recently, lg energy solution released its first-quarter financial results, showing sales of krw 6.555 trillion and an operating loss of krw 207.8 billion. sales declined by 2.5% year on year, and operating profit turned into a loss. the north american production subsidy recognized in the first quarter amounted to krw 189.8 billion.
in the earnings briefing, chief financial officer lee chang-sil stated that despite weak ev demand centered on north america, sales increased by 1.2% quarter over quarter thanks to proactive responses to ess and cylindrical battery demand. he specifically noted that the ess business now accounts for the mid-20% range of total company sales, delivering meaningful sales growth.
on the profitability front, although major cost-cutting initiatives were implemented, profits declined quarter over quarter due to initial stabilization costs associated with the expansion of the north american ess production base, as well as reduced demand for soft-pack ev products from strategic customers.
the company emphasized that, despite uncertainties in the external environment during the first quarter, it secured new orders in both the ev and ess segments, thereby strengthening its medium- to long-term growth foundation. in the ev business, the company has secured more than 100 gwh of new orders for its 46-series batteries. according to company officials, leveraging its diversified product portfolio and mass-production capabilities, the company is continuously in discussions with multiple customers on next-generation ev projects and has already obtained over 100 gwh of new orders, bringing the order backlog for 46-series batteries to more than 440 gwh.
in the ess business, the company signed an additional supply contract for a north american grid project with an existing strategic customer in february this year, continuing the momentum of new order growth. this project is scheduled to begin deliveries in 2028 and will utilize next-generation products that offer a 15% reduction in total cost compared with the lfp-based ess products currently in production.
on the operational front, in march this year the company decided to convert part of the original ev production lines at the ultium cells tennessee plant into ess lines, thereby securing a total of five production bases in north america. plants in holland and lansing, michigan, as well as windsor, ontario, canada, are already in operation. the plants in jeffersonville, ohio, and spring hill, tennessee, are expected to commence operations within the year. through these measures, the company plans to establish an ess production capacity of over 50 gwh in north america by the end of this year.
the company believes that, influenced by geopolitical conflicts, supply-chain uncertainty and persistently high oil prices are likely to increase, leading to a significant rise in demand across regions for energy independence and stable power grids. ess systems integrated with renewable energy sources are poised to serve as an alternative that addresses the limitations of traditional energy sources.
in the ev sector, the company anticipates that unstable energy supply and demand, coupled with high oil prices, will once again underscore the necessity of transitioning to electric vehicles, thereby boosting consumer demand. with the rapid advancement and commercialization of autonomous-driving technologies, medium- to long-term ev demand is expected to trend upward.
ceo kim dong-ming stated that, as the battery industry undergoes a period of redefinition, the most important thing is to accurately identify the right direction and opportunities. the company will accelerate growth through meticulous strategy and strong execution to capture future market share.
