LG Chem Q2 Sales 12.2 Trillion Won, Operating Profit 878.5 Billion Won... "No Sale of Ensol Stake" (Comprehensive Report 2)

LG Chem Iksan Plant image. Photo by LG Chem

[Asia Economy Reporter Donghoon Jung] LG Chem announced on the 27th that it achieved Q2 sales of KRW 12.2399 trillion and operating profit of KRW 878.5 billion this year.

Compared to the same period last year, sales increased by 7.0%, but operating profit decreased by 59.0%.

LG Chem CFO (Chief Financial Officer) Vice President Dongseok Cha said regarding the Q2 results, "Despite the continued challenging business environment due to high oil prices, global inflation, and China's COVID lockdown situation, we secured the highest quarterly sales and resilient profitability compared to market conditions through our differentiated product portfolio-based petrochemical business and the advanced materials business, which showed significant sales growth and improved profitability."

He added, "In a situation of great external uncertainty, we will strengthen customer-centric activities and internal efforts to improve profitability, and continue preparing for future growth through investments focused on the three new growth engines, including the rapidly growing battery materials business."

◆LG Chem "No plan to sell stake in subsidiary LG Energy Solution" = At the Q2 earnings conference call held that day, LG Chem, which has LG Energy Solution, a finished battery cell manufacturer, as its subsidiary, stated that there are no plans to sell its stake for the time being.

LG Chem IR Manager Hyunseok Yoon said, "LG Chem has no plans to sell its stake in LG Energy Solution for the time being," adding, "We will solidify strategic cooperation between the two companies and maintain the stake to exercise control as the major shareholder." He further said, "LG Energy Solution has very high growth potential, and its corporate value is expected to continue increasing, so there are no plans to sell for the time being."

LG Energy Solution, which was listed on January 27 this year, had its lock-up period lifted on this day, six months after listing. Accordingly, shares allocated to institutional investors at the time of listing and 201,463,65 shares (86.09%) held by LG Chem, the largest shareholder, can be traded in the market. LG Chem holds 191.5 million shares of LG Energy Solution, representing a stake of about 81.84%.

Looking at the detailed Q2 performance and Q3 outlook by business division, the petrochemical division recorded sales of KRW 5.9876 trillion and operating profit of KRW 513.2 billion. Although product spreads deteriorated due to rising raw material prices and global economic slowdown, it recorded resilient profitability (8.6%) compared to market conditions based on a differentiated product portfolio such as POE (polyolefin elastomer) for solar films and SAP (superabsorbent polymer) for diapers.

For Q3, despite the difficult market conditions expected due to continued global demand sluggishness caused by high oil prices and inflation, increased regional supply, and seasonal off-season entry, the company plans to continue efforts to defend profitability centered on high value-added products.

The advanced materials division recorded sales of KRW 2.0184 trillion and operating profit of KRW 335.4 billion. Quarterly highest sales were achieved due to expanded shipments of battery materials and continued price increases due to rising raw material costs, and profitability improved thanks to increased shipments of high-profit products such as high-nickel cathode materials and semiconductor materials, as well as a favorable exchange rate environment.

◆Continued growth in cathode materials and battery materials business= Although the impact on profitability due to the shift to lower metal prices is inevitable in Q3, growth is expected to continue mainly in the battery materials business, including expanded cathode material shipments.

The life sciences division recorded sales of KRW 221.7 billion and operating profit of KRW 24.2 billion. Steady sales and profitability were generated as sales of major products such as diabetes treatments and growth hormones continued to expand.

In Q3, steady sales growth is expected with continued market share strengthening of major products such as diabetes treatments and vaccines, and recovery of the aesthetics business, while R&D costs are expected to increase due to global clinical trials of new drug projects.

LG Energy Solution recorded sales of KRW 5.0706 trillion and operating profit of KRW 195.6 billion. Sales increased compared to the previous quarter due to increased sales of cylindrical batteries for electric vehicles and expanded metal price-linked contracts responding to rising raw material prices, but profitability decreased due to the impact of China's lockdowns caused by COVID spread and global logistics disruptions.

In Q3, significant sales growth is expected centered on strategic customers due to new car launches by major clients and the full-scale operation of the first phase volume of the joint venture with GM. Farm Hannong recorded sales of KRW 240.5 billion and operating profit of KRW 17.1 billion. Sales grew year-on-year due to expanded domestic and overseas sales of crop protection products, including increased exports of Terado.

In Q3, annual sales and profitability improvements are expected due to expanded overseas sales of crop protection products and increased sales of specialty fertilizers.

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