LG Energy Solution (LGES) reported preliminary guidance on Tuesday that it expects to record a first-quarter operating loss of 208 billion won, equivalent to about $138.16 million. The figure came in below the LSEG SmartEstimate, which placed the expected loss at 160 billion won and was weighted toward analysts judged to be more consistently accurate.
The company, which supplies batteries to automakers including Tesla, General Motors and HyundaiMotor, attributed the weaker result to softer demand for electric vehicle batteries. One of LGES's major customers, General Motors, has idled a Detroit EV plant until April, a development LGES said has weighed on its battery sales.
LGES said revenue for the quarter would likely fall by 2.5% to 6.6 trillion won compared with the same period a year earlier. The quarterly guidance incorporates tax credits the company received under the U.S. Inflation Reduction Act for batteries produced in the United States. Without those credits, LGES said it would have reported a first-quarter operating loss of 398 billion won.
To mitigate weakness in its EV battery business, LGES is prioritising growth in energy storage systems, or ESS. The company pointed to rising electricity demand tied to AI data centres as a driver of ESS demand. In February, LGES set a target to triple its ESS revenue this year versus the prior year. Separately, Nomura estimated that LGES's ESS revenue could reach about 2.8 trillion won in 2025.
Analysts also noted a U.S. House bill called the CHARGE Act, introduced last month, that would ban imports of certain Chinese-made energy storage systems. The bill cited concerns that imported systems may include remote monitoring capabilities. Some analysts said this legislation could create openings for South Korean battery manufacturers, including LGES, if enacted.
LGES has scheduled a detailed earnings release for April 30. The company included the U.S. tax credits in its preliminary figures, a factor that significantly narrows the reported operating loss for the quarter.
($1 = 1,505.5000 won)