Shin Hak-cheol, LG Chem Vice Chairman, "Reducing Facility Investment by Over 1 Trillion Won"

Decision to Cut Investments Due to Deteriorating Market Conditions
Discussing Measures to Enhance Competitiveness in Cooperation with the Government

Shin Hak-cheol, Vice Chairman of LG Chem, announced that the company will significantly reduce capital expenditures this year to improve profitability in the petrochemical sector. He also mentioned that discussions are underway with the government regarding tax benefits for research and development (R&D) to ensure the survival of the petrochemical industry. Vice Chairman Shin also serves as the chairman of the Korea Chemical Industry Association.

On the morning of the 24th, at the regular shareholders' meeting held at the LG Twin Towers East Building Connect Hall in Yeongdeungpo-gu, Seoul, Shin Hak-cheol told reporters, "Cash flow is very important, so this year’s CAPEX (capital expenditure) will be reduced by more than 1 trillion KRW from the originally planned scale (up to 2.7 trillion KRW) through prioritization." Last year, LG Chem executed 2.2809 trillion KRW in new and expansion investments across its petrochemical, advanced materials, and life sciences sectors.

Vice Chairman Shin Hak-cheol of LG Chem is delivering a greeting at the "24th Annual General Meeting of Shareholders" on the morning of the 24th at LG Twin Towers in Yeouido, Seoul. (Photo by LG Chem)

Vice Chairman Shin stated that he has conveyed the voices of the industry, which is struggling due to worsening market conditions, to the government through the Chemical Industry Association. He said, "I believe the government and industry must unite and make greater efforts to strengthen competitiveness," adding, "Various discussions are ongoing regarding cooperation through national projects such as R&D tax benefits and technology development."

LG Chem recorded consolidated sales of 48.9161 trillion KRW and operating profit of 916.8 billion KRW last year, representing decreases of 11.46% and 63.75%, respectively, compared to the previous year. In the fourth quarter, the petrochemical sector’s poor performance resulted in an operating loss of 253 billion KRW. This marks the first quarterly loss for LG Chem in five years since the fourth quarter of 2019.

At the shareholders' meeting, Vice Chairman Shin was reappointed as an inside director of LG Chem. He stated, "We will proactively pursue portfolio advancement and focus on strengthening execution capabilities to secure differentiated competitiveness and continue sustainable growth."

The business community is also voicing the need to establish measures to strengthen the competitiveness of the petrochemical industry. On the same day, the Korea Economic Association submitted an ‘Emergency Tasks to Overcome the Petrochemical Industry Crisis’ to the Ministry of Trade, Industry and Energy, consisting of 13 items across three areas: ▲ alleviation of cost burdens and taxation ▲ improvement of the business environment ▲ support for high value-added and low-carbon transition. In particular, they requested measures such as electricity bill reductions using government funds and deferral of capital gains taxation on asset sales until business closure.