LG Chem CEO Kim Bahn-suk |
By Kim Yoo-chul
Staff Reporter
LG Chem, Korea's largest chemical firm by sales, reported Monday a 11.6 percent rise in its first quarter net profit largely due to a slight price rebound in its petrochemical products and a weaker local currency against the greenback.
However, total sales for the first three months of this year fell slightly, hit by still sluggish demand for petro-related products and bearish moves in oil prices.
"Worries over the global recession still remain, requiring we implement more intensive cost-cutting efforts, though our petrochemical division is expected to continue impressive moves in the second quarter due to seasonal factors," LG Chem's Vice Chairman and CEO Kim Bahn-suk said.
LG Chem has decided to invest 1.048 trillion won for facility investment.
"Our annual sales target is 12.6 trillion won, including 9.3 trillion won in the petrochemical business," according to the CEO, forecasting the market for secondary batteries was "bright."
January-March net profit rose to 288.5 billion won year-on-year, while operating profit for the quarter ending March 30 soared 34.6 percent to 487.3 billion won, even as sales fell by 2.7 percent to reach 3.40 trillion won, the company said in a statement.
In the quarter, its petrochemical division reaped 374 billion won in operating profit, while sales reached 2.59 trillion won. The company's IT and electronic material division yielded 115 billion won in operating profit on sales of 786 billion won.
"The strengthening Japanese currency burdened us in buying key resources. Meanwhile, the profit margin in our secondary battery business also decreased due to price falls," Kim said.
"But shipments in lithium-ion batteries are steadily rising, while factory utilization rates of LCD panels are normalizing."
Foreign brokerages said the result is "somewhat meaningful." However, they added the first quarter performance will be short-lived due to a technical rebound from Beijing's economic stimulus packages.
Last year, LG Chem agreed to supply General Motors Corp. (GM) with lithium-ion batteries for its electric vehicle, the Chevrolet Volt. LG Chem plans to provide the batteries from the second half of 2010 until the end of 2015.
LG Chem's unit Compact Power recently said it is on track to supply lithium- ion batteries for the Volt and was confident the all-electric car would be launched on time.
yckim@koreatimes.co.kr
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