LG Chem, Hanwha Solutions outdo peers with renewable energy biz

LG Chem and Hanwha Solutions have successfully fended off challenges in the overall chemical industry, outperforming peers thanks to their aggressive investments in grooming new renewable energy business as the next growth engine.

LG Chem announced in a regulatory filing on Tuesday that it recorded 45 billion won ($31.57 million) in operating profit on a consolidated basis in the third quarter ended September. Of the total, 41.6 billion won came from its advanced materials division, producing cathode materials and separators for lithium battery production. The division’s sales rose 30 percent from 198.5 billion won in the previous quarter.

On the other hand, its traditional petrochemical business generated 598.9 billion in sales, down 8 percent during the same period.

Thanks to the robust business performance of the new advanced materials business, LG Chem stock closed Tuesday at 633,000 won, adding 22 percent since the beginning of the second half. LG Chem shares were down 0.45 percent to 669,000 won in the early trading of Thursday.

Hanwha Solutions also saw its stock price rise by 27 percent over the same period, driven by the solid growth in its renewable energy unit, which has stayed in the black since the second quarter when it successfully turned around from a years-long loss. The new renewable energy unit’s sales in the third quarter grew to 4.52 trillion won from 3.34 trillion won a quarter earlier.

The firm’s shares fell 1.63 percent to 48,350 won on Thursday.

On the contrary, those chemical firms complacent in their traditional chemical business reported disappointing outcomes in the same quarter.

According to the Seoul-based market tracker FnGuide, the chemical sector on the Kospi is estimated to register a 16.7-percent fall in operating profit on average in the third quarter from a quarter ago. The chemical market currently faces with multiple challenges ranging from waning demand from the soaring energy prices and interest rates to oversupply.

Lotte Fine Chemical, a subsidiary of Lotte Chemical, is estimated to have reaped 120.4 billion won in operating profit in the third quarter, which is considered better than expected. But its sales mostly came from traditional petrochemicals business as it has been slow in nurturing its new growth engines in biotechnology and copper foil production. Reflecting the market’s concern that it would take time for the firm to produce intangible results from its new businesses, its shares lost 15 percent since the beginning of the second half this year.

Hyosung Chemical also saw its stock price down 46 percent in the second half, as investors have turned their back on its business results mainly from traditional chemical materials.

Lotte Chemical shares were down 0.63 percent to 159,000 won in the morning session on Thursday, while Hyosung Chemical was down 1.38 percent to 107,000 won.

By Kang In-seon and Jenny Lee