SEOUL (Reuters) – South Korea’s LG Energy Solution on Wednesday posted a 145% jump in quarterly profit, as the battery maker factored in subsidies from the U.S. Inflation Reduction Act and solid sales of electric vehicles (EVs) in U.S. and European markets.
The company, which supplies Tesla Inc, General Motors Co and others, reported an operating profit of 633 billion won ($472.6 million) for the January-March period, versus 259 billion won a year earlier.
That compared with an average analyst forecast of 633 billion won compiled by Refinitiv SmartEstimate.
Revenue for the quarter rose 101% to 8.7 trillion won, LG Energy said in a regulatory filing.
Analysts attributed the jump to the solid sales of EVs in the United States, where EV consumers could receive up to $7,500 U.S. EV tax credit under the Inflation Reduction Act, which would help boost sales of EVs.
The U.S. Inflation Reduction Act requires 50% of the value of battery components to be produced or assembled in North America to qualify for a $3,750 credit and 40% of the value of critical minerals sourced from the United States or a free trade partner also for a $3,750 credit.
About 80% of EVs that are eligible for U.S. federal tax credits use batteries from South Korea’s three major cell makers – LGES, Samsung SDI Co Ltd and SK On, according to an analysis from brokerage Korea Investment & Securities.
Shares of LG Energy Solution was trading up 0.7%, versus benchmark KOSPI’s 0.1% rise as of 0044 GMT.
($1 = 1,339.3700 won)
(Reporting by Heekyong Yang and Hyunsu Yim; Editing by Himani Sarkar and Stephen Coates)
