SEOUL — South Korea’s LG Chem Ltd. swung to an operating profit in the fourth quarter of 2020 and the supplier expects surging revenue from its battery unit that supplies Tesla Inc. to set the stage for a strong 2021.
The maker of chemicals and batteries, whose battery unit LG Energy Solution supplies Tesla, posted an operating profit of 674 billion won ($610.20 million) — compared with a loss of 33 billion won in the same period a year earlier.
With the launches of new EVs and increased orders for its energy storage system batteries, LG Energy Solution expects revenue to grow more than 50 percent in 2021 from a year earlier, aiming to ramp up annual capacity to 155 gigawatt-hours of batteries by the of the year, up about 30 percent from a year earlier, the unit’s Senior Vice President Chang Seung-se said in a call with analysts.
LG Chem’s overall fourth-quarter revenue rose 20 percent to 8.9 trillion won, the company said in a regulatory filing. LGg Energy Solution, which was split off on Dec. 1, reported a fourth-quarter profit of 116 billion won after a loss a year earlier with the unit’s revenue up more than 66 percent from a year earlier.
Fourth-quarter profits were impacted as funds were set aside to cover the costs of two battery recalls, LG Chem Vice President Yoon Hyun-seok said on the analyst call without the amount.
Those include the recall of Hyundai Motor Co.’s Kona EV, which uses LG Energy Solution batteries, as well as a recall of LG Energy Solution’s residential energy storage batteries in the U.S.
LG Chem saw strong demand for its EV batteries last year. That helped the battery business swing to a profit for the first time in the April to June quarter backed by global automakers’ shift from the combustion engine to electric vehicles to comply with environmental regulations.