LG Energy Solution swung back to operating profit in the second quarter, ending two consecutive quarters of losses as its strategic shift from idle electric-vehicle battery lines to energy storage systems (ESS) gained momentum. The pivot aligns with a wider industry trend in which major battery manufacturers are expanding grid-scale storage offerings at a time when EV demand growth has moderated across key markets.

The company reported Thursday that revenue for the April–June period reached 7.56 trillion won ($5.19 billion), up 24.8 percent year-on-year and 15.3 percent from the prior quarter. Operating profit came in at 113.3 billion won, a 77 percent decline from a year earlier but a sharp turnaround from the 207.8 billion won operating loss posted in the first quarter. The results were consistent with preliminary figures released on July 7.

The return to profit relied heavily on 241 billion won in U.S. Advanced Manufacturing Production Credits, tax incentives established under the 2022 Inflation Reduction Act to support domestic battery manufacturing. Without those subsidies, LG Energy Solution would have posted an operating loss of 127.7 billion won, representing a negative 1.7 percent operating margin. That figure still marked an improvement of 269.9 billion won compared with the first quarter's subsidy-adjusted loss of 397.6 billion won. Net loss for the quarter stood at 328.6 billion won.

Energy storage emerged as the company's primary growth driver. First-half ESS revenue surged 4.6-fold year-on-year, accounting for a high-20s percentage share of total sales, up from single digits a year earlier. Second-quarter ESS shipments rose more than 30 percent from the first quarter, buoyed by demand from North America and Europe, where utilities and project developers are accelerating grid-scale storage deployments alongside renewable energy buildout. LG Energy Solution secured more than 3 trillion won in new ESS orders during the first half, including a project for an artificial intelligence data center whose end customer was described only as an unnamed hyperscaler.

ESS production lines commenced operations at the second General Motors joint venture plant in May and at the Honda joint venture in June. The company is targeting more than 50 gigawatt-hours of North American ESS capacity by year-end.

On the EV battery side, cylindrical cell shipments increased 1.5 times year-on-year as production of the 46-series form factor stabilized. U.S. demand remained muted, while European and Asian shipments grew for a third consecutive quarter. LG Energy Solution, one of the world's largest battery manufacturers alongside China's CATL and BYD, Japan's Panasonic, and Korean rivals Samsung SDI and SK On, has faced the same EV demand headwinds affecting the sector globally.

"Utilization improved in Europe, high-margin cylindrical sales took a larger share, and expanded North American ESS output eased the fixed-cost burden," Chief Financial Officer Lee Chang-sil said on the earnings call.

Lee projected third-quarter revenue growth of more than 20 percent from the second quarter, with ESS shipments expected to rise at least 50 percent. The company's debt climbed by 5.7 trillion won to 47.59 trillion won, raising its debt-to-equity ratio to 157 percent from 140 percent.