LG Chem Reports Operating Profit in 2 Trillion KRW Range for 2Q... Impact of ITC Lawsuit Settlement Reflected

Strong Chemical Sector Earnings Continue with Yeosu 2nd NCC Operation in Q3
LG Energy Solution Sets New Record Despite Recall Provisions and ITC Lawsuit Settlement

[Asia Economy Reporter Hwang Yoon-joo] LG Energy Solution recorded its highest quarterly performance due to the impact of battery lawsuit settlement payments.

LG Chem announced on the 29th that its consolidated operating profit for the second quarter of this year increased by 290.2% year-on-year to 2.2308 trillion KRW. During the same period, sales rose 65.2% to 11.4561 trillion KRW, and net profit jumped 289.5% to 1.6322 trillion KRW, according to preliminary estimates.

An LG Chem official explained, "Despite reflecting a recall amount of 400 billion KRW as a provision, operating profit exceeded 2 trillion KRW due to the inclusion of settlement payments from the SK Innovation and ITC lawsuits."

By business division, the petrochemical division recorded sales of 5.2674 trillion KRW and operating profit of 1.3247 trillion KRW. A differentiated product portfolio including eco-friendly materials such as renewable energy and hygiene, combined with demand improvement due to global economic recovery, led to record-high performance. In the third quarter, sales growth and solid profitability are expected to continue with the operation of new facilities such as the Yeosu 2nd NCC.

The advanced materials division posted sales of 1.2969 trillion KRW and operating profit of 94.5 billion KRW. Sales growth and solid profitability were maintained through expanded cathode material shipments and increased prices of engineering materials. Sales growth from the expansion of the battery materials business is expected to continue in the third quarter.

The life sciences division recorded sales of 203 billion KRW and operating profit of 29.1 billion KRW. It achieved the highest quarterly sales through the launch of a new polio vaccine product and expanded sales of key products such as Gemiglo and Utrophin, with profitability also improving. In the third quarter, steady sales are expected due to the full-scale supply of the polio vaccine and maintenance of market share for key products.

Energy Solution posted sales of 5.131 trillion KRW and operating profit of 815.2 billion KRW. Although there were impacts from supply and demand disruptions in the upstream industry and customer demand, sales and profitability improved due to recognition of one-time factors. In the third quarter, sales growth of automotive batteries and IT small batteries is expected due to increased electric vehicle sales, and efforts to improve profitability through early stabilization of expansion lines and cost reduction will continue.

Farm Hannong recorded sales of 210 billion KRW and operating profit of 16.9 billion KRW. Despite rising raw material costs, sales and profitability improved year-on-year due to expanded sales of crop protection products. Although cost burdens from rising raw material prices are expected, annual performance is projected to improve through expanded sales of crop protection products and seeds.

LG Chem CFO Vice President Cha Dong-seok said regarding the second quarter results, "We achieved the best performance through balanced growth across all business divisions, including remarkable performance growth in petrochemicals, expansion of the battery materials business, and record quarterly sales in life sciences," adding, "We will execute concrete plans based on the three new growth engines grounded in ESG: eco-friendly sustainability business, e-Mobility centered on battery materials, and global innovative new drugs."