LS ELECTRIC achieved record results in the third quarter, supported by expanding sales of power equipment for North American data centers. Operating profit grew faster than revenue as sales of high-value products, including switchgear and extra-high-voltage transformers, increased. Growing adoption of on-site generation at US data centers is also creating new order opportunities.
According to LS ELECTRIC on October 22, consolidated revenue for the third quarter of this year rose 54.4% year on year to 1,877.8 billion won. Operating profit increased 131.7% to 233.5 billion won. Compared with the preceding quarter, revenue rose 19.1% and operating profit increased 30.8%. The operating profit margin also climbed from 11.3% in the second quarter to 12.4%.
Switchgear and extra-high-voltage transformers led the growth. Third-quarter switchgear revenue increased 120% year on year, while extra-high-voltage transformer revenue rose 106%. Increased sales of high-value products supplied to data centers and large power infrastructure projects also contributed to improved profitability. Revenue from mass-produced power distribution devices rose 32% from the same period last year.
By region, North America recorded particularly strong revenue growth. Third-quarter revenue in North America reached a record of approximately 500 billion won, up 25% from approximately 400 billion won in the preceding quarter. Its share of total revenue also rose from approximately 25.4% in the second quarter to 26.6%. Revenue at the Spanish and Middle Eastern subsidiaries increased approximately 120% and 61% year on year, respectively.
Cumulative results also exceeded last year's full-year level. Operating profit through the third quarter of this year rose 81.5% year on year to 538.6 billion won, surpassing last year's full-year operating profit. LS ELECTRIC also achieved 100 consecutive quarters of operating profit, from the fourth quarter of 2001 through the third quarter of this year. The article interprets the combination of the power equipment business, where results fluctuate with large project orders, and stable sales of power distribution devices as supporting the company's earnings base.
The company also secured orders that will contribute to future revenue. New orders in the third quarter totaled approximately 1,600 billion won, down 23.8% from approximately 2,100 billion won in the preceding quarter, but the order backlog remained at approximately 7 trillion won. The backlog consists of contracted orders that have not yet been delivered, and the timing of revenue recognition varies with project progress.
Securities analysts are focusing on increasing data center orders. On October 19, iM Securities forecast that LS ELECTRIC's new orders this year would exceed 6 trillion won. It also expected North American data center orders to rise from approximately 800 billion won last year to 2,700 billion won this year. It cited growing orders for on-site generation equipment, in addition to existing power equipment, as a key reason.
Long-term supply contracts with major US customers also continued. On October 16, LS ELECTRIC signed a power distribution equipment contract worth approximately 168.9 billion won for a US big technology company's data center project. Following an order secured in April for deliveries in 2026, it received an additional order for deliveries to the same project in 2027. Supply volumes for 2028 are to be determined through future discussions.
More diverse data center power supplies create new order opportunities
LS ELECTRIC is securing new order opportunities as power supply arrangements at US data centers change. In some parts of the United States, delays in transmission grid connections are prompting data center operators to increase their adoption of on-site generation. Rather than waiting for connections to the existing grid, they aim to bring data centers into operation sooner by generating electricity themselves.
Generation equipment uses technologies such as natural gas generation and fuel cells. Additional power equipment, including switchgear and transformers, is needed to distribute the electricity produced within data centers. This gives LS ELECTRIC opportunities to supply products for on-site generation in addition to equipment for existing grid connections.
To meet this demand, LS ELECTRIC is expanding its cooperation with US fuel cell company Bloom Energy. In April, it secured a power distribution equipment supply contract worth approximately 319 billion won for a data center project in New Mexico. In August, it signed a contract to supply a power distribution system worth approximately 48.6 billion won to a large data center in Wyoming.
Contracts also extended to Pennsylvania. On October 13, the company secured an additional contract worth approximately 185.3 billion won for a local data center fuel cell generation project. The contract covers deliveries of 38-kilovolt (kV) high-voltage switchgear and distribution transformers from April through July 2027. Cumulative orders also exceeded $500 million approximately 1 year and 6 months after cooperation with Bloom Energy began.
As supply locations expand from New Mexico to Wyoming and Pennsylvania, power equipment for on-site generation is becoming a new source of orders. Securing contracts for multiple generation projects rather than a single data center is also significant. If Bloom Energy's fuel cell business expands into other regions, it could lead to additional power distribution equipment orders.
Investment in production facilities is also underway to meet growing orders. LS ELECTRIC supplies power equipment to North American customers through local production locations, including LS ELECTRIC Utah in Utah and the Bastrop campus in Texas. In South Korea, it is expanding its extra-high-voltage transformer production facilities in Busan to meet increasing demand.
Expanding production facilities is also important for converting the secured order backlog into revenue. Power equipment must be delivered in line with data center construction schedules, so production capacity and delivery management could affect future results. Additional orders related to on-site generation and the operating performance of US production locations are expected to influence future growth.
An LS ELECTRIC representative said, "These 100 consecutive quarters of operating profit are a meaningful record combining a solid business portfolio spanning low- and medium-voltage distribution to extra-high-voltage transmission, consistent investment in new businesses, and results from expansion in global markets." The representative added, "With order growth driven by the AI-related power infrastructure supercycle now gaining momentum on the basis of stable earnings, we will establish a period of sustained high growth."
Original Korean article: ngetnews.com
English brief by Korea Wind Intelligence, koreawindintel.com
