LG Energy Solution returned to profit in the second quarter, posting operating profit of 113.3 billion won on expanded ESS shipments and higher cylindrical battery sales. The company said on Wednesday it recorded second-quarter revenue of 7.56 trillion won and operating profit of 113.3 billion won. Revenue rose 24.8 percent from a year earlier, while operating profit fell 77.0 percent.

From the previous quarter, revenue increased 15.3 percent. It swung to profit in two quarters from a first-quarter operating loss of 207.8 billion won.

The revenue increase came from expanded shipments of mid- to low-priced EV products and cylindrical batteries, and higher production capacity for ESS in North America. ESS shipments increased mainly in North America and Europe, growing more than 30 percent from the previous quarter.

North America production subsidies reflected in the second-quarter results, including IRA tax credits, totaled 241.0 billion won. The subsidies exceed operating profit.

CFO Lee Chang-sil (이창실), a vice president at LG Energy Solution, said revenue rose 15 percent from the previous quarter on higher shipments of mid- to low-priced EV products and cylindrical batteries and expanded ESS production capacity in North America. He said ESS in particular grew more than 30 percent from the previous quarter as shipments expanded mainly in North America and Europe, extending strong growth momentum.

Lee added that second-quarter profit and loss swung back to the black in two quarters, helped by improved utilisation rates in Europe, a higher share of high-margin cylindrical sales and a gradual reduction in the burden of fixed costs through increased ESS production in North America.

First-half cumulative revenue was 14.12 trillion won, up 10.5 percent from a year earlier. First-half cumulative operating loss was 94.5 billion won, swinging to a loss from operating profit of 866.8 billion won a year earlier.

The second-quarter profit was not enough to offset the first-quarter loss. First-half net loss was 1.27 trillion won, swinging to a loss from net profit of 317.2 billion won a year earlier.

Second-quarter return to profit... ESS drives results

By business segment, ESS posted the biggest growth. First-half ESS revenue rose 4.6 times from a year earlier as the company responded by shifting EV production capacity to ESS, and the share of companywide revenue expanded to the high-20 percent range.

First-half new order contracts exceeded 3 trillion won. That includes AI data centre projects whose end customers are hyperscalers.

Its North American production base also expanded. ESS production lines began operating at GM JV 2 and the Honda JV in May and June, and the company plans to secure more than 50 GWh of ESS production capacity in North America by the end of the year.

In the EV business, utilisation rates in Europe and Asia improved on shipments of mid- to low-priced solutions such as high-voltage mid-nickel and LFP, as well as full-scale shipments of the 46-series. Cylindrical shipments increased 1.5 times from a year earlier, helped by stabilised mass production of the 46-series and demand for the 2170 product.

The company forecast continued growth in the ESS market on the spread of AI technology and increased data centre investment. It said demand is also rising for stand-alone ESS to ease power supply-demand imbalances and for long-duration energy storage, in addition to grid ESS linked to renewable power generation.

Demand for BTM, or Behind The Meter, is increasing as AI data centres build their own power infrastructure instead of connecting to the power grid. The company forecast that battery application areas are also diversifying, including BESS and UPS and BBU, which reduce variability in power loads.

As an ESS response plan, it presented expanding production capacity this year centred on pouch LFP and securing prismatic lines next year. It aims to strengthen its position as a largest ESS supplier by maximising customers' benefits from the ITC investment tax credit, and to provide end-to-end solutions based on SI system integration competitiveness.

In the EV market, the company said there are moves to develop next-generation models in Europe, including strengthened thermal safety regulations and CTx that raise the degree of structural integration. It added that OEMs are also showing greater interest in battery solutions that can respond.

The 46-series uses robust can material and a tabless design that reduces internal resistance, improving structural and thermal stability. It has a lineup from 4680 to 46120 and production capabilities in Ochang and the United States. It aims to strengthen competitiveness through fast-charging technology within 10 minutes and its own pack design.

For the second half, it cited key tasks including stable operation of five ESS production bases in North America and expanding orders for large-scale renewable energy projects and data centre power infrastructure. In the EV segment, it is preparing to start operating an Arizona-based 46-series line in the fourth quarter, aiming to improve equipment efficiency by 50 percent from current levels, and it is also expanding shipments of mid- to low-priced solutions from its plant in Poland.

In next-generation batteries, it will respond to the BBU and robot markets with a new high-output tabless 2170. It said it plans to ship sodium-ion battery samples next year to ESS and automotive customers, and to conduct pilot production this year through a pilot line for a dry electrode process for all-solid-state batteries.