Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
LG Group needs to reverse EV slowdown, weak petrochemical outlook
LG Twin Towers, headquarters of key affiliates of LG Group, in Seoul / Courtesy of LG Group
By Lee Min-hyung
LG at risk of losing market spot to HD Hyundai
LG Group is losing momentum for a possible stock rebound as the outlook remains lukewarm for the firm’s cornerstone battery and petrochemical businesses.
The conglomerate had long held its position as one of Korea’s four largest groups by market capitalization — alongside Samsung, SK and Hyundai Motor — but its standing weakened recently as Hanwha Group overtook it earlier this month.
Hanwha’s key defense affiliates have seen robust growth due to geopolitical tensions in the Middle East creating more demand.
LG, however, has failed to ride the recent rally in the benchmark KOSPI, as major affiliates of rival conglomerates posted strong gains during the market’s upward cycle.
Shares of LG Energy Solution fell about 12 percent over the past three months through Monday, weighed down by a prolonged slowdown in electric vehicle (EV) demand ahead of mass adoption. The battery maker remains the largest affiliate within the group, with a market capitalization of around 86 trillion won ($57.55 billion).
LG Chem is facing a similar challenge in a slumping petrochemical industry. The company slipped into an operating loss last year, excluding earnings from LG Energy Solution. LG Chem is the largest shareholder of the battery unit.
The chemical company has begun accepting applications for voluntary retirement as part of efforts to cut labor costs and streamline its operations. Its shares dropped around 17 percent over the past three months, reflecting weakening investor confidence in the sector.
HD Hyundai headquarters in Seongnam, Gyeonggi Province / Korea Times file
LG Group also faces the risk of losing its fifth-place ranking in market capitalization to HD Hyundai Group, which is benefiting from a favorable outlook for the global shipbuilding industry.
According to data from the Korea Exchange on Monday, the combined market capitalization of LG Group affiliates stood at about 168 trillion won, while HD Hyundai Group was close behind at 162 trillion won.
Unlike LG Group, shares of HD Hyundai’s key affiliates have surged over the past year. Shares of HD Hyundai Heavy Industries jumped about 96 percent during the period, while those of HD Hyundai rose roughly 250 percent.
HD Hyundai is also widely expected to secure additional orders from the United States in line with the Make American Shipbuilding Great Again initiative proposed by the Korean government.
Industry officials said growing geopolitical uncertainties are reshaping the landscape for Korea’s major conglomerates.
“Outlook for Hanwha Group and HD Hyundai Group remains promising, as demand for their products is expected to stay strong amid persistent global uncertainties,” an industry official said. “However, the ranking of conglomerates by market capitalization could still shift depending on changes in business conditions across industries.”