LG Chem Opens Era of 1 Trillion KRW Operating Profit... Achieves Record High Performance

Operating Profit 1.4081 Trillion KRW... Up 584% YoY
Strong Performance Across All Businesses Including Petrochemicals, Advanced Materials, Life Sciences, and Ensol

[Asia Economy Reporter Hwang Yoon-joo] LG Chem has entered the era of quarterly operating profits exceeding 1 trillion KRW. It broke its record just two quarters after posting its highest-ever operating profit in Q3 last year (902.1 billion KRW). In particular, the battery division recorded an operating profit of 341.2 billion KRW, marking its best performance ever.

LG Chem announced on the 28th that its consolidated operating profit for Q1 this year increased by 584% year-on-year to 1.4081 trillion KRW. Sales during the same period rose 43.4% to 9.65 trillion KRW.

Chadong-seok, LG Chem CFO and Vice President, commented on the earnings surprise, saying, "Despite uncertain external conditions, we have restructured our business portfolio and laid the foundation to generate stable profits through continuous investment in new growth engines." He added, "We will nurture battery materials such as cathode materials and CNT as solid growth drivers, and actively invest in and collaborate externally in promising future ESG (Environmental, Social, and Governance) sectors such as recycling and bio-materials to accelerate growth."

Looking at the Q1 performance and Q2 outlook by business division, the petrochemical division recorded sales of 4.4352 trillion KRW and operating profit of 983.8 billion KRW. Strong demand for key products driven by robust end industries such as home appliances, medical supplies, and building materials, along with spread expansion, led to solid results. In Q2, with the operation of the Yeosu No. 2 NCC and new capacity (Capa) startups for high value-added products such as NBL and CNT, sales growth and stable profitability are expected to continue.

The advanced materials division posted sales of 1.1719 trillion KRW and operating profit of 88.3 billion KRW. Sales and profitability improved significantly compared to the previous quarter due to expanded cathode material production and recovery in demand for engineering plastics (EP) materials. In Q2, sales growth is expected to continue with the addition of new lines at the cathode material plant and expanded shipments of OLED materials.

The life sciences division recorded sales of 161.9 billion KRW and operating profit of 22.5 billion KRW. Profitability improved compared to the previous quarter due to increased sales of key products such as Gemiglo and Utrophin and strengthened market position. In Q2, sales expansion is expected as UNICEF begins supplying the new polio vaccine product, Upolio.

The energy solutions division achieved record quarterly sales and operating profit with 4.2541 trillion KRW and 341.2 billion KRW, respectively. Profitability improved due to expanded shipments of electric vehicle batteries, continuous yield improvements, and cost reductions. In Q2, sales growth of automotive batteries and cylindrical batteries is expected due to increased electric vehicle sales, and efforts to improve profitability through early stabilization of expansion lines and cost reductions will continue.

Farm Hannong posted sales of 210.9 billion KRW and operating profit of 29.7 billion KRW. Sales and profitability slightly declined year-on-year due to delayed sales of key products such as crop protection agents caused by the COVID-19 impact.

Although cost burdens from recent raw material price increases are expected, sales and profitability are projected to improve year-on-year due to expanded sales of crop protection agents and high value-added specialty fertilizers.