LG Energy Solution 2025 Annual Results: Operating Profit Doubles to KRW 1.35 Trillion, Yet Shareholders Post a KRW 1.07 Trillion Loss

Key takeaways

• LG Energy Solution’s group operating profit rose 134.0% to KRW 1,346,120 million (~$1.0 billion), while total revenue fell 7.6% to KRW 23,671,759 million (~$17.5 billion).
• Despite the higher operating profit, the profit attributable to the owners of the Parent was a loss of KRW (1,072,810) million — a loss that widened from KRW (1,018,741) million in 2024. Nearly all reported group profit went to non-controlling interests (KRW 1,153,613 million).
• A US IRA Advanced Manufacturing Production Tax Credit (AMPC) of KRW 1,646,811 million was recognized in other operating income — an amount that exceeds the entire group operating profit of KRW 1,346,120 million.
• ESS is not disclosed as a separate segment. LGES reports a single operating segment covering “automotive batteries, mobile batteries, ESS batteries and others.” There is no ESS revenue, no GWh figure, and no ESS margin in this filing.
• As of the reporting date the Group did not comply with financial covenants (borrowings-to-EBITDA below 4.0x) on syndicated and EIB loans; affected long-term borrowings were reclassified as current liabilities, with waiver/amendment discussions ongoing.

1. A note on ESS disclosure

This article is based on LG Energy Solution’s audited consolidated financial statements for the year ended December 31, 2025 (K-IFRS, Deloitte Anjin unqualified opinion dated March 5, 2026). This is the audit report, not a management discussion and analysis (MD&A) annual report, and it does not contain an operational ESS commentary.

LGES reports a single reportable segment. Note 32(1) describes its products as “automotive batteries, mobile batteries, ESS batteries and others” (p.96). There is no separate ESS revenue line, no ESS shipment figure in GWh, no ESS gross margin, and no ESS production capacity disclosed in this filing. The only forward-looking market statement on energy storage in the document is a single business-overview sentence (p.6):

“Demand for ESS is expanding with an increasing importance of efficient usage of electricity and generation of renewable energy.”

Everything below is therefore group-level, with the ESS-relevant subsidiaries and commitments identified where the filing names them. We do not estimate an ESS split, because the filing does not provide one.

2. Headline numbers

Revenue declined 7.6% to KRW 23,671,759 million (~$17.5 billion at ~1,350 KRW/USD, approximate), while cost of sales fell faster (−12.5%). That lifted gross profit 24.3% and expanded gross margin from 13.3% to 17.9%. Operating profit rose 134.0% to KRW 1,346,120 million (p.2, p.80, p.96).

Below the operating line, profit before tax was KRW 414,124 million, and income tax expense of KRW 333,321 million — up from KRW 10,269 million in 2024, an effective rate of 80.49% (p.85) — reduced profit for the year (including non-controlling interests) to KRW 80,803 million, down 76.1%.

3. Group profit split between owners and non-controlling interests

The KRW 80,803 million of profit for the year splits as follows:

• Owners of the Parent (LGES shareholders): a loss of KRW (1,072,810) million — wider than the KRW (1,018,741) million loss in 2024.
• Non-controlling interests: profit of KRW 1,153,613 million.

The amount attributable to non-controlling interests exceeds the group’s total profit for the year, and the portion attributable to LGES’s own shareholders was a loss for the second consecutive year. Basic and diluted EPS were a loss of KRW (4,585), versus a loss of KRW (4,354) in 2024 (p.86).

4. AMPC recognized in other operating income

LGES recognized a US IRA Advanced Manufacturing Production Tax Credit (AMPC) of KRW 1,646,811 million in other operating income in 2025, up from KRW 1,480,020 million in 2024 (p.80, Note 21).

That AMPC amount exceeds the entire group operating profit of KRW 1,346,120 million, by KRW 300,691 million (derived). The AMPC is tied to production at LGES’s US-based manufacturing under the IRA framework.

5. ESS-relevant entities and commitments

While ESS is not a reported segment, the notes do name entities and commitments tied to energy storage (p.7, p.60, p.78):

• LG Energy Solution Arizona ESS, Inc. (USA) — ESS manufacturing and sales.
• LG Energy Solution Vertech Inc. (USA) — ESS installation and integration.
• LG Energy Solution Europe / Australia / Japan — ESS battery sales.
• Jeju Bukchon BESS Power Plant Co., Ltd. — a new Korean BESS-plant associate, 10% held, acquired for KRW 900 million (p.60).
• Arizona new-plant construction commitment of USD 2,048 million (p.78).

The filing names ESS manufacturing, integration and sales entities in the US, Europe and Asia-Pacific, but attaches no revenue, volume or margin figures to them.

6. Geographic revenue

Revenue by location of sale (Note 32(4), p.96, KRW millions):

The Americas were the largest market at KRW 10,142,970 million, or 42.8% of 2025 sales. Europe recorded the sharpest decline, from KRW 7,028,980 million to KRW 4,879,060 million, while Korea rose from KRW 1,747,024 million to KRW 2,677,968 million.

Note 32(5) discloses three customers each accounting for at least 10% of revenue — KRW 4,845,460 million, KRW 4,591,682 million, and KRW 2,910,177 million — together roughly 52% of 2025 revenue. The filing does not name them.

7. Balance sheet, cash flow, and R&D

Total assets grew 11.3% to KRW 67,147,953 million, but total equity fell 5.3% to KRW 29,321,676 million (p.1). Total borrowings rose 46.3% to KRW 22,512,096 million, pushing gearing from 27.1% to 39.0% and debt-to-equity from 94.7% to 129.0% (p.46, p.68).

Net operating cash flow of KRW 4,432,277 million (−13.3%) did not cover capex of KRW 10,833,917 million, though capex itself declined 12.6% year-on-year (p.5). R&D expense rose 23.3% to KRW 1,304,210 million (p.66).

8. Market context

The filing contains only one forward-looking ESS market statement (p.6): “Demand for ESS is expanding with an increasing importance of efficient usage of electricity and generation of renewable energy.” Beyond that single sentence, the audited statements provide no market sizing, competitive positioning, or ESS demand forecast. The document is an audit report, not an MD&A.

9. What to watch

The filing records the following:

Covenant breach and reclassification. As of the reporting date, the Group did not comply with financial covenants (borrowings-to-EBITDA below 4.0x) on syndicated loans (ANZ / HSBC / JPM) and EIB borrowings. The affected long-term borrowings were reclassified as current liabilities, and amendment or waiver discussions were ongoing (p.69, Note 14).

AMPC and operating profit. The KRW 1,646,811 million AMPC exceeds group operating profit of KRW 1,346,120 million by KRW 300,691 million (derived). The filing gives no sensitivity analysis for a change in the credit or in US production volumes.

Leverage and shareholder earnings. Borrowings rose 46.3% and equity fell 5.3% while the loss attributable to owners widened for a second year. The filing also notes KRW 595,701 million of deferred tax assets de-recognized (p.85), and that a 10% USD appreciation would reduce pre-tax profit by KRW 688,678 million (p.41).

Warranty, litigation, and JV commitments. A warranty provision of KRW 1,549,908 million stood at year-end (flagged as a Key Audit Matter), alongside litigation including the GM Bolt EV recall and mobile-battery class actions (p.78). Committed JV and expansion outlays: Honda (USD 1,802 million), Stellantis (USD 1,464 million), Arizona (USD 2,048 million), plus the March 2025 acquisition of Ultium Plant 3 assets by LGES Michigan for USD 2,154 million.

10. Sources

All data in this article is sourced from LG Energy Solution’s official audited consolidated financial statements for the year ended December 31, 2025, published by LG Energy Solution.

• LG Energy Solution 2025 Audited Consolidated Financial Statements — Annual Report (PDF) — K-IFRS, Deloitte Anjin unqualified opinion dated March 5, 2026. Audit report only; no MD&A.
• LG Energy Solution Manufacturer Profile — BESS Manufacturers directory page
• USD conversions are approximate at ~1,350 KRW/USD; the filing does not disclose a KRW/USD rate.