Companies that were already “producing outside the U.S. and supplying to the U.S. are very carefully checking their production strategies,” reported CFO Lee Chang-sil in an earnings call.
Kim Hyun-soo, an analyst at Hana Securities, also said, “There have been expectations that LGES would see a revenue rebound in Q2, but the company guided for lower Q2 revenue compared to the previous quarter, which seems to have dampened sentiment,".
LGES said on Wednesday that it expected to cut 2025 investments by around 30% from 2024. It also put on hold the construction of its energy storage systems (ESS) battery plant in Arizona, deciding to first use the existing capacity at its Michigan plant, where it will also start developing lithium iron phosphate batteries for ESS this year.
LG Energy Solution (LGES) announced plans to expand its Energy Storage Systems (ESS) business to offset weakening electric vehicle (EV) demand in North America, where Chinese competitors are currently restricted by tariffs. The company also stated it will continue building a supply chain independent of China.
Despite slowing EV sales growth in key global markets, LGES posted a 138% year-over-year increase in first-quarter profit, reaching 375 billion won ($261.96 million), boosted by favorable foreign exchange rates.
The battery maker talked in a regulatory filing that it would have booked an 83 billion won operating loss without a tax credit received under the US, reported Reuters. In the first quarter, the South Korean won averaged 1,452.9 per U.S. dollar—an 8.5% depreciation from 1,329.4 a year earlier. This weaker exchange rate allowed LGES to convert U.S. sales revenue into more won, boosting its earnings.
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