LG Energy Solution profit falls 77% as EV demand stays weak

LG Energy Solution said Tuesday its second-quarter operating profit fell 77% to 113 billion won ($73.9 million), as sluggish electric vehicle demand continued to pressure battery sales.

The company attributed the decline to "continued weak EV demand" in its preliminary earnings release. Full quarterly results, including revenue and net profit, have not yet been disclosed.

The 113 billion won profit compares with 491 billion won in the same period a year earlier, marking the steepest quarterly drop for the battery maker in recent years. The company did not provide revenue figures or guidance in the preliminary statement.

The profit collapse adds to mounting evidence that the EV slowdown is deepening, with ripple effects across the battery supply chain. LG Energy Solution, which supplies automakers including General Motors, Ford and Tesla, faces a demand environment that shows no signs of near-term improvement.

The warning from LG Energy Solution follows similar signals from peers. Samsung SDI and SK On, South Korea's other major battery makers, have also flagged weakening demand as automakers scale back EV production targets. In China, CATL and BYD's battery division face intensifying price competition amid a glut in battery cell production capacity.

The EV demand slowdown has broad implications for the supply chain. Automakers from Tesla to Ford have cut prices to stimulate sales, compressing margins across the sector. LG Energy Solution's operating margin has narrowed as it grapples with lower factory utilization rates and higher raw material inventory costs, according to people familiar with the matter.

LG Energy Solution shares trade on the KOSPI exchange. The stock has fallen about 35% this year through Monday's close, underperforming the broader South Korean market, as investors priced in weakening demand for battery cells. Analysts at Morgan Stanley and Goldman Sachs have cut their price targets on the stock in recent months, citing the prolonged EV demand downturn.

This article is for informational purposes only and does not constitute investment advice.