LGES cuts sales target on weak EV demand, flags US election risk
LGES cuts 2024 revenue target on weak EV demand
Flags risk due to U.S. presidential election
Expects U.S. policies aimed at China to continue
Adds comments from the company and analysts
By Heekyong Yang and Jihoon Lee
SEOUL, July 25 (Reuters) -South Korean battery maker LG Energy Solution (LGES) 373220.KS said on Thursday its revenue would plunge more than 20% this year and that it would ease capacity expansion due to a sharper-than-expected slowdown in global electric vehicle (EV) demand.
LGES, whose customers include Tesla TSLA.O, General Motors GM.N and Hyundai Motor 005380.KS, also said potential change in U.S. EV policies after November's presidential election could further weaken EV demand.
The outlook is likely to further dampen sentiment toward the global EV sector. A disappointing earnings report from Tesla triggered a 12% tumble in the EV leader's stock on Wednesday, wiping almost $100 billion off its market value.
"If the U.S. administration changes, there could be risk to EV demand growth," Kang Chang Beom, LGES chief strategy officer, said on an earnings call with analysts.
Former President Donald Trump, the Republican candidate, is critical of the EV policies of Democrat President Joe Biden and has said he will "end the electric vehicle mandate" if he wins.
However, U.S. efforts to discourage the use of the Chinese supply chain are likely to gain momentum, "which is advantageous in terms of competition," said Kang.
LGES slashed its estimated size of the U.S. federal tax credit it would receive this year under the Inflation Reduction Act to 30-35 gigawatt hours (Gwh) from 45-50 Gwh due to demand slowdown, pointing to a potential drop in profitability.
It has said it would have booked a 253 billion won ($182 million) second-quarter operating loss without an IRA tax credit.
"In the second half, we'll adjust the pace of new expansion or scale down investment in some projects, while maximising the use of our existing capacity," LGES said in an earnings release.
LGES forecast global EV market growth would slow to slightly above 20% this year from 36% last year. It said annual revenue will drop after previously expecting mid-single percentage growth.
LGES posted on Thursday a 58% drop in operating profit at 195 billion won for April-June, in line with an earlier forecast. Revenue fell 30% to 6.2 trillion won.
Shares in LGES jumped 4.2% as of 0435 GMT, rebounding from an earlier fall, as investors factored in potential benefits from increased EU tariffs on China-built EVs and the U.S. further crimping the Chinese EV supply chain.
The market was initially worried about the impact of U.S. EV policy change but those concerns eased as the market digested LGES' comments, lifting shares of battery makers across the board, said analyst Kang Dong-jin at Hyundai Motor Securities.
An LGES senior executive said in an interview with Reuters that he expects EV demand to recover in about 18 months in Europe and two to three years in the U.S., depending in part on climate policies and other regulations.
Shares in LGES rival Samsung SDI 006400.KS rose 3% and those of SK Innovation 096770.KS, which owns battery maker SK On, gained 1.2%.
($1 = 1,386.9700 won)
Reporting by Heekyong Yang, Joyce Lee and Jihoon Lee; Writing by Miyoung Kim; Editing by Christopher Cushing and Michael Perry
Asset collegati
Ultime news
Disclaimer: le entità di XM Group forniscono servizi di sola esecuzione e accesso al nostro servizio di trading online, che permette all'individuo di visualizzare e/o utilizzare i contenuti disponibili sul sito o attraverso di esso; non ha il proposito di modificare o espandere le proprie funzioni, né le modifica o espande. L'accesso e l'utilizzo sono sempre soggetti a: (i) Termini e condizioni; (ii) Avvertenza sui rischi e (iii) Disclaimer completo. Tali contenuti sono perciò forniti a scopo puramente informativo. Nello specifico, ti preghiamo di considerare che i contenuti del nostro servizio di trading online non rappresentano un sollecito né un'offerta ad operare sui mercati finanziari. Il trading su qualsiasi mercato finanziario comporta un notevole livello di rischio per il tuo capitale.
Tutto il materiale pubblicato sul nostro servizio di trading online è unicamente a scopo educativo e informativo, e non contiene (e non dovrebbe essere considerato come contenente) consigli e raccomandazioni di carattere finanziario, di trading o fiscale, né informazioni riguardanti i nostri prezzi di trading, offerte o solleciti riguardanti transazioni che possano coinvolgere strumenti finanziari, oppure promozioni finanziarie da te non richieste.
Tutti i contenuti di terze parti, oltre ai contenuti offerti da XM, siano essi opinioni, news, ricerca, analisi, prezzi, altre informazioni o link a siti di terzi presenti su questo sito, sono forniti "così com'è", e vanno considerati come commenti generali sui mercati; per questo motivo, non possono essere visti come consigli di investimento. Dato che tutti i contenuti sono intesi come ricerche di investimento, devi considerare e accettare che non sono stati preparati né creati seguendo i requisiti normativi pensati per promuovere l'indipendenza delle ricerche di investimento; per questo motivo, questi contenuti devono essere considerati come comunicazioni di marketing in base alle leggi e normative vigenti. Assicurati di avere letto e compreso pienamente la nostra Notifica sulla ricerca di investimento non indipendente e la nostra Informativa sul rischio riguardante le informazioni sopra citate; tali documenti sono consultabili qui.
