By Heekyong Yang and Ju-min Park
SEOUL (Reuters) – South Korean battery maker LG Power Answer stated on Monday it had a “conservative” view of income development subsequent yr and that it’s going to considerably cut back capital expenditure as a result of slowing electrical automobile demand, after reserving a 39% third-quarter revenue drop.
The corporate, which provides Tesla (NASDAQ:), Common Motors (NYSE:) and Hyundai Motor (OTC:), additionally expects the results of the U.S. presidential election subsequent week to have a big impression on EV market course, its CFO stated.
“Looking ahead to 2025, we see continuing macro uncertainty and geopolitical risk, increased (battery) exports by Chinese rivals, as well as (automaker) customer plans to manufacture their own batteries, which would intensify competition,” Chief Monetary Officer Lee Chang-Sil stated on an earnings name.
“When it comes to revenue growth next year, we have a rather conservative outlook,” Lee stated. “We expect capital expenditure to be significantly reduced next year compared to this year, with the exception of some essential and necessary investment.”
In April, LGES stated it deliberate to scale back capital expenditure this yr as a result of slowing development in EVs. It additionally stated earlier this yr that 2024 capital expenditure could be just like the earlier yr’s 10.9 trillion gained.
A number of automakers are cutting down electrification targets, damage by slowing EV demand caused by elements together with the dearth of inexpensive fashions, sluggish proliferation of charging factors, commerce stress and elevated competitors from cheaper Chinese language rivals.
Demand will doubtless recuperate in about 18 months in Europe and two to 3 years in the US, relying partly on local weather insurance policies and different regulation, a senior LGES govt advised Reuters in July.
“The general view is that the pace of EV demand growth could be slower if Donald Trump is elected to a second term in the White House (compared with under Kamala Harris) as he has suggested cutting EV tax credits,” stated analyst Kang Dong-jin at Hyundai Motor Securities.
BEATS ESTIMATES
LGES reported working revenue of 448 billion gained ($322.84 million) for July-September, according to its earlier forecast however down from 731 billion gained in the identical interval a yr earlier,
Nevertheless, improved demand from some European and North American automakers helped the battery maker beat the 374 billion gained LSEG SmartEstimate, calculated from the common of 20 analyst estimates and weighted towards the estimates of analysts who’re extra constantly correct.
LGES stated it might have booked an 18 billion gained working loss within the quarter with out a tax credit score obtained beneath the U.S. Inflation Discount Act.
Income fell 16% to six.9 trillion gained.
LGES’ share worth was 1.2% after the outcomes, outpacing a 0.9% rise within the benchmark .
($1 = 1,387.6900 gained)
