LG Energy Solution Ltd. (LGES), the pure-play vehicle battery maker under South Korea’s LG Group, saw its second-quarter 2025 operating profit surge 152 percent. The upward trend was due to the benefits of the Advanced Manufacturing Production Credit (AMPC) under the U.S. Inflation Reduction Act (IRA).

LGES said in a regulatory filing on Monday that its preliminary operating profit for the second quarter totaled 492.2 billion won ($360.37 million), a 152 percent increase from the same period a year ago. The figure was 64.4 percent higher than the market forecast of 299.4 billion won compiled by Yonhap Infomax Co.

The AMPC amount was 490.8 billion won, which means the operating profit excluding the subsidy totaled 1.4 billion won. This is the first time in six quarters that the company has posted a positive operating profit excluding subsidies.

Sales came to 5.57 trillion won in the April to June 2025 period, down 9.7 percent from the same period a year ago. Compared to the previous quarter, sales fell 11.2 percent while operating profit rose by 31.4 percent.

The strong performance in operating profit was attributed to improved profitability from high-margin shipments to North American clients, the start of local production of energy storage systems (ESS) in North America, and continued cost-reduction efforts.

The decline in sales, however, was partly due to conservative inventory strategies by European original equipment manufacturers (OEMs) and reduced production volume in China as the company adjusted its ESS manufacturing footprint.

Despite uncertainties in demand forecasts from downstream markets, LGES plans to accelerate its performance improvement in the second half of 2025 by starting mass production of new electric vehicle (EV) battery chemistries for Europe and ramping up ESS production in North America.

The company also aims to enhance profitability via continuous cost-cutting, focusing on high-margin EV projects, and proactively responding to ESS demand through its manufacturing capabilities in the United States.

“Following inventory adjustments in Europe, the company’s production usage is expected to recover gradually, supported by the start of lithium iron phosphate (LFP) battery supply,” Shinhan Securities Co. analyst Lee Jin-myung said. “The ESS is also expected to make a greater contribution to its earnings, thanks to solid demand and the full-scale operation at the North American plant.”

LGES became the first Korean battery maker in the first half of 2025 to supply 46-series cylindrical batteries to Chery Automobile Co., one of China’s top five automakers.

The company is also accelerating efforts to establish a closed-loop recycling system for used batteries by partnering with Japan’s Toyota Tsusho Corp. to establish GMBI, a recycling joint venture in the United States.

[ⓒ 매일경제 & mk.co.kr, 무단 전재, 재배포 및 AI학습 이용 금지]