#South Korea #Seoul #LG Energy Solution #EV Batteries #ESS Batteries

LG Energy Solution Reveals Financial Performance for 2025

LG Energy Solution, a leading player in the battery manufacturing sector, announced its consolidated financial results for 2025, reporting a revenue of KRW 23.7 trillion and a notable operating profit of KRW 1.3 trillion. Despite a 7.6% decline in total revenue from the previous year, the company showcased a dramatic operating profit increase of 133.9%, reaching a margin of 5.7%.

The decline in revenue was attributed to a slowdown in electric vehicle (EV) sales among key customers. However, the company emphasized that the significant rise in profitability was driven by an enhanced product mix, improved material cost efficiency, and the benefit from production incentives in its North American operations. CFO Chang Sil Lee highlighted the improved working capital efficiency, achieved through reductions in inventory levels and optimization of supply chain management.

In 2025, LG Energy Solution took pivotal steps to optimize its asset management. The company judiciously reallocated its production capacity between EV and energy storage systems (ESS) to minimize new investments while boosting utilization of idle lines. Furthermore, the strategic setup of production sites for mid-to-low-end battery solutions in Europe, coupled with the sale of non-core assets, helped enhance capital management efficiency. By the end of the year, LG secured a backlog exceeding 300GWh for its 46-Series cylindrical batteries and a robust 140GWh order backlog for ESS batteries.

Key Business Initiatives for 2026

Looking ahead to 2026, LG Energy Solution anticipates a growth rate exceeding 10% in global EV production and over 40% in ESS installations. Notably, the demand for ESS in North America is projected to encompass about half of the total battery demand, aided by significant investments in data centers and supportive policies like maintaining clean energy tax credits.

To leverage the expanding market, LG Energy Solution has set ambitious targets for its ESS business, aiming for more than 90GWh in new orders primarily from utility companies across North America. Additionally, the company plans to expand into new segments such as Uninterruptible Power Supply (UPS) and Battery Backup Units (BBU) while delivering comprehensive ESS solutions.

In order to bolster its production capabilities, the company will enhance its ESS production capacity to over 60GWh, with a significant portion being based in North America. This will entail reallocating global production resources towards ESS manufacturing and leveraging existing plants in Michigan.

In the EV sector, LG Energy Solution aims to expand its product line to cater to evolving customer needs. In particular, mass production of lithium iron phosphate (LFP) and high-voltage mid-nickel batteries will begin in the first quarter. Further efforts will focus on upgrading production lines to include lithium manganese-rich (LMR) prismatic cells and enhancing the charging speeds of the 46-Series cylindrical batteries to meet market demands.

In an exciting development, LG Energy Solution is exploring new opportunities in diverse applications such as robotics and Urban Air Mobility (UAM). The company is set to provide its cylindrical batteries to top players in the robotics industry, currently engaged in discussions to develop next-generation battery specifications.

As the company pushes forward, it is set to pilot production lines for LFP batteries with dry electrodes and aims to secure capabilities for mass production. The emphasis will also be on innovating materials and manufacturing processes for all-solid-state batteries and sodium batteries to bolster its technological edge.

With its strategic initiatives in place, LG Energy Solution is targeting a year-on-year revenue increase of 10-20%, alongside a mid-single-digit operating profit margin for 2026. The company intends to navigate the unpredictability of the EV market while maximizing opportunities in the cylindrical battery sector and optimizing existing capacities. In light of its objectives, LG Energy Solution is preparing for a capital spending reduction of over 40% compared to the previous year, ensuring a strong focus on cash flow management and essential investments that support revenue growth.

Through its efforts, LG Energy Solution emphasizes its commitment to create a sustainable battery ecosystem while pursuing ambitious financial goals, leveraging its innovative capabilities and extensive industry experience.