Lead

LG Energy Solution Ltd., South Korea's largest battery maker, 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. The company reported a net loss of 944 billion won (US$635.8 million) for the January-March period, compared with a net profit of 227 billion won a year ago, according to Yonhap News.

The company also shifted to an operating loss of 207.8 billion won from an operating profit of 374.7 billion won in the same period last year. Sales fell 2.5 percent to 6.55 trillion won from 6.72 trillion won.

Coverage Comparison

All three reports from Yonhap News, South Korea's leading wire service, consistently presented the same financial figures for LG Energy Solution. The coverage attributed the losses to 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, as stated by a company official.

A separate Yonhap report covered LG Chem Ltd., the parent company, which also swung to a net loss in the first quarter. LG Chem reported a net loss of 781.9 billion won (US$526.2 million), compared with a net profit of 260.4 billion won a year earlier. The company attributed the loss to reduced equity gains from affiliates, including LG Energy Solution, and higher raw material costs in its petrochemical segment.

Key Claims

  • LG Energy Solution's net loss of 944 billion won, operating loss of 207.8 billion won, and sales of 6.55 trillion won were reported consistently across all three Yonhap articles.
  • The company 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. The client was not disclosed, but market watchers speculate the batteries could be used in next-generation EVs from BMW, according to Yonhap.
  • Industry sources cited by Yonhap suggest LG Energy Solution is expected to supply around 10 GWh annually over up to 10 years, in a deal likely valued at more than 10 trillion won. This detail was reported by a single outlet and has not been independently verified.
  • LG Chem's net loss of 781.9 billion won, operating loss of 49.7 billion won, and sales of 12.24 trillion won were reported in a single Yonhap article.

Perspectives

Company Perspective

LG Energy Solution's CEO Kim Dong-myung said last month that the company plans to repurpose some EV battery production capacity to manufacture ESS products in response to softer demand from the automotive sector. Part of the EV battery production line at its Ultium Cells plant in Tennessee has already 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.

LG Chem's CFO Cha Dong-seok said that with geopolitical risks in the Middle East and weak demand for EVs in the United States expected to persist, the company will restructure its portfolio toward higher value-added and higher-margin businesses.

Market Context

The losses come amid a broader slowdown in global EV demand, which has pressured battery makers worldwide. LG Energy Solution's shift toward ESS and its large new battery supply contract suggest the company is adapting to changing market conditions. The potential BMW deal, if confirmed, would mark the first such partnership with the German luxury carmaker, according to market speculation reported by Yonhap.