Construction Industry News
LG Energy Solution Ltd (LGES) announced on Tuesday that it plans to increase sales by about 8% by 2022, and forecasts an increase in demand for electric vehicle (EV) batteries as the global chip shortage eases later this year.
Even as the chip shortage at automakers led to weaker-than-expected demand for batteries, the newly listed South Korean company, which accounts for one-fifth of the global EV battery market, made a profit in the October-December quarter.
LGES, which last month became South Korea's second-largest publicly traded company in its largest-ever initial public offering (IPO), reported fourth-quarter operating profit of 76 billion won ($63.5 million) in its first earnings report. This compares to a profit estimate of $150 billion won by two analysts polled by Refinitiv and a loss of $479 billion won in the same period a year ago.
The global chip shortage has impacted demand from automakers, analysts say, with LGES rivals SK On and Samsung SDI Co Ltd reporting a similar impact on battery demand in the fourth quarter. LGES's revenues grew 2% year-on-year to 4.4 trillion won, with the company supplying Tesla Inc and General Motors Co., among others. The company said it will spend 6.3 trillion won in capital expenditures this year, up 58% from the previous year, to expand the capacity of its global manufacturing facilities to meet battery demand.
LGES made a fantastic market debut at the end of January, rising to a market cap of approximately $98 billion, second only to Samsung Electronics Co Ltd on the local exchange, reflecting the bright prospects of the EV battery industry. The company's shares are up 8.5% since then, with a further 2.2% on Tuesday, outperforming the broader market KOSPI by 0.8%.
According to a South Korean local newspaper in January, LGES planned to build a battery joint venture (JV) with Honda in the United States.
LGES announced in late January that it plans to invest $2.6 billion in a third joint battery plant in the United States with GM, aiming to secure an annual capacity of approximately 50 gigawatt hours (GWh) of batteries by 2025. , enough to power about 700,000 electric vehicles. The two companies are already building two joint battery plants in Ohio and Tennessee.
According to consultancy Deloitte, global electric vehicle sales are expected to grow more than 12-fold to 31.1 million vehicles by 2030, accounting for nearly a third of all new vehicle sales.
