LG Chem Narrows Losses Despite Turning to Deficit

Inventory Lagging Effects and One-Time Gains Lead to Improved Profitability

LG Chem announced on April 30 that its consolidated sales for the first quarter reached 12.2468 trillion won, with an operating loss of 49.7 billion won. Compared to the same period last year, sales decreased by 2.6%, and operating profit turned to a loss. Compared to the previous quarter, sales increased by 6.2%, and the scale of operating losses was reduced.

LG Chem CI.

Cha Dongseok, CFO and President of LG Chem, stated, "Despite instability in raw material supply, the petrochemical division's inventory lagging effect and the reflection of one-time gains improved profitability compared to the previous quarter," adding, "While external uncertainties are expected to persist, we will accelerate the shift toward a high value-added business portfolio and continue to enhance our business fundamentals."

By business segment, the petrochemical division posted sales of 4.4723 trillion won and operating profit of 164.8 billion won. Profitability improved quarter-on-quarter, driven by inventory lagging effects from rising raw material prices and the reflection of one-off gains from a European anti-dumping duty refund. In the second quarter, sales volume is expected to decrease due to the shutdown of the second NCC plant, but the company expects to maintain profitability at a similar level to the previous quarter, thanks to ongoing cost reductions and persistent lagging effects.

The advanced materials division recorded sales of 843.1 billion won and an operating loss of 43.3 billion won. Sales increased, and losses narrowed due to expanded cathode material shipments and the contribution of new semiconductor materials. In the second quarter, a turnaround to profitability is expected, driven by improved results centered on high value-added electronic and engineering materials and further expansion of cathode material volumes.

The life sciences division posted sales of 312.6 billion won and operating profit of 33.7 billion won. Although sales decreased due to the timing of export shipments, profitability improved as a result of reduced R&D and marketing expenses. In the second quarter, sales are expected to grow thanks to higher volumes of key products, while R&D investment will continue.

Subsidiary LG Energy Solution reported sales of 6.555 trillion won and an operating loss of 207.8 billion won. Sales increased as a result of higher ESS shipments and expanded cylindrical battery supply; however, the company posted a loss due to initial costs from the expansion of production sites and a deteriorated product mix stemming from a decrease in North American EV pouch battery volumes. In the second quarter, shipment and sales growth are expected, supported by strong North American ESS demand.

Subsidiary Farm Hannong recorded sales of 266.2 billion won and operating profit of 34.8 billion won. Business performance improved on the back of increased crop protection product sales and rising pre-purchase demand for fertilizers. In the second quarter, crop protection product sales are expected to rise, but profitability may soften somewhat due to higher raw material prices and increased R&D expenses.

This content was produced with the assistance of AI translation services.