South Korean battery manufacturer LG Energy Solution (LGES) has issued a warning about a revenue decline for this year, projecting a drop of over 20%. The company attributes this decline to a sharper-than-expected slowdown in global electric vehicle (EV) demand.
The news impacted LGES shares, causing a drop of up to 2.6%. The company, a key supplier to major automakers such as Tesla, General Motors, and Hyundai Motor, had initially aimed for mid-single-digit growth in annual revenue for the year.
In response to the market slowdown, LGES announced plans to adjust its operations. The company stated, “In the second half, we’ll adjust the pace of new expansion or scale down investment in some projects while maximizing the use of our existing capacity.”
LGES expects the global EV market to grow at a rate just above 20% this year, a decrease from the 36% growth observed last year.
Financial Performance Overview
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Operating Profit | 195 billion won | 464 billion won |
| Revenue | 6.2 trillion won | 8.8 trillion won |
| Tax Credit Impact | +253 billion won | N/A |
LGES reported a 58% decrease in operating profit for the April-June period, amounting to 195 billion won ($141 million), aligning with earlier forecasts. Without the benefit of a tax credit received under the U.S. Inflation Reduction Act, the company would have faced a 253 billion won operating loss for the quarter. Revenue for the quarter also fell by 30%, reaching 6.2 trillion won.
Featured Image courtesy of Tech Times
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