[Courtesy of LG Chem]
Net income stood at 83.8 billion won ($71 million) in the April-June period, a sharp decline from a profit of 493 billion won a year earlier, the company said in a regulatory filing. Sales inched up 1.8 percent on-year to 7.1 trillion won, but operating profit dropped 62 percent on-year to 267 billion won over the cited period.
LG Chem said one-off costs related to ESS-related fires and increased fixed costs related to its massive facility investments dragged down its profit. Domestic sales and production of its ESS products have been temporarily halted out of concerns over additional fires.
"In the third quarter, the company expects to see improved earnings since one-off costs will be cleared, while sales of high-value products from the petrochemical sector and batteries are expected to increase," Jeong Ho-young, chief financial officer at LG Chem, said.
LG Chem said its petrochemical business unit logged an operating income of 382 billion won in the second quarter, down 42 percent from a year ago, on sales of 3.9 trillion won. The company said rising material costs and facility maintenance costs for its factory in Daesan, 100 kilometers southwest of Seoul, led to the drop.
LG Chem's battery unit suffered an operating loss of 128 billion won on sales of 2 trillion won. The company made 27 billion won in operating profit on sales of 1.49 trillion won in the second quarter last year.
Meanwhile, LG Chem said in a conference call that it plans to invest 13 trillion won in its battery unit over the next four years, with 10 trillion won going to its electric vehicle battery business. The company announced earlier that it aims to collect more than 31 trillion won in sales from its battery unit by 2024.
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