LG Chem earns 44% of Q1 revenue from battery unit LG Energy Solution

[Photo by LG Energy Solution Co.]

The battery business has ascended to one of top two revenue-generating units in South Korea’s leading petrochemical company LG Chem Ltd. with the share of battery sales taking up its best-ever 44 percent in the company’s total revenue.

According to its disclosure on Monday, LG Chem’s first-quarter revenue reached 9.65 trillion won ($8.52 billion), of which 43.7 percent or 4.21 trillion won came from the battery business, now demerged as LG Energy Solution Co., and 44.6 percent or 4.3 trillion won from the petrochemical business.

The ratio of the battery unit’s sales in the company’s total revenue kept up growth in recent years, topping 30 percent for the first time in 2019 and then 41.1 percent in 2020.

Operating profit from LG Energy Solution surged as well to 340.5 billion won in the first quarter, reversing from a loss a year earlier and contributing 24.2 percent of the company’s total profit.

The utilization rate of its battery plants at home and abroad also jumped to 67.8 percent in the first quarter from 59.7 percent in 2019 and 58.9 percent in 2020.

LG Energy Solution’s global share, however, fell 3 percentage points on year to 20.5 percent amid intensifying competition with industry peers like China’s CATL.

[Photo by LG Energy Solution Co.]

LG Chem’s battery division was spun off to the country’s first pure-play battery maker LG Energy Solution, which officially set sail on Dec. 1, 2020. It now is readying an initial public offering this year, reportedly between August and October.

The enterprise valuation of LG Energy Solution after market debut is estimated at 50-100 trillion won, according to market experts. It is expected to offer about 10 trillion won worth new shares or more.

“LG Chem is projected to seek for new growth opportunities through joint ventures and M&As in its secondary battery value chains and petrochemical business. LG Energy Solution after its initial offering will lead the growth of LG Chem,” said Lee Ji-yeon, an analyst at Shinyoung Securities.

LG Chem shares finished 2.44 percent higher at 881,000 won in Seoul trading on Tuesday.

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