An employee walks past the logo of LG Energy Solution at its office building in Seoul, South Korea, November 23, 2021. Picture taken November 23, 2021. REUTERS
SEOUL, – South Korea’s LG Energy Solution (LGES) (373220. KS), said on Tuesday it signed a deal to supply electric vehicle (EV) batteries to a Mercedes-Benz (MBGn.DE) affiliate in North America and other regions, sending its shares soaring.
The battery maker, whose customers include Tesla, General Motors and Hyundai Motor said in a regulatory filing it would supply 50.5 gigawatts per hour in batteries from 2028 to 2038, but said it cannot disclose the monetary size of the contract.
LGES declined to comment on the specific affiliate of Mercedes involved in the contract.
Shares of LGES rose as much as 5.7% after announcing the deal, versus benchmark KOSPI’s 0.4% fall.
The contract announcement came on the same day LGES released a forecast showing a 40% fall in third-quarter operating profit to 448 billion won ($332.27 million), still higher than analyst estimates as it managed to expand supplies of EV batteries for U.S. customers as well as batteries for energy storage systems.
The most recent LGES SmartEstimate forecasts operating profit for the three months ended Sept. 30 at 438 billion won.
LGES also said it would have booked an 18 billion won operating loss without tax credits from the U.S. Inflation Reduction Act.
LGES said it would report its full earnings on Oct. 28.
The contract announcement was made even as major automakers including General Motors and Ford (F.N), reported weaker EV sales for the latest quarter with buyers continuing to shy away from purchases on affordability concerns, and Tesla reported a smaller-than-expected rise in quarterly deliveries earlier this month.
Reporting by Joyce Lee; Editing by Tom Hogue, Christopher Cushing and Christian Schmollinger
