LG Chem announced on November 5 that it recorded consolidated revenue of 15.5 trillion won and an operating profit of 561.2 billion won for the third quarter of this year. While revenue increased by 34.0% compared to the same period last year, operating profit decreased by 17.4%.
Cha Dong-seok, Chief Financial Officer of LG Chem, stated, "Despite uncertainties in the market environment due to rising oil prices and increased volatility in raw material costs stemming from geopolitical risks in the Middle East, the overall performance remained stable thanks to improved profitability in advanced materials and energy solutions. We will continue to enhance profitability and business competitiveness through the expansion of high-value-added businesses based on customer collaboration and structural transformation, while balancing growth investments and financial soundness with various shareholder return strategies."
By business segment, the petrochemical division reported revenue of 4.75 trillion won and returned to an operating loss of 175.6 billion won. The profitability was impacted by a reduction in spreads for major products due to raw material lagging effects, increased transportation costs, and currency depreciation.
In the fourth quarter, high oil price burdens due to geopolitical risks and opportunity losses from scheduled maintenance at the Yeosu naphtha cracking center (NCC) are anticipated. However, the company plans to improve profitability by increasing sales of high-value products such as isopropyl alcohol (IPA) for semiconductor cleaning and high-performance synthetic rubber (SSBR) for electric vehicle tires, along with cost reductions and optimized inventory management. LG Chem is discussing restructuring plans, including the integration of the Yeosu NCC with GS Caltex, in response to the sluggish petrochemical market.
The advanced materials division recorded revenue of 1.07 trillion won and an operating profit of 39.7 billion won. Increased sales volume of battery materials, recognition of one-time revenues, and solid performance in electronic materials for semiconductors and automobiles contributed to improved revenue and profitability compared to the previous quarter.
In the fourth quarter, revenue is expected to increase due to expanded sales of battery materials, but profitability is projected to remain at a similar level due to the base effect from one-time revenues in the third quarter.
The life sciences division reported revenue of 337.3 billion won and an operating profit of 23.2 billion won. A decrease in export shipment volumes and increased research and development (R&D) costs led to declines in revenue and profitability compared to the previous quarter. In the fourth quarter, performance is expected to improve due to concentrated export volumes of certain products, including vaccines, and additional upfront payments from changes in contracts for rare obesity treatment technology.
Subsidiary Farm Hannong recorded revenue of 100.3 billion won and an operating loss of 20.7 billion won. Although sales of crop protection products and seeds increased, revenue and profitability slightly declined year-on-year due to the base effect from fertilizer pre-purchases in the first half of the year. In the fourth quarter, despite expanded overseas sales of crop protection products, performance is expected to worsen year-on-year due to decreased fertilizer sales and increased R&D costs.
Subsidiary LG Energy Solution achieved revenue of 9.64 trillion won and an operating profit of 756 billion won. Significant increases in shipments of energy storage systems (ESS) and rising supplies of cylindrical batteries for electric vehicles and high-voltage mid-nickel pouch batteries drove revenue growth. Improved operating rates at European plants, increased sales of cylindrical batteries, and stabilization of North American ESS production contributed to enhanced profitability.
Meanwhile, LG Chem is utilizing funds secured from the sale of its stake in LG Energy Solution for growth investments, strengthening financial soundness, and shareholder returns. The company plans to continue exploring various shareholder value enhancement strategies, including dividends and share buybacks, in connection with future stake sales.
* This article has been translated by AI.
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