LG Energy Solution Ltd (LGES), South Korea’s prominent battery manufacturer, has reported a significant decline in its second-quarter operating profit, attributing the downturn to sluggish electric vehicle (EV) sales worldwide.
According to a statement released on Monday, LGES indicated that its operating profit for the quarter ending in June plummeted by 58 percent year-over-year, falling sharply from 460.6 billion won to 195.3 billion won ($142 million).
Reduced demand for EV batteries primarily drove this decline, exacerbated by lower lithium and other metal prices affecting pricing dynamics.
Yonhap news agency stated, “Decreased lithium and other metal prices weighed on EV battery prices, and lower demand from automakers resulted in the decline in profit.”
In addition to the profit decline, LGES forecasts a 30 percent decrease in sales, expecting revenues to drop from 8.77 trillion won to 6.16 trillion won during the same period.
The final earnings figures are likely for disclosure on 25 July.
The company attributes the current market conditions to a phase known as the “chasm,” characterized by a stagnation in global EV markets before widespread adoption.
Despite these challenges, LG Energy Solution remains committed to enhancing its competitiveness as a leading supplier of car batteries.
In an effort to bolster its position, LGES recently secured a significant agreement with Renault SA to supply lithium iron phosphate (LFP) pouch-type batteries for the French automaker’s EV models over the next five years until 2030.
This strategic move underscores LGES’s proactive approach in navigating the current slowdown in EV demand while preparing for future growth opportunities in the evolving automotive sector.
LG Energy Solution continues to strategize and innovate amidst market fluctuations, aiming to sustain its leadership in the battery industry despite the temporary headwinds posed by the current state of the global EV market.
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