LG Energy Solution (373220) investor relations material

Executive summary

• Q1 2026 revenue rose 1% QoQ to KRW 6.6 trillion, driven by robust ESS and cylindrical battery demand despite weak North American EV demand and a decrease in EV pouch shipments.

• Operating loss widened to KRW 208 billion with a negative margin of -3.2%, impacted by ramp-up costs for ESS production and reduced EV battery shipments.

• Net loss reached KRW 944 billion, impacted by non-operating losses including asset disposals and interest expenses, compared to a net income of 227 billion KRW in Q1 2025.

• ESS revenue contribution surged to mid-20% of total revenue, with expectations to reach mid-30% by year-end.

• Order backlog increased from 300 GWh to over 440 GWh by end of April.

Financial highlights

• Total assets increased by KRW 4.7 trillion to KRW 71.8 trillion, mainly from investments in Arizona and Michigan production sites.

• Liabilities rose by KRW 4.1 trillion to KRW 41.9 trillion; capital increased to KRW 29.9 trillion.

• Liabilities-to-equity ratio at 99% in Q1 2026, improved from 129% in Q4 2025; debt-to-equity at 56%, net debt-to-equity at 45%.

• EBITDA for Q1 was KRW 887 billion, margin 13.5%; CapEx decreased 47% YoY to KRW 1.6 trillion.

• Cash balance at quarter-end was KRW 3.7 trillion.

Outlook and guidance

• Q2 topline expected to grow over 10% QoQ, driven by strong ESS shipments and stable cylindrical battery supply.

• Full-year topline growth guidance maintained at 15–20%, with continued ESS expansion and cautious optimism for EV demand recovery.

• Plans to establish over 50 GWh of ESS production capacity in North America by the end of 2026.

• Profitability to improve as ramp-up costs decrease and cost-saving initiatives continue; excluding IRA tax benefits, target is to return to profitability.

• Strategic capex allocation limited to essential investments to ensure financial soundness.