LG Chem’s petrochemicals division swung into the red compared with the previous quarter. The company aims to submit a business structure restructuring plan by year-end while continuing to build a portfolio centered on high-value-added businesses. In its cathode materials business, LG Chem is accelerating its transition by positioning high-density LFP (lithium iron phosphate) cathodes, differentiated from Chinese competitors, as its next growth engine.
LG Chem announced on the 5th that it recorded preliminary consolidated Q3 results this year of 15.496 trillion won in revenue and 561.2 billion won in operating profit. Revenue increased by 34% year-on-year, but operating profit decreased by 17.4%. Compared with the previous quarter, revenue rose by 9.3%, while operating profit fell by 6.4%. Net loss for the period was recorded at 600 billion won.
By business segment, the slump in the petrochemicals division stood out. The segment posted revenue of 4.7547 trillion won and an operating loss of 175.6 billion won, turning to a deficit from the previous quarter. Rising international oil prices due to the Middle East war increased raw material costs, while higher transportation expenses and a weaker exchange rate also acted as headwinds.
The profitability burden in the petrochemicals business is expected to continue into Q4. An LG Chem official said at a briefing following the earnings release on the 5th, “Approximately 8 million tons of capacity closures are expected in Northeast Asia by 2031, but new additions are projected to reach about 29 million tons.” The official added, “There is also a possibility that oversupply of some basic chemicals and polyethylene (PE) products domestically could worsen next year with the start-up of the S-Oil Shahin project.”
LG Chem reaffirmed its goal of submitting a business restructuring plan by year-end. LG Chem operates two NCC units with an annual capacity of approximately 2 million tons in Yeosu and is discussing restructuring with GS Caltex, which holds 900,000 tons of capacity. Cha Dong-seok, CFO (Chief Financial Officer) and President of LG Chem, stated, “We will do our best to submit a business restructuring plan by year-end.” He added, “While there are some procedural delays, we are continuing to push forward with the business restructuring.” Alongside this, the company is seeking 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.
The advanced materials division presented high-density LFP cathodes as its next growth engine. The company plans to exclude the low-density LFP market, where direct competition with Chinese firms is unavoidable, from commercialization targets and focus on commercializing high-density products that allow for differentiation in technology and supply chain. An LG Chem official said, “We have already secured high-density LFP cathode technology.” The official added, “In line with the expected full-scale demand in 2028–2029, we are finalizing supply contracts with suppliers to build a 40,000-ton supply chain.”
The electronic materials business is also aiming for a rebound centered on high-value-added products. For semiconductor substrate materials, the company is expanding its application scope from existing memory-focused areas to non-memory fields and began supplying global customers this year. TGV (through-glass via) materials for next-generation glass substrates are currently undergoing customer evaluation, while adhesive and insulating materials for semiconductor packaging are also being pushed for customer approval. For automotive materials, the company is expanding its application scope from existing vehicle adhesives to electronic component adhesives. It plans to begin mass production of adhesives for sensor actuation, motor power, and modules starting next year.
The company will also pursue shareholder returns. LG Chem plans to utilize resources secured by liquidating its held shares in LG Energy Solution in a balanced manner across growth investment, strengthening financial soundness, and shareholder returns. The company decided to continue reviewing various measures to enhance shareholder value, including dividends and share buybacks and cancellations, linked to future share sales. CFO Cha said, “We will further strengthen profitability and business competitiveness through the expansion of high-value-added businesses and business structure transformation.” He added, “While balancing growth investment and financial soundness, we will continue to pursue various shareholder return measures.”
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