LG Chem Soars in Performance Overcoming Adversities

Top Management's Ability to Manage Accidents

Expectations for Battery Performance Improvement

Expansion of Petrochemical Plants, etc.

[Asia Economy Reporter Park Soyeon] Despite adverse factors such as the spread of the novel coronavirus (COVID-19) and domestic and international accidents, LG Chem is leading the LG Group with its performance and future value. According to related industries on the 9th, LG Chem's stock price soared 38.6% from 317,500 KRW at the end of last year to 440,000 KRW as of 9 a.m. today. This is the highest figure among LG Group affiliates. The stock price was supported by actively managing accidents that occurred at domestic and overseas business sites last month, as well as improved performance in the battery sector, which is positioned as a future business area.

◇Top management directly takes charge of accident management 'All-out effort' = The atmosphere at LG Chem was not good just last month. This was because accidents occurred consecutively at the Indian and domestic Daesan plants within two weeks. In particular, the momentum for innovation slowed down as accidents followed shortly after the declaration of a new vision for the first time in 14 years. However, Koo Kwang-mo, Chairman of LG Group, visited the fire accident site, apologized for the consecutive accidents, and emphasized the need to establish fundamental countermeasures. Meanwhile, Shin Hak-cheol, Vice Chairman and CEO of LG Chem, took the lead as the head of the emergency response committee, with top management directly involved in making every effort to manage the accidents. Recently, Chairman Koo also visited LG Science Park in Magok, Seoul, which marked its 2nd anniversary, to revitalize the stagnant atmosphere and emphasize the future vision.

◇Expectations for operating profit improvement in the battery sector= The improvement in the battery sector's performance is also a background factor that has increased LG Chem's corporate value. In particular, business-wise, expectations for performance have grown as the yield of automotive batteries improved and the effect of expanding small batteries was reflected. Additionally, there is anticipation that in the second quarter, the yield improvement of European automobile plants and the impact of facility expansion for small cylindrical batteries will be fully reflected. Furthermore, LG Chem is focusing on internalizing cathode materials, a raw material for batteries. Besides the current production lines in Ochang, Iksan, and China, the establishment of a new cathode material plant in Gumi will enable a stable raw material supply chain for the battery sector, which is expected to strengthen cost competitiveness.

◇Opening a high value-added era through petrochemical plant expansion= The petrochemical sector is also in a positive situation due to cost reductions from the recent sharp drop in international oil prices and the input of raw material naphtha, as well as the boom in ABS (plastic used for home appliances and mobile phones), a key product. There is also a forecast that demand for ABS will increase further due to China's strengthened safety policies for two-wheelers. In particular, LG Chem is investing about 2.8 trillion KRW to expand the Yeosu cracker, which is expected to be completed next year, significantly strengthening competitiveness in the petrochemical field. Next year, LG Chem's ethylene production capacity will increase to about 340,000 tons, making it the number one domestic producer. Analyst Hwang Seong-hyun of Eugene Investment & Securities said, "LG Chem's battery business division is expected to return to profitability in the second quarter."

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