LG Chem's First Quarter Performance Holds Up Amid COVID-19

Cost Reduction and Battery Deficit Shrinkage Prove Effective... Recorded Sales of 7.1157 Trillion KRW and Operating Profit of 236.5 Billion KRW

[Asia Economy Reporter Park So-yeon] LG Chem managed to perform well in the first quarter of this year by exceeding market expectations despite the global demand decline caused by the COVID-19 pandemic. This success is attributed to securing cost competitiveness due to low oil prices and a reduction in the battery division's deficit.

LG Chem announced on the 28th that its preliminary first-quarter results showed sales of 7.1157 trillion KRW and an operating profit of 236.5 billion KRW. Sales decreased by 4.5% compared to the previous quarter (7.4612 trillion KRW) but increased by 7.5% compared to the same period last year. Operating profit fell by 15.9% from 281 billion KRW in the first quarter of last year but was more than 68% higher than the securities market forecast of 140.5 billion KRW. Compared to the previous quarter, the company turned a profit.

By business division, the petrochemical division recorded sales of 3.6959 trillion KRW and an operating profit of 242.6 billion KRW. Compared to the same period last year, sales and operating profit decreased by 1.4% and 39.1%, respectively. The decline in sales and operating profit compared to the previous quarter was due to the drop in oil prices and the impact of COVID-19. However, this is a solid performance exceeding market expectations due to improved spreads (price differences between products and raw materials) of key products such as ABS and PVC.

The battery division posted sales of 2.2609 trillion KRW and an operating loss of 51.8 billion KRW. Sales increased by 37% compared to the same period last year, and the operating loss was reduced by more than half compared to the operating loss of 147.9 billion KRW in the same period last year. Although there were impacts such as new investments in automotive batteries, the off-season entry of IT small batteries, and shutdowns due to the spread of COVID-19, cost reduction and yield improvement are believed to have reduced the deficit.

The advanced materials division recorded first-quarter sales of 1.1074 trillion KRW and an operating profit of 62.1 billion KRW, showing improved profitability despite a decrease in sales compared to the previous quarter. The life sciences division recorded sales of 159.3 billion KRW and an operating profit of 23.5 billion KRW.

Cha Dong-seok, Chief Financial Officer (Vice President) of LG Chem, said, "Although uncertainties such as COVID-19 and the plunge in oil prices are expected in the second quarter, we will expand the foundation for growth while managing crises through stable cash flow management and continuous core investments for the future."

This content was produced with the assistance of AI translation services.