LG Chem bounces back on recovery in batteries
LG Chem reported better-than-expected profit for the second quarter mostly powered by solid demand for batteries used in electric vehicles (EVs) and other computing devices such as notebooks.
Operating profit for the April-June period increased by 9.5 percent quarter-on-quarter to reach 500 billion won, while sales rose 4.2 percent to 5.99 trillion won from the previous quarter, the company said in a regulatory filing.
But net income slightly decreased by 1.8 percent to 374 billion won as demand in China waned for materials to make plastic and synthetic rubber, said a LG Chem spokesman.
Korea’s biggest chemical maker’s battery plant in Michigan, the United States, has returned to full normalization and new EVs from Renault helped strengthen the firm’s profit. Top global carmakers are using LG-manufactured batteries in their eco-friendly EVs.
By division, its battery unit was the winner. Led by former LG Display CEO Kwon Young-soo, it saw a 127.4 percent jump in operating profit to 30.7 billion won from the previous quarter, while sales spiked 20.4 percent to 677 billion won.
General Motors suspended its EV-producing line for a month in the first quarter, hurting LG’s battery business. But the spokesman said the company is on track for 600 billion won, its full-year sales forecast for electric car batteries from 300 billion won last year.
LG Group Chairman Koo Bon-moo last year named Kwon to lead LG Chem’s battery division as he wants huge organic growth in itsbattery business amid major government shifts to pursue eco-friendly projects. Kwon helped LG Display rise to rank as the world’s top flat-screen manufacturer.
The petrochemical division, the company’s major cash-generator, had operating profit of 343 billion won, a 7 percent fall quarter-on-quarter, while sales were 4.5 trillion won.
Operating profit for the company’s information technologies division, which makes polarizers and other electronics materials, was up 67 percent to 129 billion won. Sales marked 864 billion won. LG Chem also supplies 3D films, a critical component in 3D televisions.
``Demand for LG Chem’s petrochemical products will rise in the third quarter aided by stable naphtha prices, seasonal demand and economic stimulus packages from China,’’ said the spokesman, adding it also sees solid demand for batteries during the July-September period as the global consumer electronics market heads toward year-end shopping and back-to-school seasons.