SEOUL (Reuters) -LG Power Answer Ltd (LGES) booked a 24% quarterly revenue drop on Wednesday, far milder than market estimates, as sturdy gross sales of batteries to Tesla Inc offset troubles at automotive purchasers the place chip shortages have hit manufacturing.
Rising uncooked supplies costs and supply-chain disruption set LGES up for a lean first quarter, however with Tesla reporting agency gross sales of its electrical automobiles, LGES not solely cushioned the blow, however stated it has set itself up for a strong second quarter.
Chief Monetary Officer Lee Chang Sil, at an earnings briefing, stated he expects “double-digit income progress” in April-June and that LGES is working to minimise the affect of surging uncooked materials costs by means of long-term provide offers, investing in mines, and sharing price burden with automakers.
Its battery order backlog stands at about 300 trillion received, up about 15% from its earlier estimate introduced earlier this 12 months, the South Korean battery maker stated.
“LGES is more likely to proceed seeing regular battery gross sales within the second quarter as automakers are stocking up for concern uncooked materials worth hikes might additional increase battery costs,” stated analyst Hwang Kyu-won at Yuanta Securities.
For January-March, LGES booked working revenue of 259 billion received ($205.01 million) versus the 141 billion received common of 16 analyst estimates compiled by Refinitiv SmartEstimate. Income rose 2.1% to 4.3 trillion received.
It stated income progress was constrained by “rising prices of uncooked supplies, ongoing international semiconductor scarcity and provide chain disruption brought on by the navy battle between Russia and Ukraine and periodic COVID lockdowns.”
LGES attributed regular working revenue to stable gross sales of cylindrical battery cells which it makes primarily for Tesla. The agency additionally produces pouch-type batteries for purchasers together with Normal Motors Co and Volkswagen AG.
CAPEX LIFT
LGES additionally stated it has raised this 12 months’s capital expenditure price range about 10% from the determine introduced in February to 7 trillion received.
Final month it introduced plans to take a position 1.7 trillion received to construct a manufacturing unit within the U.S. state of Arizona by 2024 to satisfy demand from startups and different North American clients.
It stated it goals to spice up annual manufacturing capability to about 520 gigawatt hours (GWh) price of batteries by 2025, sufficient to energy about 7.3 million electrical automobiles. It expects capability to achieve 200 GWh by year-end with cylindrical batteries making up about 30%.
Shares of LGES had been down 0.9% at round noon versus the benchmark KOSPI’s 1.1% fall.
The inventory is down about 16% since its January debut, after LGES was carved out of LG Chem Ltd, as supply-chain disruption has endured on account of warfare in Ukraine and COVID-19 containment measures in China the place Tesla has a manufacturing unit.
Final week, Tesla’s first-quarter earnings exceeded market estimates after the U.S. EV maker delivered a document variety of vehicles at increased costs, saying it had an affordable shot at attaining 60% automobile supply progress this 12 months.
Nonetheless, analysts stated second-quarter earnings at LGES might undergo from closure at Tesla’s manufacturing unit in COVID-19-hit Shanghai.
Tesla stated it has misplaced a couple of month of construct quantity on the plant and that manufacturing has resumed at restricted ranges, which can affect construct and supply quantity within the second quarter.
($1 = 1,263.3300 received)
Reporting by Heekyong Yang and Byungwook Kim; Modifying by Jacqueline Wong and Christopher Cushing
