By Heekyong Yang and Ju-min Park
SEOUL (Reuters) – South Korean battery maker LG Vitality Answer mentioned on Monday it had a “conservative” view of income progress subsequent 12 months and that it’s going to considerably cut back capital expenditure resulting from slowing electrical automobile demand, after reserving a 39% third-quarter revenue drop.
The corporate, which provides Tesla (NASDAQ:), Basic 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 route, its CFO mentioned.
“Looking forward to 2025, we see persevering with macro uncertainty and geopolitical threat, elevated (battery) exports by Chinese language rivals, in addition to (automaker) buyer plans to fabricate their very own batteries, which might intensify competitors,” Chief Monetary Officer Lee Chang-Sil mentioned on an earnings name.
“Relating to income progress subsequent 12 months, we now have a quite conservative outlook,” Lee mentioned. “We anticipate capital expenditure to be considerably decreased subsequent 12 months in comparison with this 12 months, excluding some important and obligatory funding.”
In April, LGES mentioned it deliberate to scale back capital expenditure this 12 months resulting from slowing progress in EVs. It additionally mentioned earlier this 12 months that 2024 capital expenditure can be just like the earlier 12 months’s 10.9 trillion received.
A number of automakers are cutting down electrification targets, harm by slowing EV demand led to by components together with the shortage of inexpensive fashions, gradual proliferation of charging factors, commerce pressure and elevated competitors from cheaper Chinese language rivals.
Demand will probably get better 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 government advised Reuters in July.
“The final view is that the tempo of EV demand progress may very well be slower if Donald Trump is elected to a second time period within the White Home (in contrast with below Kamala Harris) as he has urged slicing EV tax credit,” mentioned analyst Kang Dong-jin at Hyundai Motor Securities.
BEATS ESTIMATES
LGES reported working revenue of 448 billion received ($322.84 million) for July-September, according to its earlier forecast however down from 731 billion received in the identical interval a 12 months earlier,
Nevertheless, improved demand from some European and North American automakers helped the battery maker beat the 374 billion received LSEG SmartEstimate, calculated from the common of 20 analyst estimates and weighted towards the estimates of analysts who’re extra constantly correct.
LGES mentioned it could have booked an 18 billion received working loss within the quarter with out a tax credit score obtained below the U.S. Inflation Discount Act.
Income fell 16% to six.9 trillion received.
LGES’ share value was 1.2% after the outcomes, outpacing a 0.9% rise within the benchmark .
($1 = 1,387.6900 received)