SEOUL: South Korean battery maker LG Energy Solution said Monday it has a “cautious” outlook on revenue growth next year and will significantly reduce capital spending due to the slowdown in demand for electric vehicles, after recording a 39% drop in third-quarter profits. .

The company, which supplies Tesla, General Motors and Hyundai Motor, also expects the outcome of next week’s U.S. presidential election to have a significant impact on the direction of the electric vehicle market, its director said financial.

“Looking ahead to 2025, we see continued macroeconomic uncertainty and geopolitical risk, increased (battery) exports from Chinese competitors, as well as (automaker) customers’ plans to manufacture their own batteries, which would intensify competition,” Chief Financial Officer Lee Chang-” Sil said on an earnings call.

“When it comes to revenue growth next year, we have a pretty conservative outlook,” Lee said. “We expect capital expenditures to be significantly reduced next year compared to this year, with the exception of some essential and necessary investments.”

In April, LGES announced plans to reduce capital spending this year due to slowing growth in electric vehicles. He also said earlier this year that investment spending in 2024 would be similar to the previous year’s 10.9 trillion won.

Several automakers are reducing their electrification targets, hurt by slowing demand for electric vehicles caused by factors including a lack of affordable models, the slow proliferation of charging points, trade tensions and increased competition from Chinese rivals. cheaper.

Demand is expected to recover in about 18 months in Europe and two to three years in the United States, depending in part on climate policies and other regulations, a senior LGES official told Reuters in July.

“The general view is that the pace of growth in demand for electric vehicles could be slower if Donald Trump is elected to a second term in the White House (compared to Kamala Harris), as he has suggested cutting appropriations tax for electric vehicles,” said analyst Kang Dong-jin at Hyundai Motor Securities.

BEAT ESTIMATES

LGES reported operating profit of 448 billion won ($322.84 million) for July-September, in line with its earlier forecast but down from 731 billion won in the same period a year earlier.

However, improving demand from some European and North American automakers helped the battery maker surpass the 374 billion won LSEG SmartEstimate, calculated from the average of 20 analyst estimates and weighted according to analyst estimates that are more consistently accurate.

LGES said it would have posted an operating loss of 18 billion won in the quarter without a tax credit received under the U.S. Inflation Reduction Act.

Revenue fell 16 percent to 6.9 trillion won.

The LGES share price was up 1.2 percent after the results, outpacing the 0.9 percent rise in the benchmark KOSPI index.

($1 = 1,387.6900 won)