LG Chem Ltd. Q3 operating profit falls 17.4% to 561.2 billion won; petrochemicals swing to a loss

[Financial News] LG Chem Ltd.'s operating profit for the third quarter of this year fell 17.4% year on year, due in part to its petrochemicals business swinging into the red. Revenue rose 34.0%, helped by increased shipments of energy storage systems (ESS) by its subsidiary LG Energy Solution.
LG Chem Ltd. said on the 5th that it recorded consolidated revenue of 15.496 trillion won and operating profit of 561.2 billion won in the third quarter. Revenue increased 34.0% year on year, while operating profit declined 17.4%. Compared with the previous quarter, revenue rose 9.3% and operating profit fell 6.4%.
The Petrochemicals Division recorded revenue of 4.7547 trillion won and an operating loss of 175.6 billion won, swinging from a profit in the previous quarter to a loss. Spreads on key products narrowed as increases in raw material prices were reflected with a time lag, while higher freight costs and a decline in exchange rates also affected profitability.
The Advanced Materials Division recorded revenue of 1.0726 trillion won and operating profit of 39.7 billion won. Increased sales of battery materials, recognition of one-off gains and improved performance in electronic materials lifted both revenue and operating profit from the previous quarter.
The Life Sciences Division recorded revenue of 337.3 billion won and operating profit of 23.2 billion won. Both revenue and operating profit declined from the previous quarter due to lower export shipment volumes and increased research and development (R&D) costs.
LG Energy Solution recorded revenue of 9.6434 trillion won and operating profit of 756 billion won. Increased ESS shipments and higher supplies of cylindrical batteries for electric vehicles and high-voltage mid-nickel pouch batteries drove revenue growth. Improved utilization at European plants and a lighter fixed-cost burden as North American ESS production stabilized also contributed to better profitability.
LG Chem Ltd. President and CFO Cha Dong-seok said, "Despite uncertainties in the market environment, including rising oil prices due to geopolitical risks in the Middle East and increased volatility in raw material prices, company-wide performance remained stable, thanks to improved profitability in advanced materials and energy solutions."
LG Chem Ltd. expects the burden of high oil prices and opportunity losses from scheduled maintenance at its Yeosu naphtha cracking center (NCC) to occur in the fourth quarter as well. It plans to expand sales of high-value-added products such as isopropyl alcohol (IPA) for semiconductor cleaning and high-performance synthetic rubber (SSBR) for electric vehicle tires, while cutting costs and managing inventory.
LG Chem Ltd. is using funds raised by selling its stake in LG Energy Solution for growth investments and to strengthen its financial health, among other purposes. It also plans to consider shareholder-return measures, including dividends and share buybacks and cancellations.

[email protected] Kim Mi-hee Reporter