(ATTN: ADDS details on battery supply deal in paras 5-8)
SEOUL, April 30 (Yonhap) — LG Energy Solution Ltd. said Thursday it swung to a net loss in the first quarter from a year earlier, as weakening global demand for electric vehicle (EV) batteries weighed on earnings.
For the first three months of this year, the company shifted to a net loss of 944 billion won (US$635.8 million) from a net profit of 227 billion won a year ago.
“Lower sales of EV batteries to key customers and higher costs associated with the initial ramp-up of an energy storage system (ESS) plant in the United States weighed on quarterly performance,” a company official said.
It also shifted to an operating loss of 207.8 billion won from an operating profit of 374.7 billion won over the cited period. Sales fell 2.5 percent to 6.55 trillion won from 6.72 trillion won.
During a conference call, the company said it secured a contract in the first quarter to supply more than 100 gigawatt-hours (GWh) of its 46-series cylindrical batteries, bringing its total order backlog to over 440 GWh. It did not disclose the client.
Market watchers speculate the batteries could be used in next-generation EVs from BMW, which would mark the first such deal with the German luxury carmaker if confirmed.
LG Energy Solution is expected to supply around 10 GWh annually over up to 10 years, according to industry sources, in a deal likely valued at more than 10 trillion won.
The South Korean battery maker has been supplying batteries to Mercedes-Benz, China’s Rivian Automotive, Inc., and Chery Automobile Co., among others.
This undated file photo provided by LG Energy Solution Ltd. shows its logo. (PHOTO NOT FOR SALE) (Yonhap)
Last month, Chief Executive Kim Dong-myung said the company plans to repurpose some EV battery production capacity to manufacture ESS products, in response to softer demand from the automotive sector.
Under the plan, part of the EV battery production line at its Ultium Cells plant in Tennessee has been converted to produce ESS systems.
“The company aims to increase the share of ESS and new businesses to the mid-40 percent range over time, from around 20 percent currently, to build a more stable and balanced portfolio,” Kim said at a shareholders meeting last month.
kyongae.choi@yna.co.kr
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