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(Bloomberg) — LG Energy Solution Ltd. reported first-quarter profit that exceeded analyst expectations, helped by stronger-than-expected demand from the US and favorable exchange rates.
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Operating profit rose to 374.7 billion won ($261 million) in the three months ended March 31, the company said in a statement Wednesday. That compared with analyst estimates of 165.1 billion won, according to forecasts compiled by Bloomberg.
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The company said it would have posted an 83 billion won operating loss without tax credits from the the US Inflation Reduction Act. Revenue rose 2.2% to 6.3 trillion won.
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A weaker Korean won, steady orders from General Motors Co. — a major LG customer — and one-off gains helped LG Energy improve profit in the first quarter. Internal cost reductions also contributed, though high inventory levels and competition from Chinese firms are limiting hopes for a strong demand rebound in the first half.
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Uncertainties also continue to loom for the battery industry. Growing trade tensions and weakening electric vehicle demand continue to cloud the outlook. While LG Energy’s US operations may be somewhat shielded due to its local manufacturing capacity, analysts warn that shrinking trade volumes and intensifying competition across Korean battery makers pose downside risks.
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Higher duties in the US on key materials could raise production costs by 15% for Korean battery-cell makers, Won-Suk Chung, an analyst at iM Securities Co., wrote in a note before the earnings announcement.
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LG Energy shares slipped 2.1% in Seoul after the earnings release.
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