LG Energy Solution's record quarter runs on US tax credits, and LG Chem is selling 2.5 trillion won of stock
LG Energy Solution's record quarter shows AI's power shortage has become a battery business, with North American storage booked through 2028. The profit underneath is carried by US production credits and ends in a net loss, and the parent, LG Chem, is selling 2.5 trillion won of stock into the rally.
Richard Tang · 3 min read
LG Energy Solution−5.06% — LG Energy Solution, down 5.06 percent today, South Korea's biggest battery maker, just turned AI's power shortage into a record: 9.64 trillion won of third-quarter revenue, up 59% and an all-time high 12. Read past the record and the quarter forces a narrower judgment. The demand is booked years ahead, and the profit still arrives through a tax credit: operating profit was 756 billion won, of which 417 billion won was US production credit claimed under the Inflation Reduction Act, and the quarter still closed in a net loss 1.
AI's power gap became an order book
Two upstream changes made this quarter possible. Nvidia+3.03% — Nvidia, up 3.03 percent today, the chipmaker whose AI factories anchor the demand, began qualifying power gear against its reference designs, and in September LG became the only Korean battery maker on its DSX Ready list, with storage blocks built to smooth AI power load 34.
An August US executive order also restricted grid equipment from designated foreign entities, pushing utilities and data-center buyers toward LG's American plants and its non-Chinese supply chain 1. Storage shipments rose more than 60% in the quarter and passed 30% of revenue; the backlog stands near 160 GWh, with North American volumes largely booked through 2028 15. Management raised full-year sales growth guidance to 35 to 40% 5.
Credits and finance costs carry the quarter
Strip the credits out and the operating margin was 3.7% 14. Below the operating line, derivative losses, interest and impairments added 987 billion won of non-operating items 1. The balance sheet is financing the ramp: debt-to-equity reached 171%, from 125% a year earlier, and cash fell 2.9 trillion won in the quarter 12.
The fourth-quarter guide points the same way: revenue up about 10%, margins moderating as one-time customer payments lapse and the Honda joint venture's new storage lines add start-up costs 12. Demand is no longer the bottleneck. Converting booked volume into unsubsidised margin is the work that remains, and it is where management says it is now concentrating 1.
Operating profit collapses to a net loss once credits and finance costs are counted
Data
| Value | |
|---|---|
| Operating profit, reported | ₩756B |
| Operating profit, ex-credits | ₩339B |
| Non-operating items | -₩987B |
| Net result | -₩297B |
The parent is selling the boom
The share register shows who gets paid first. The stock hit a four-month high above 400,000 won in early October, when preliminary profit came in at more than double analyst consensus, credits included 6.
On October 29, LG Chem, the chemicals group that controls LG Energy Solution, said it would raise about 2.5 trillion won by selling a 2.79% stake through a two-year price-return swap, on a stated path to a 70% holding by 2030; the shares fell more than 10% that morning 7. The Inference mapped that supply queue on October 30 7.
The batteries are booked through 2028. Part of the profit is still booked in Washington. Until the unsubsidised margin widens, this boom pays the parent and the big-tech buyers of certified storage first, and minority shareholders last.
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