Seoul, Dec 26 South Korean battery maker LG Energy Solution Ltd. said on Friday it has agreed with a US company to terminate a supply contract signed in 2024 by mutual consent.
In a regulatory filing, LG Energy Solution said it has canceled the supply deal worth 3.9 trillion won ($2.69 billion) signed with U.S.-based battery pack producer Freudenberg Battery Power System (FBPS) LLC.
LG Energy Solution said the termination came as FBPS decided to pull out from the battery industry, reports Yonhap news agency.
LG Energy Solution signed the $2.7 billion agreement with the U.S. company in April and had already implemented $110 million of the deal.
Last week, LG Energy Solution announced the cancellation of a 9.6 trillion-won battery supply order from Ford Motor Co. signed last year.
Following the latest regulatory filing, the combined amount of contracts terminated this month for LG Energy Solution reached 13.5 trillion won, which accounts for around half of the company's annual sales of 25.6 trillion won posted in 2024.
The South Korean battery maker, however, said the terminations are expected to have a limited impact on its financial health.
"We have not made an investment for building specialized production facilities nor expenditures for research and development projects. Thus, there are no additional costs incurred due to the termination," the company said.
"We intend to take this as an opportunity to streamline relationships with uncertain customers and secure a more stable source of demand," it added.
Meanwhile, LG Energy Solution’s third-quarter operating profit likely jumped 34.1 per cent from a year earlier, driven by strong sales of energy storage systems (ESSs) in the United States.
In the three months ended September, operating profit is estimated to have surged to 601.3 billion won ($422.8 million) from 448.3 billion won in the same period last year, the company said in a regulatory filing.
Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor