LG Chem profits dragged down by struggling petrochemicals unit

LG Chem logged a 29.9 percent drop in operating profit to 615.6 billion won in the second quarter, weighed down heavily by sluggish demand for petrochemicals.

LG Chem's three CNT plants in Yeosu, South Jeolla [LG CHEM]

LG Chem posted a 29.9 percent drop in operating profit to 615.6 billion won ($481 million) in the second quarter, weighed down heavily by sluggish demand for petrochemicals.

The figure fell well short of the analyst consensus of 814.9 billion won compiled by FnGuide.

Revenue rose 18.8 percent to 14.54 trillion won, also below the market forecast of 15.6 trillion won.

Net profit fell 6.6 percent to 670.8 billion won, beating the consensus of 527.5 billion won.

The petrochemical division logged an operating loss of 12.7 billion won, with sales of 4.6 trillion won, amid the slowdown in demand and partly due to the maintenance and repair work for production facilities, LG Chem said.

The company is reportedly considering selling off its naphtha cracking facility in Yeosu, which has halted operations after a maintenance break in April.

The advanced materials sector, which includes battery components, booked 184.6 billion won in operating income on sales of 2.2 trillion won.

The profitability in the electric vehicle battery sector waned in the second quarter due to the slowdown in EV sales in Europe and a sharp decline in metal prices, but the IT and semiconductor components business fared better compared with the previous quarter as the market regained momentum.

The company expects a decline in sales and profit in the battery segment in the third quarter as the fall in metal prices will be reflected in selling prices.

The battery-making subsidiary, LG Energy Solution, booked 460.6 billion won in operating profit on sales of 8.77 trillion won.

BY SHIN HA-NEE, YONHAP [shin.hanee@joongang.co.kr]