor (4680) early.

Next-generation technology development will focus on lithium-sulfur batteries and all-solid-state batteries.

LG Energy Solution announced that it will focus its efforts on four areas: quality capabilities, smart factories, value chains, and new business development to provide customers with “world-class QCD (quality, cost, and delivery).”

To strengthen quality capabilities, we will ensure that the possibility of defects is prevented through product design and process improvements, and establish a comprehensive inspection system for each process.

The BMS (Battery Management System) safety diagnosis algorithm will also be strengthened to improve the preemptive monitoring and detection of abnormal signs.

LG Energy Solution is accelerating the construction of a smart factory to improve yield, stabilize quality, and improve process efficiency.They also announced plans to achieve improvements in quality and productivity, and workforce efficiency.

For the value chain, the company plans to secure a stable supply chain through upstream equity investments and expansion of long-term supply contracts, while also establishing a used battery collection and recycling system through strategic collaboration with leading companies.

Regarding the promotion of new businesses, the company announced that it will further strengthen investments in preparation for the future, such as battery data-based BaaS (Battery as a Service) and renewable energy-related EaaS (Energy as a Service), while conservatively operating expansion investments to increase investment efficiency.

LG Energy Solution has raised its annual sales target to KRW 22 trillion, citing a positive outlook for its second-half performance, driven by new vehicle launches from OEMs and expansion of its major customer base.

This figure represents an increase of KRW 2.8 trillion compared to the KRW 19.2 trillion annual sales target announced in early 2022. Last year, LG Energy Solution's annual sales reached KRW 17.9 trillion.

It is projected that sales will reach 12.6 trillion won in the second half of 2022. This figure represents a 48% increase compared to the same period last year (KRW 8.5 trillion) and a 34% increase compared to the first half of the year (KRW 9.4 trillion).

LG Energy Solution stated, “For the second half of the year, we expect meaningful sales growth compared to the first half due to the launch of new vehicles by major OEMs, the full operation of the first GM JV, increased volume due to increased demand from major customers, and the effect of linking raw material prices to selling prices.”

LG Energy Solution achieved sales of KRW 5.0706 trillion and operating profit of KRW 195.6 billion in the second quarter of 2022.

Compared to the previous year, sales increased by 16.8%, but operating profit decreased by 24.4%. Compared to the same period last year, sales decreased by 1.2%, and operating profit decreased by 73%.

However, in the second quarter of last year, sales and operating profit reflected one-time items such as license fee agreements and provisions, so excluding these, the figure showed a slight decrease compared to the same period last year.

At the earnings conference that day, LG Energy Solution CFO Lee Chang-sil said, “Profitability decreased somewhat due to the difference in the timing of applying the sales price increase for the increase in metal costs, as well as the Chinese coronavirus lockdown and the global logistics disruption,” but added, “However, sales increased steadily due to the increase in sales of cylindrical batteries for EVs and the expansion of contracts linking the sales price of major raw materials.”