LG Energy Solution broke a three\u2011quarter losing streak in the June quarter, returning to the black as its energy storage business exploded and next\u2011generation cylindrical batteries won fresh orders. Speaking on the company\u2019s second\u2011quarter earnings call, CFO Lee Chang\u2011sil declared that the top priority is now \u201cto secure the profitability of the ESS business on an ex\u2011IRA basis by the fourth quarter\u201d \u2013 a sign that the steep ramp\u2011up costs that initially squeezed margins are expected to ease.<\/p>\n
Financial Snapshot: A Turnaround on Surging ESS<\/p>\n
Second\u2011quarter revenue jumped 15% from the previous three months to 7.6 trillion won, propelled by a 30% sequential increase in ESS shipments, a doubling of cylindrical volumes year\u2011on\u2011year, and a rebound in European automotive demand for mid\u2011nickel and LFP chemistries. After three consecutive quarters in the red, operating profit reached 113.3 billion won, yielding a slim 1% margin.<\/p>\n
Financial MetricQ2 2026QoQ ChangeRevenueKRW 7.6 trillion+15%Operating IncomeKRW 113.3 billionTurned to profitOperating Margin1%-AMPC (IRA Credits)KRW 241 billion+27%Net LossKRW 328.6 billion-EBITDA~KRW 1.3 trillion-CapEx~KRW 1 trillion-40%CashKRW 7.2 trillion+KRW 3.4 trillion<\/p>\n
First\u2011half revenue totalled 14.1 trillion won, a more than 10% increase year\u2011on\u2011year.<\/p>\n
The net loss of 328.6 billion won stemmed largely from non\u2011operating items \u2013 interest expense and asset disposals \u2013 and not from the core business. With the sale of a Honda JV building injecting about 3 trillion won, cash reserves swelled to 7.2 trillion won, giving the company ample firepower for its aggressive capacity build\u2011out.<\/p>\n
ESS Becomes the Engine: \u201cRevenue More than Quadrupled\u201d<\/p>\n
The spotlight belonged to the energy storage division, where revenue more than quadrupled from the prior\u2011year period and now represents the \u201chigh\u201120%\u201d of total company sales, CFO Lee noted. Five North American cell production sites are ramping simultaneously, and by year\u2011end the company will command more than 50 GWh of ESS production capacity on the continent. Management is converting existing EV pouch lines to ESS, a process set to be completed within the year.<\/p>\n
\u201cWe secured more than 3 trillion won in new orders in the first half, including an AI data center project for a hyperscaler end\u2011user,\u201d Lee said. \u201cIn May and June, the GM\u2011JV Phase II and the Honda\u2011JV sequentially kicked off ESS lines, and that momentum will continue.\u201d<\/p>\n
For the current quarter, ESS shipments are forecast to climb at least 50% from the second\u2011quarter level. By the second half, total ESS output will be double that of the first six months \u2013 a pace that underpins the company\u2019s confidence in delivering the full\u2011year 20% revenue growth target originally guided.<\/p>\n
Cylindrical: 2170 Stays Hot, 46\u2011Series Orders Surge 60%<\/p>\n
The smaller battery division, dominated by cylindrical cells, continued to ride the success of a strategic customer\u2019s new EV model, which drove robust 2170 demand. Shipments of next\u2011generation 46\u2011series cells \u2013 ranging from 4680 to 46120 \u2013 jumped more than 60% quarter\u2011on\u2011quarter as production ramped in Ochang, South Korea. Noh In\u2011hak, head of Mobility & IT Battery Planning, told analysts that the \u201cmomentum is something that will continue into next year.\u201d<\/p>\n
Arizona will add significant scale: the 46\u2011series line there, scheduled to begin mass production in the fourth quarter, boasts 50% higher equipment efficiency than the Ochang facility, enabling the company to pursue fresh orders from multiple OEMs. Noh confirmed that the Nanjing cylindrical plant is running at full capacity to meet Asian demand, and the company is developing tabless 2170 cells for emerging applications such as BBU (backup battery units) for data centers and for robotics, with a dedicated mass\u2011production line being built in Ochang.<\/p>\n
Automotive Batteries: Europe Offsets North America Slump<\/p>\n
While North American EV demand remained weak, Europe provided relief. High\u2011voltage mid\u2011nickel and LFP products shipped to European customers saw double\u2011digit volume growth, and Asian clients also increased uptake of high\u2011nickel chemistries. Ahn Min\u2011kyu from Advanced Automotive Battery Planning confirmed that the GM joint venture\u2019s Phase 1 facility, suspended in the first half to align with the customer\u2019s inventory adjustments, will restart production in the third quarter. Ramp\u2011up will be gradual, \u201cwith Q4 volume much larger than Q3.\u201d<\/p>\n
In Europe, demand for mid\u2011to\u2011low\u2011end solutions is driving a significant jump in the second half, which will lift utilisation rates at the Polish plant. The company also aims to win new pouch orders for second\u2011generation mid\u2011nickel products that offer improved driving range and faster charging, especially in Europe.<\/p>\n
Guidance and Margin Challenges<\/p>\n
CFO Lee was notably bullish on the near\u2011term trajectory. \u201cFor the third quarter, total revenue will grow by more than 20% quarter\u2011on\u2011quarter,\u201d he said, \u201cwith ESS shipments up at least 50%.\u201d The full\u2011year 2026 revenue growth of around 20% is \u201csomething that we will very comfortably be able to achieve.\u201d<\/p>\n
However, the rapid capacity expansion \u2013 not just cells but also pack and LINC (container) lines \u2013 is inflating start\u2011up costs and squeezing margins in the short term. Lee acknowledged that \u201cfor the time being, that will have an impact,\u201d but pledged that the company is \u201cfocusing on stabilizing the overall production system\u201d and implementing company\u2011wide cost savings. The ultimate goal is to deliver ESS profitability without relying on IRA tax credits by the final quarter of 2026.<\/p>\n
Chinese Competition and the BTM Opportunity<\/p>\n
Analyst questions zeroed in on the threat from Chinese ESS makers. Lee Yeon\u2011hee, Director of Business Strategy, argued that the PFE (prevailing foreign entity) regulations make it \u201cvery challenging for them to secure any AMPC or ITC subsidies,\u201d limiting their market\u2011share expansion in North America. LG\u2019s three\u2011pronged response: aggressively expanding production capacity by converting EV lines and building pack\/container capacity; strengthening product competitiveness with prismatic LFP mass production from 2027 and sodium\u2011ion battery verification at the hundreds\u2011of\u2011megawatt\u2011hour scale; and differentiating through system integration, operations & maintenance, and software that can support energy trading \u2013\u201cconverting from a hardware supplier to a higher\u2011margin software\u2011based supplier.\u201d<\/p>\n
A newer and potentially larger opportunity lies in the behind\u2011the\u2011meter (BTM) ESS market, where AI data center operators seek on\u2011site power infrastructure to sidestep grid bottlenecks. Lee Yeon\u2011hee described the BTM segment as \u201ca very important market opportunity\u201d because it requires non\u2011PFE players. \u201cWe are actively discussing BTM projects with big tech companies and developing solutions optimized for the next\u2011generation AI DC standard platform,\u201d she said. On the policy front, the U.S. Federal Energy Regulatory Commission has signaled openness to BTM solutions, further stoking demand.<\/p>\n
Order Pipeline and Next\u2011Gen Batteries<\/p>\n
Pressed to quantify the order pipeline, Lee Sang\u2011hyun of Planning & Management demurred due to disclosure regulations but offered colour: in ESS, the company is in \u201cactive discussions for additional large\u2011scale, mid\u2011 to long\u2011term orders\u201d with existing customers and with new utility and developer clients targeting AI data\u2011center projects. On the EV side, besides pursuing mid\u2011nickel\/LFP pouch orders in Europe and Asia, LG is pitching 46\u2011series cylindrical cells to multiple U.S. and European OEMs and, given the sluggish North American EV market, is now targeting hybrid\u2011electric vehicle projects where demand is rising.<\/p>\n
In next\u2011generation batteries, the company will mass\u2011produce tabless 2170 cells this year for BBU and robotics. A sodium\u2011ion pilot line is being set up in Ochang to ship test volumes for ESS and EV applications next year. Solid\u2011state batteries remain a longer\u2011term bet; a pilot line using dry electrode processing will be established this year to evaluate price\u2011competitive designs.<\/p>\n
What the Call Revealed<\/p>\n
The standout message from LG Energy Solution\u2019s second\u2011quarter call is that ESS has become the company\u2019s growth locomotive far faster than anticipated. While the 1% operating margin shows the cost of that rapid expansion, management\u2019s confidence in hitting targets and turning ESS durably profitable \u2013 even without government subsidies \u2013 suggests the company believes it is building an irreversible competitive moat in North America. Analysts will be watching closely whether the guided shipment jumps materialize and whether the restart of GM\u2019s Phase 1 can lift automotive margins in tandem with the ESS boom.<\/p>\n","protected":false},"excerpt":{"rendered":"LG Energy Solution broke a three\u2011quarter losing streak in the June quarter, returning to the black as its…\n","protected":false},"author":2,"featured_media":103752,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[26],"tags":[53631,757,4221,10774,53632,53628,53633,53629,53626,53627,46022,315,747,733,53630,49080],"class_list":["post-103751","post","type-post","status-publish","format-standard","has-post-thumbnail","category-lg-energy-solution","tag-2170-cylindrical-cells","tag-46-series-cylindrical-battery","tag-ai-data-centers","tag-ampc","tag-arizona-cylindrical-plant","tag-btm-behind-the-meter-ess","tag-cfo-lee-chang-sil","tag-chinese-ess-competitors","tag-ess-division","tag-general-motors-jv","tag-lfp-batteries","tag-lg","tag-lg-energy","tag-lg-energy-solution","tag-pfe-regulations","tag-poland-plant"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts\/103751","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/comments?post=103751"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts\/103751\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/media\/103752"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/media?parent=103751"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/categories?post=103751"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/tags?post=103751"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}