LG Chem Q3 OP up 24% thanks to brisk battery, materials biz

LG Chem

South Korea’s LG Chem Ltd. and its standalone battery maker LG Energy Solution Ltd. closed the third quarter with record quarterly revenue after the stellar performance by its battery and advanced materials businesses more than offset loss from its mainstay petrochemical business.

LG Chem in its regulatory filing on Monday said its consolidated operating profit for the quarter ended September reached 901.2 billion won ($631.4 million) after gaining 2.6 percent from a quarter ago and 23.9 percent from a year earlier.

Its net profit fell 0.6 percent on quarter but rose 5 percent on year to 713.9 billion won, while sales added 15.8 percent from three months ago and 33.8 percent against the previous year to total 14.18 trillion won. It marked the biggest quarterly revenue thanks to brisk sales from the advanced materials and battery businesses despite a fall in profitability from the petrochemical business.

LG Chem shares closed 11.02 percent higher at 695,000 won in Seoul on Tuesday.

Its petrochemical division reported an operating profit of 92.6 billion won on sales of 5.49 trillion won. Profitability deteriorated due to a decrease in demand amid rising oil prices and higher inflation.

But its advanced materials division delivered an operating profit of 415.8 billion won with sales of 2.58 trillion won. Supplies of cathode materials expanded, and the selling price also increased in sync with a rise in raw materials prices.

Cathode materials sales are expected to fall with price stabilization in the fourth quarter, but second battery demand is forecast to remain strong, leading an overall growth of supplies and earnings.

“Global economic recession and worsening petrochemical business conditions hurt profitability of the petrochemical business, but the company’s new growth engines like advanced materials and energy solution businesses achieved revenue growth and improved profitability,” said Cha Dong-seok, chief financial officer of LG Chem. “Starting from the fourth quarter, the petrochemical business conditions is expected to recover, and the new businesses will likely see greater growth.”