By Kim Yoo-chul
LG Chem, the country's leading maker of chemicals and industrial materials, was pleased after an impressive third-quarter report, which confirmed that the company continues to benefit massively from the rising demand for petrochemical products and rechargeable batteries.
The company's operating profit for the July-Sept. period reach 779 billion won (about $698 million), which represents a 12 percent growth year-on-year, while net profit rose by 10.5 percent at 599 billion won.
LG Chem's 5.02 trillion won revenue for the third quarter was up 16.9 percent from last year's numbers.
LG Chem, which continues to emerge as a critical unit for the LG Group, has been generating massive buzz in the market for rechargeable batteries used in hybrid-electric vehicles and other fuel-efficient models being developed by car makers.
However, the shining third-quarter was based on the company's strengths in its bread-and-butter markets, including polyvinyl chloride (PVC) and petrochemical products.
"Our upbeat earnings results were based on the increased shipments of PVC products as well as the stabilized prices for petro-related materials and higher demand for acryl-nitrile butadiene styrene (ABS) products and engineering plastics," said LG Chem spokesman Song Choong-sup, Tuesday.
The company's petrochemical unit accounted for 3.77 trillion won of the quarterly revenue, which represents a 23.1 percent annual increase. The unit's operating profit of 620 billion won was 26.4 percent better than last year's numbers.
However, LG Chem's information technology and electronics materials division suffered a significant decline in profit during the third quarter due to the unfavorable seasonal conditions in the batteries market, although the unit’s 1.3 trillion won in revenue represented a slight increase year-on-year.
Song said the company is on course to rake in over 20 trillion won in revenue for the whole year, while achieving its goal of 3 trillion won in annual operating profit may prove to be difficult.
Throughout the third quarter, the company posted 14.47 trillion won in sales and 2.26 in operating profit this year, Song said.
"For the fourth quarter, petrochemical division will likely continue its surge, while the technology division will see an improved earnings report backed by the releases of electric vehicles (EV)," he added.
LG is currently providing batteries to several top-tier automakers across the globe including Renault, Ford Motor, General Motors, Volvo Cars and Hyundai Motor.
The company's chief executive Kim Bahn-suk said it has been in talks with two or three more major carmakers to supply its lithium-ion batteries with the announcements coming this year.