South Korea’s LG Energy Solution (LGES) reported a 138% increase in its first-quarter profit on Wednesday, driven by favorable foreign exchange rates. The growth helped offset the slowdown in electric vehicle (EV) sales in key overseas markets.
LGES, which supplies batteries to companies such as Tesla, General Motors (GM), and Hyundai Motor, posted an operating profit of 375 billion won ($261.96 million) for January through March. This result aligns with its earlier forecast and marks a significant improvement from 157 billion won during the same period last year.
However, the company disclosed that it would have reported an operating loss of 83 billion won if not for a tax credit from the U.S. Inflation Reduction Act.
Revenue for the first quarter increased by 2.2% year-on-year, reaching 6.3 trillion won.
Despite the strong earnings, LGES shares fell 2.1% following the announcement, while the benchmark KOSPI index rose by 0.1%.
A key factor contributing to LGES’ profit surge was the weaker South Korean won. In Q1, the average exchange rate stood at 1,452.9 won per U.S. dollar, an 8.5% drop from the previous year’s rate of 1,329.4. This meant LGES could buy more won with the dollars it earned from U.S. sales.
Another boost came from solid EV sales by GM, which reported a 94% year-on-year increase in domestic EV sales, reaching 31,887 units during the first quarter.
In related news, GM adjusted its outlook by retracting its annual forecast, citing uncertainties over the potential impact of trade tensions instigated by former President Donald Trump’s administration. The automaker also delayed its investor call following changes to the U.S. import tariff policy. On the same day, Trump signed executive orders to mitigate the effects of new tariffs on the auto industry, offering tax credits and relief from certain material levies.
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