By Heekyong Yang and Ju-min Park
SEOUL (Reuters) -South Korean battery maker LG Energy Solution (LGES) said on Thursday it plans to minimise capital expenditure this year due to slowing global electric vehicle (EV) demand, after reporting a 75% plunge in first-quarter profit.
The supplier of automakers including Tesla (NASDAQ:), General Motors (NYSE:) and Volkswagen (ETR:) reported operating profit of 157 billion won ($114 million) for January-March on revenue that fell 30% to 6.1 trillion won.
LGES said it would have reported a 32 billion won loss without a tax credit received under the U.S. Inflation Reduction Act. That would have been its first loss since listing in 2022.
Amid slow global growth in EVs, LGES said it plans to reduce capital expenditure this year.
“While we review the priorities of our investment, such as mid-to-long-term demand and essential expansion in the United States, we plan to adjust the size and pace of our capex spending,” Chief Financial Officer Lee Chang-sil said on an earnings call.
In January, LGES said this year’s capital expenditure would be similar to last year’s 10.9 trillion won.
LGES said performance would likely improve in the second half because of new EVs from U.S. customers such as GM. It also noted risk factors for EV demand, including a U.S. presidential election as well as governments’ environment policies.
The South Korean manufacturer said it could explore more business opportunities for its 46-series cylindrical battery products, which analysts expect to be used in the more affordable EVs that Tesla on Tuesday said it would introduce.
The price of LGES shares was down 2% as of 0241 GMT, versus a 1% fall in the benchmark .
($1 = 1,375.4800 won)