LG Chem beats expectations with Q3 profit of $640 million

LG Chem reports Q3 earnings of $640 million, beating expectations despite revenue and net profit declines. Petrochemicals and EV batteries contributed to improved sales.

LG Chem CEO Shin Hak-cheol speaks during a conference at the Grand Hyatt Seoul in central Seoul. [LG CHEM]

LG Chem beat market consensus with 860 billion won ($640 million) operating profit in the third quarter driven by improved sales of petrochemicals and EV batteries.

LG Chem reported 860.4 billion won in the July-September period, down 5.6 percent on year. It beat market expectations of 767.6 billion won compiled by market tracker FnGuide.

Revenue, however, fell 3.5 percent to 13.5 trillion won, falling short of analyst estimates of 14 trillion won.

Net profit went down 18 percent to 585 billion won, beating the estimate of 470 billion won.

The petrochemical business swung to 36.6 billion won in operating profit, with revenue standing at 4.4 trillion won.

“Increase in oil prices helped the profitability, with growing sales of high-margin polyolefin elastomer and carbon nanotube,” LG Chem's spokesperson said during a conference call Monday.

The company is currently discussing 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, logged 129.3 billion won in operating profit on sales of 1.7 trillion won.

The battery business performed well.

LG Energy Solution, an EV battery maker 81.8 percent owned by LG Chem, generated an all-time high of 731.2 billion won in operating profit in the third quarter. Quarterly revenue increased 7.5 percent to 8.22 trillion won.

“Our LFP [lithium iron phosphate] battery plant in Morocco will have a 50,000-ton annual capacity, with a goal of starting operation in 2026,” LG Chem said. “We are in talks with multiple potential clients for the LFP batteries.”

Global automakers like Tesla and Hyundai Motor are increasing the use of LFP batteries as they cost around 30 percent less than today's high-nickel batteries and have lower fire risks.

Around 90 percent of the LFP battery market is controlled by Chinese manufacturers including CATL.

When asked about its plan for downsizing investment in batteries amid the sluggish demand of EVs, LG Chem said, it “will proceed with the initial plans with no changes.”

LG Chem shares rose 1.5 percent to close at 445,000 on Monday.

BY SARAH CHEA [chea.sarah@joongang.co.kr]