EV battery giant LG Energy Solution expects sales to grow 8% in 2022

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An employee walks past the logo of LG Energy Solution at its office building in Seoul, South Korea November 23, 2021. REUTERS/Kim Hong-Ji

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SEOUL, Feb 8 (Reuters) – Battery maker LG Energy Solution Ltd (LGES) (373220.KS) said on Tuesday it is aiming to grow sales by about 8% in 2022 as market conditions for electric vehicles ( EV ) batteries as global chip shortages are likely to ease later in the year.

The newly listed South Korean company, which accounts for one-fifth of the global electric vehicle battery market, made a profit in the October-December quarter even though the chip shortages affecting automakers resulted in weaker-than-expected demand for batteries.

LGES, which became South Korea’s second-largest listed company in the country’s largest IPO last month, reported fourth-quarter operating profit of 76 billion won ($63.5 million), its first earnings report said.

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That compares to an earnings estimate of 150 billion won by two analysts polled by Refinitiv and a loss of 479 billion won in the same period last year.

Analysts noted that global chip shortages have hurt automakers’ demand and impacted the company’s results. LGES competitors SK On and Samsung SDI Co Ltd (006400.KS) had reported a similar impact on battery demand in the fourth quarter. Continue reading

Revenue for the company, which supplies Tesla Inc (TSLA.O) and General Motors Co (GM.N), among others, rose 2% year over year to 4.4 trillion won.

LGES said it has set this year’s investment budget at 6.3 trillion won, up 58% year-on-year, to fund capacity expansion at its global manufacturing facilities to meet demand for its batteries.

“LGES will continue to move forward with bold investment plans that are required over the long term. We are confident that our business model of preparing for the future will definitely help us lead the industry,” said Youngsoo Kwon, chief executive officer of LGES, in a statement.

LGES made an excellent market debut in late January, rising to a market capitalization of approximately $98 billion, second only to Samsung Electronics Co Ltd (005930.KS) on the local stock exchange, reflecting the optimistic outlook for the electric vehicle battery industry.

Its shares are up another 8.5% since then, gaining another 3.5% on Tuesday versus a 1.2% gain in the broader market KOSPI (.KS11).

Global electric vehicle sales, estimated at 2.5 million vehicles in 2020, are expected to increase more than 12-fold to 31.1 million by 2030, accounting for nearly a third of new vehicle sales, according to consultancy Deloitte.

In late January, LGES announced it would invest a total of $2.6 billion with GM to build its third joint battery plant in the United States, aiming to secure approximately 50 gigawatt-hours (GWh) of battery capacity annually by 2025, enough for that Makes about 700,000 electric vehicles. The two companies are already building two joint battery plants in Ohio and Tennessee. Continue reading

($1 = 1,196.8700 won)

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Reporting by Heekyong Yang and Joyce Lee; Adaptation by Richard Pullin

Our standards: The Thomson Reuters Trust Principles.

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