Seoul: LG Energy Solution Ltd., South Korea's prominent battery manufacturer, announced an operating loss for the first quarter on Tuesday, citing the implications of the ongoing U.S.-Iran conflict. This marks a significant shift from the previous year's performance, as the company reported an operating loss of 207.8 billion won (US$138.2 million) for the January-March period, compared to a profit of 374.7 billion won a year earlier.

According to Yonhap News Agency, the company's sales saw a 2.5 percent decline, totaling 6.55 trillion won, though details regarding net earnings remain undisclosed. The reported operating loss exceeded the average estimate by 30.4 percent, as per a survey conducted by Yonhap Infomax, the financial data division of Yonhap News Agency. LG Energy Solution has yet to release its final earnings report.

Although specific details were not provided in the preliminary earnings report, industry analysts attribute the loss to increased production costs linked to the Middle East crisis. Additionally, the company's initial expenses related to its North American energy storage system (ESS) battery production facilities may have also impacted its financial performance.

The company highlighted that it benefited from a tax credit of 189.8 billion won under the Advanced Manufacturing Production Credit (AMPC) as part of the U.S. Inflation Reduction Act. Without this credit, LG Energy Solution's operating loss would have been 397.5 billion won for the first quarter.