By Kim Yoo-chul
Staff Reporter
LG Chem, the nation's top chemical firm by sales, said Tuesday it has clinched record quarterly sales during the first three months of this year mainly helped by an increased share of the global market for information technology products.
A market turnaround in the petrochemical sector has also lifted the demand for products in China, contributing to a strengthened cash balance sheet.
Inspired by the strong results, LG Chem shares rose 2.08 percent to end at 245,000 won on the nation's main bourse, according to data from the Korea Exchange (KRX).
In a regulatory filing to the KRX, LG Chem said its first quarter net profit surged by 73 percent to 517.7 billion won year-on-year, while the quarterly operating profit also jumped 34.6 percent to 652.4 billion won during the same period.
Sales reached a record 4.42 trillion won, an increase of 32 percent from a year ago, the company said.
All figures are based on the International Financial Reporting Standards, or IFRS.
"Higher operating profit from the petrochemical segment, sustainable growth in the information and electronic component unit, as well as cost-saving efforts also boosted our bottom line," company spokesman Song Choong-sup said.
LG Chem is a maker of petrochemicals, plastics, LCD glass and rechargeable batteries.
The company's petrochemical unit made 3.31 trillion won in sales for the three months to March, while the operating profit was 490 billion won.
Its electronic component division reaped 1.16 trillion won in sales, an increase of 47.6 percent year-on-year. The operating profit was 168 billion won, up 52.3 percent.
LG Chem executives and analysts say the company will continue the upswing during the second quarter as the petrochemical and electronics markets are approaching strong seasonality.
"The profit margin in our petrochemical segment will remain high for the current quarter thanks to the rising demand for petrochemical products and a strong oil price amid the global economic recovery," Song said.
"In the electronic component division, we're receiving more calls from our bigger clients such as Nokia of Finland and Hewlett-Packard of the United States to supply more necessary components such as lithium-ion batteries for electronic products."
Citing the lucrative growth drivers such as the electric car batteries and LCD glass, a local brokerage of Woori Investment & Securities maintained its 300,000 won target price for LG Chem shares.
The company aims for sales to rise to 16.3 trillion in 2010 and is budgeting 1.43 trillion won for capital expenditure.
The spending will include the expansion of facilities for polarizers, construction of an electric car battery plant as well as the expansion of its naphtha cracking centers in Yeosu by 100,000 metric tons to 1 million tons, according to the company.
"We don't see any big risks hampering LG Chem's profit curve for the full year. The overall market outlook both for petrochemicals and electronic components is looking good amid a recovery in the global economy," Kim Jae-joong, an analyst at Woori said.
yckim@koreatimes.co.kr