By Heekyong Yang and Jihoon Lee

SEOUL (Reuters) -Tesla Inc supplier LG Energy Solution Ltd (LGES) upped revenue guidance by 14% on Wednesday in the year’s second such change, after quarterly profit beat forecasts on strong demand from car makers and a weak local currency.

The South Korean firm said its battery order backlog rose to 370 trillion won ($260 billion) by the end of September, or nearly 15 times its projected 2022 revenue.

That indicated tight battery supplies for the foreseeable future, as the auto industry races to turn out more environmentally-friendly electric vehicles (EVs).

LGES shares jumped 3.3% after the results, beating a rise of 1% rise in the benchmark index.

While soaring inflation, rising interest rates and a gloomy economic outlook have darkened business prospects for many industries, car makers and their battery suppliers have been less affected, as this year’s severe chip shortage hit output.

General Motors reported solid quarterly results on Wednesday, and Hyundai Motor raised its full-year revenue and profit guidance this week.

LGES, which also supplies automakers such as GM, Ford Motor Co and Volkswagen AG, raised its 2022 revenue outlook to 25 trillion won from 22 trillion, citing new projects from automakers.

It said 70% of its order backlog was from North America, with demand from major client Tesla expected to stay solid in the current quarter.

The new revenue forecast exceeds an average of 23.5 trillion won from analysts and is a second revision from an original target of 19.2 trillion in February.

“We have increased the shipment of EV batteries thanks to improved demand in Europe and North America,” Chief Financial Officer Lee Chang-sil told analysts.

Lee said profitability also improved because of product price increases to reflect higher raw material costs, and favourable exchange rates.

The company swung to an operating profit of 522 billion won in the period from July to September, a record since going public in January.

The result beat a Refinitiv SmartEstimate of 488 billion won profit from 17 analysts and compares with a loss of 373 billion a year earlier. Revenue jumped 90% to 7.6 trillion won.

“VERY GOOD” INFLATION REDUCTION ACT

LGES shrugged off investor concerns about the U.S. Inflation Reduction Act that requires automakers to source a portion of critical minerals for EV batteries from the United States or an American free-trade partner to qualify for EV tax credits, betting on its joint ventures and U.S. factories.

“We have been putting effort to achieve localisation of supply chain with our strategic partners and reduce our China exposure,” said Lee, calling the new law a “very good” business opportunity.

The company has sought to improve sourcing of critical minerals through long-term supply deals with mines in countries such as Australia and Canada, as well as boosting stakes in metal producers, he added.

From next year, the new rules will require that at least 40% of the monetary value of critical minerals for batteries be from the United States or an American free-trade partner in order to qualify for U.S. tax credit.

That share will rise gradually to 80% in 2027.

($1=1,429.6500 won)

(Reporting by Heekyong Yang and Jihoon Lee; Editing by Miyoung Kim and Clarence Fernandez)

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