Petrochemical Operating Profit Alone Declines
Advanced Materials Up 291% Year-on-Year
[Asia Economy Reporter Choi Seoyoon] LG Chem surpassed 50 trillion KRW in sales for the first time since its founding, but its operating profit nearly halved.
LG Chem announced on the 31st that its consolidated sales last year reached 51.8649 trillion KRW, with an operating profit of 2.9957 trillion KRW. Sales increased by 21.8% compared to the previous year, while operating profit decreased by 40.4%. Sales excluding LG Energy Solution amounted to 30.9 trillion KRW.
Operating profit in the fourth quarter of last year was 191.3 billion KRW, down 74.5% from a year earlier. Sales grew by 26.7% during the same period to 13.8523 trillion KRW, and net loss for the period turned to a deficit of 5.9 billion KRW.
The poor performance is attributed to the petrochemical sector, where operating profit dropped to about one-quarter in one year. Among LG Chem’s five business divisions, the petrochemical business recorded an operating profit of 1.075 trillion KRW last year, down 73.7% from 4.082 trillion KRW the previous year. In the fourth quarter of last year, it posted an operating loss of 166 billion KRW. LG Chem explained, "We recorded a loss due to non-recurring factors such as scheduled maintenance and the Cargo Solidarity strike, as well as demand decline caused by the spread of COVID-19 in China."
Operating profits increased in all other business sectors except petrochemicals. Looking at last year’s operating profit by business division, Advanced Materials posted 923 billion KRW, up 291% year-on-year, and Life Sciences recorded 74 billion KRW, up 10.4%. LG Energy Solution’s operating profit was 1.214 trillion KRW, an increase of 58.1% over the same period.
LG Chem stated, "Despite difficult domestic and international conditions, the expansion of the battery materials business helped establish a stable business portfolio," adding, "Along with increased overall sales, we achieved meaningful results such as generating a solid EBITDA of 6.4 trillion KRW on a consolidated basis."
LG Chem set its sales target for this year at 32.2 trillion KRW, a 4% increase from the previous year.
Regarding this year’s business outlook, LG Chem expects the challenging management environment to continue due to economic slowdown caused by inflation and high interest rates.
However, it plans to continuously strengthen company-wide growth momentum and lay the groundwork for future preparation through ▲decarbonization of existing products in the petrochemical sector, strengthening high value-added businesses, and fostering sustainable new businesses ▲sales growth driven by more than 50% increase in cathode material shipments in the advanced materials sector ▲maximizing global business synergy through the acquisition of AVEO in the life sciences sector (projected sales of 1.2 trillion KRW in 2023).
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