LGES Q1 profit falls less than expected as battery sales to Tesla rise

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South Korea's LG Energy Solution Ltd (LGES) on Wednesday reported a smaller-than-expected 24% drop in quarterly profit as strong sales of its cylindrical batteries to Tesla Inc offset a hit to production due to chip shortages.

An average of 16 analyst estimates was profit of 141 billion won, according to Refinitiv SmartEstimate.Revenue rose 2.1% to 4.3 trillion won.

LGES, in a statement, said revenue growth was constrained by "the rising costs of raw materials, ongoing global semiconductor shortage and supply chain disruption caused by the military conflict between Russia and Ukraine and periodic COVID lockdowns." It also said it managed to uphold steady operating profit with solid sales of cylindrical battery cells.

The company, which also supplies batteries to electric-vehicle maker Lucid, said last month it plans to invest 1.7 trillion won to build a battery factory in Arizona by 2024 to meet demand from prominent startups and other North American customers.LGES said it has updated this year's capital expenditure budget to 7 trillion won, up more than 10% from a previously announced 6.3 trillion won in February.

LGES said it plans to boost its annual production capacity to about 520 gigawtt hours worth of batteries by 2025, enough to power about 7.3 million electric vehicles. It expects to secure annual capacity of about 200 GWh by the end of this year.

 

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