LG Chem said Thursday it posted first-quarter consolidated revenue of 12.2468 trillion won and an operating loss of 49.7 billion won. Revenue fell 6.2% from a year earlier, while the operating loss narrowed.
By business, the petrochemicals division posted revenue of 4.4723 trillion won and operating profit of 164.8 billion won, which the company linked to the impact of the Middle East war. LG Chem said profitability improved from the previous quarter on a positive inventory lagging effect from higher naphtha prices and one-time income from refunds of European anti-dumping duties.
The company said it returned to profit in February, before the outbreak of the war, citing aggressive cost cuts and portfolio improvements pursued since last year.
For the second quarter, LG Chem expects lower sales volume and revenue due to a temporary shutdown of its Yeosu naphtha cracker center, or NCC, No. 2 plant. Still, it forecast profitability similar to the first quarter, citing continued naphtha lagging effects and ongoing cost reductions.
On a government-led restructuring of commodity petrochemicals, LG Chem said on its first-quarter earnings call that its goal of securing final approval for business reorganization within the year remains unchanged. It said it is continuing detailed talks with partners GS Caltex and Hanwha TotalEnergies on integrating NCC operations at the Yeosu and Daesan industrial complexes.
LG Chem said domestic NCC restructuring alone would be unlikely to resolve global oversupply in the short term, but said its partnership model would strengthen its refinery-based feedstock competitiveness while allowing partners to internalize LG Chem's petrochemical capabilities in a short period.
To respond to ethylene shortages at home and abroad tied to the Middle East war, LG Chem said it kept average NCC utilization around 60% in March. It said it aims to lift the rate to at least 75% in the second quarter by securing additional feedstocks such as naphtha, though the Yeosu NCC No. 2 shutdown is expected to continue into the quarter.
The advanced materials division posted revenue of 843.1 billion won and an operating loss of 43.3 billion won. LG Chem said revenue rose on higher cathode-material volumes for batteries and the launch of new semiconductor materials, and the loss narrowed. It said electronics and engineering materials are expected to remain solid in the second quarter on higher-value products, and it expects the division to return to profit as cathode-material volumes increase.
LG Chem said it has completed development of a high-density LFP (lithium iron phosphate) cathode material and is in talks with customers, targeting mass production from late 2027 to early 2028. For sodium-battery cathode materials, it said pilot verification is under way, with mass production targeted for the first half of 2028 for high-output products and 2029 to 2030 for energy storage system use.
The life sciences division posted revenue of 312.6 billion won and operating profit of 33.7 billion won. Revenue fell from the previous quarter due to differences in export shipment timing, but profitability improved as research and development and marketing costs declined. LG Chem expects second-quarter revenue growth on higher volumes of key products, while R&D investment is expected to continue for global clinical trials and other work.
Subsidiary FarmHannong posted revenue of 266.2 billion won and operating profit of 34.8 billion won. LG Chem said results improved on higher domestic sales of crop protection products and increased demand for fertilizer pre-purchases tied to the Middle East war. For the second quarter, it expects higher crop protection sales but forecasts weaker revenue and profitability due to reduced exports from higher fertilizer raw-material costs and higher R&D spending.
LG Chem CFO Cha Dong-seok said that despite uncertainty from unstable raw-material supply, profitability improved from the previous quarter on positive inventory lagging effects from higher petrochemical feedstock prices and recognition of one-time income, narrowing the companywide operating loss. He said external uncertainty, including Middle East geopolitical risks and weak demand in the North American electric vehicle market, is likely to persist, but the company will accelerate a shift toward a higher-value, higher-profit portfolio to build a business structure more resilient to rapid economic cycles.
* This article has been translated by AI.
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