LG Chem Reports 2Q Operating Profit of 571.6 Billion KRW, Up 131.5% YoY (Update)

[Asia Economy Reporter Park So-yeon] LG Chem announced on the 31st that it achieved consolidated sales of KRW 6.9352 trillion and operating profit of KRW 571.6 billion for the second quarter of this year.

Compared to the previous quarter, sales increased by 3.1% and operating profit by 177.7%, while compared to the same period last year, sales rose by 2.3% and operating profit by 131.5%.

The operating profit margin reached 8.2%, marking the highest level since the third quarter of 2018.

LG Chem explained that the petrochemical division achieved a double-digit operating profit margin (13.1%, KRW 434.7 billion) through differentiated operational efficiency improvements and spread improvements of key products.

The battery division exceeded market expectations by achieving the highest quarterly performance ever, including a surplus in automotive batteries.

LG Chem CFO Vice President Cha Dong-seok said, "Despite the impact of COVID-19 in the second quarter, we enhanced internal efficiency and differentiated capabilities to achieve results exceeding market expectations. In particular, normalizing yield and reducing fixed costs in the automotive battery division laid a structural profit generation foundation, which is very meaningful."

Vice President Cha added, "Although uncertainties due to the continued COVID-19 pandemic are expected in the third quarter, we will maintain stable profitability in the petrochemical division and achieve significant growth in the battery division to continue strong performance. We will also continue business efficiency improvements from a mid- to long-term perspective to build a business structure that achieves stable results even amid crises."

The petrochemical division recorded sales of KRW 3.3128 trillion and operating profit of KRW 434.7 billion.

Although sales declined due to falling product prices caused by low oil prices, the division recorded a double-digit operating profit margin (13.1%) for the first time in five quarters since the first quarter of last year, thanks to strengthened differentiated operational capabilities and spread expansion of key products such as ABS due to recovering demand in China.

In the third quarter, steady performance is expected to continue due to recovery expectations in front industries such as home appliances following the resumption of global economic activities.

The battery division posted sales of KRW 2.823 trillion and operating profit of KRW 155.5 billion, achieving the highest quarterly sales and operating profit ever.

Sales increased by 25% compared to the previous quarter due to the expansion of eco-friendly policies worldwide including Europe and China, increased electric vehicle sales, and large-scale ESS project supplies in the North American region.

In terms of profitability, the automotive battery business achieved a surplus and recorded the highest performance ever through productivity improvements such as yield at the Poland plant and cost reductions.

In the third quarter, sales growth and steady profitability are expected to continue due to expanded shipments of automotive batteries to Europe and increased sales of cylindrical batteries for automotive use.

The advanced materials division recorded sales of KRW 789.2 billion and operating profit of KRW 35 billion.

Although sales declined due to reduced demand in front markets such as IT and displays caused by the spread of COVID-19, profitability improved through raw material price declines and cost efficiency.

The life sciences division recorded sales of KRW 160.3 billion and operating profit of KRW 14.1 billion, while its subsidiary, Pharmhanong, recorded sales of KRW 177.8 billion and operating profit of KRW 11.6 billion.

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