LG Energy Solution (373220) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue was KRW 6.3 trillion, down 3% QoQ, but exceeded expectations due to favorable ASP, product mix, and solid North American shipments despite lower overall volume.

• Operating profit rebounded to KRW 374.7 billion (6% margin), aided by cost reductions, a KRW 457.7 billion North American tax credit, and the absence of prior one-off items.

• Net profit stood at KRW 227 billion, recovering from a Q4 loss, with non-operating loss limited to KRW 10 billion due to offsetting interest expenses and FX gains.

• Maintains a global presence in EV, ESS, and small battery markets, with major production and R&D hubs in Korea, the US, Poland, and China.

• Focused on R&D for next-generation batteries and expanding into ESS system integration and BaaS/EaaS businesses.

Financial highlights

• EBITDA margin reached 20% in Q1 2025, up from 10% in Q4 2024.

• Gross margin rose to 16.2% in Q1 2025 from 8.2% in Q4 2024.

• Assets increased to KRW 62.3 trillion, liabilities to KRW 31 trillion, and equity to KRW 31.3 trillion.

• Cash and equivalents at quarter-end were KRW 3.57 trillion, with negative cash flow due to KRW 3 trillion CapEx, mainly for North American JV capacity.

• Net income margin was 3.6% in Q1 2025.

Outlook and guidance

• Q2 revenue expected to decline QoQ due to conservative OEM inventory management and tariff volatility.

• Profitability to be supported by high-margin projects, ESS market growth, and selective investment in new chemistry batteries.

• CapEx to be cut by 20–30% YoY, with further reductions possible; focus on maximizing existing capacity and operational efficiency.

• Plans to expand large-volume, long-term ESS orders and advance Michigan production start to Q2 2025.

• Will continue to secure future demand with new products and applications, including 46-series, prismatic, and LFP batteries.