Three major LS Cable & System subsidiaries, Gaon Cable, LS Eco Energy and LS Marine Solution, substantially increased their operating profits in the third quarter of this year, supported by expanding global power infrastructure investment. Rising investment in artificial intelligence data centers, together with the expansion of aging grid replacement, offshore wind and cross-border grid interconnection projects, increased demand for both power cables and subsea cables. LS Cable & System is strengthening its subsidiaries' production and installation capabilities while expanding into new businesses, including rare earths and permanent magnets, to broaden its medium- to long-term growth base.
According to industry sources on October 28, third-quarter operating profits at Gaon Cable, LS Eco Energy and LS Marine Solution increased by 99.1%, 50.2% and 229%, respectively, from a year earlier.
In the nine months through the third quarter, Gaon Cable and LS Eco Energy both exceeded their full-year revenue and operating profit for the previous year. LS Marine Solution also achieved its highest-ever operating profit for the first three quarters.
Gaon Cable recorded third-quarter revenue of 986.5 billion won and operating profit of 52 billion won, increases of 51.9% and 99.1%, respectively, from a year earlier.
Performance improved as the company expanded supplies of power cables to North America and bus ducts for AI data centers, led by its US subsidiary LSCUS. Increased sales of high-value-added products, supported by growing data center investment and grid expansion projects by global Big Tech companies, also contributed to improved profitability.
LS Eco Energy recorded revenue of 351.5 billion won and operating profit of 22.2 billion won over the same period. Revenue rose 51% and operating profit increased 50.2% from a year earlier.
The gains reflected increased power cable exports to Europe and North America and expanded bus duct supplies in Asian markets. In particular, bus duct revenue increased to two to three times its year-earlier level as construction of hyperscale data centers and high-rise buildings expanded in Malaysia and Indonesia.
Subsea cable installation specialist LS Marine Solution also significantly improved profitability. Third-quarter revenue declined 4.4% year on year to 73.6 billion won, but operating profit rose approximately 229% to 6.9 billion won.
The increase in operating profit reflected the expansion of overseas business, including subsea cable burial for offshore wind projects in Taiwan and subsea telecommunications cable installation projects in the Asia-Pacific region, as well as improved installation efficiency.
Long-term investment demand extends beyond AI data centers to grid replacement and offshore wind
The subsidiaries' improved performance coincides with a structural expansion of investment in the global power infrastructure market.
Although rising electricity demand from the expansion of AI data centers has recently attracted attention, growth drivers in the power infrastructure market are not limited to data centers. Demand for investment is emerging simultaneously in multiple areas, including renewable energy expansion, replacement of aging transmission and distribution networks, and cross-border grid interconnections.
In particular, the growth of offshore wind farms, especially in Europe, is increasing demand not only for subsea cables that carry generated electricity to shore but also for extra-high-voltage direct current (HVDC) subsea cables that connect national power systems.
Because grid expansion and modernization projects are linked to national energy policies and industrial infrastructure investment, expectations are also growing for a long-term growth cycle lasting 15 to 20 years. The analysis is that investment in expanding and replacing grids themselves could continue even if the pace of AI investment changes.
According to the International Energy Agency (IEA), approximately 80 million km of grids must be built or replaced worldwide by 2040 for countries to meet their energy and climate goals.
That is equivalent to the entire length of the world's existing grids. The agency also assesses that annual grid investment needs to increase to more than $600 billion by 2030.
The European Union (EU) also estimates that approximately €584 billion in investment will be needed for grid expansion and modernization by 2030.
This is because about 40% of Europe's distribution networks are more than 40 years old, while offshore wind expansion and increasing cross-border electricity trading are creating a greater need to expand transmission networks.
In particular, continued offshore wind farm development centered on the North Sea is expanding the market for subsea power networks. While projects previously focused on connecting wind farms to onshore grids, they have recently expanded to include transmission interconnections that allow countries to exchange electricity.
In this process, HVDC technology for transmitting large volumes of electricity over long distances, the subsea cables needed to implement it, and related installation capabilities are becoming increasingly important.
Subsea cable order backlog reaches 820 billion won as production bases expand in Vietnam and North America
LS Cable & System subsidiaries are strengthening production capacity and installation capabilities in response to growth in the global power infrastructure market.
LS Marine Solution currently has an order backlog of approximately 820 billion won. This is about 3.4 times its annual revenue for the previous year.
With a stable business base secured through existing orders, the company also expects additional orders from domestic offshore wind and HVDC grid development projects.
In particular, domestic offshore wind projects, including the Shinan Ui offshore wind project, and the government's west coast HVDC energy highway project are seen as opportunities for future business expansion.
The company is also strengthening its installation capabilities. LS Marine Solution is fully deploying the subsea cable-laying vessel GL2030 from October, following completion of work to increase its capacity, to serve subsea cable installation and burial projects.
LS Eco Energy is expanding production capacity for bus ducts used in AI data centers.
It plans to establish new high-capacity bus duct production facilities in Vietnam and begin mass production in the second half of 2027. The investment is intended to meet growing demand for data centers and large buildings, particularly in Southeast Asian countries such as Malaysia and Indonesia.
Gaon Cable is also strengthening its business base in North America's AI data center and grid markets, led by its US subsidiary LSCUS. It plans to respond to increased local infrastructure investment by expanding supplies of high-value-added products, including power cables and bus ducts.
LS Cable & System plans to expand opportunities in the global power infrastructure market by using each subsidiary's established business base and local production and installation capabilities.
Pursuing new growth businesses from rare earth metals to permanent magnets
LS Cable & System is developing rare earths and permanent magnets as next-generation growth businesses while maintaining growth in its power infrastructure business.
Its strategy is to diversify its business portfolio and build a supply chain linking rare earth metal production to permanent magnet manufacturing in cooperation with subsidiaries, including LS Eco Energy.
In particular, LS Eco Energy has begun establishing a facility in Vietnam to produce samarium metal for defense applications. It plans to gradually expand the range of rare earth metals it produces.
Samarium is a rare earth element used to manufacture high-performance permanent magnets, which are used in defense and advanced industries.
LS Cable & System is pursuing the development of a permanent magnet supply chain for advanced industries, including defense and robotics, using its rare earth metal production base.
Through this effort, it intends to expand from a business structure centered on power cables and subsea cables into high-value-added materials and components.
Medium- to long-term investment in the global power infrastructure market is expected to expand as growing AI data center demand coincides with the energy transition and modernization of aging grids.
In response to these market conditions, LS Cable & System plans to secure new revenue sources by expanding its subsidiaries' orders and strengthening production and installation capabilities while developing new rare earth and permanent magnet businesses.
Original Korean article: Pinpoint News
English brief by Korea Wind Intelligence, koreawindintel.com
