LG Chem said Thursday that it posted preliminary third-quarter results this year, with revenue of 15.496 trillion won and an operating profit of 561.2 billion won. Revenue increased by 34% compared to the same period last year, while operating profit decreased by 17.4%.
Compared to the previous quarter (Q2), revenue rose by 9.3%, while operating profit fell by 6.4%.
By business segment, the petrochemicals division recorded revenue of 4.7547 trillion won and an operating loss of 175.6 billion won. The division swung to a loss compared to the previous quarter due to factors such as the narrowing of spreads for major products resulting from raw material lag effects, increased transportation costs, and the impact of currency depreciation.
In the fourth quarter, opportunity losses are expected due to the burden of high oil prices stemming from geopolitical risks and scheduled maintenance at Plant 1 of the Yeosu NCC (naphtha cracking unit). Nevertheless, LG Chem plans to continue efforts to improve profitability by expanding sales of high-value-added products such as IPA (isopropyl alcohol) for semiconductor cleaning and SSBR (styrene-butadiene rubber) for electric vehicle tires, while also reducing costs and optimizing inventory management.
The advanced materials division achieved revenue of 1.0726 trillion won and an operating profit of 39.7 billion won, respectively. Profitability improved as battery material volumes increased and one-time gains were reflected. In addition, solid performance in electronic materials for semiconductors and automobiles also contributed to the improvement in profitability.
The life sciences division recorded revenue of 337.3 billion won and an operating profit of 23.2 billion won. Revenue and profitability declined compared to the previous quarter due to a decrease in export shipment volumes and increased R&D (research and development) costs. In the fourth quarter, revenue and profitability are expected to improve as export volumes for certain products, including vaccines, concentrate, and additional prepayments are received following the signing of an amended license-out agreement for a rare obesity treatment.
Subsidiary Farm Hanone recorded revenue of 100.3 billion won and an operating loss of 20.7 billion won. While sales of crop protection products and seeds increased, revenue and profitability declined slightly year-on-year due to the base effect from fertilizer pre-purchases in the first half of the year.
Subsidiary Energy Solution's revenue was 9.6434 trillion won, with an operating profit of 756 billion won. Revenue grew driven by a significant expansion in ESS (energy storage system) shipments and increased supply of cylindrical and high-voltage mid-nickel pouch cells for EVs (electric vehicles). Profitability improved due to the easing of fixed cost burdens resulting from improved utilization rates in Europe, continued growth in cylindrical cell volumes, and the stabilization of ESS production in North America.
Cha Dong-seok, President and CFO (Chief Financial Officer) of LG Chem, stated, "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, overall company performance maintained a stable level thanks to improved profitability in advanced materials and Energy Solution." He added, "We will further strengthen profitability and business competitiveness by expanding high-value-added businesses based on customer collaboration and transforming our business structure. We will also continue to pursue various shareholder return initiatives while balancing growth investments with financial soundness."
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