LG Chem Posts 561.2 Billion Won Operating Profit in Q3; ESS Buoys Results Despite Petrochemical Losses

Revenue up 34%, operating profit down 17%
Petrochemicals swing to 175.6 billion won loss
Continued shareholder returns linked to stake sales

LG Chem posted operating profit in the 500 billion won range in the third quarter, despite its petrochemicals division swinging to a loss, thanks to strong performance in energy storage systems (ESS) at LG Energy Solution and improved results in advanced materials.

LG Chem said on November 5 that it recorded consolidated revenue of 15.496 trillion won and operating profit of 561.2 billion won in the third quarter of this year. Revenue rose 34.0% from a year earlier, while operating profit fell 17.4%. Compared with the previous quarter, revenue increased 9.3% and operating profit decreased 6.4%.

The petrochemicals division dragged down results. It recorded revenue of 4.7547 trillion won and an operating loss of 175.6 billion won, swinging to a loss. Major product spreads narrowed due to the time lag in raw material prices (reverse lagging), while higher transportation costs and a weaker exchange rate also weighed on performance. In the fourth quarter, the company also expects pressure from high oil prices amid geopolitical risks and opportunity losses from scheduled maintenance at Plant 1 of its naphtha cracking center (NCC) in Yeosu. The company plans to boost profitability by increasing sales of high-value-added products, including isopropyl alcohol (IPA) for semiconductor cleaning and high-performance solution styrene-butadiene rubber (SSBR) for electric vehicle tires, while cutting costs and managing inventory.

LG Energy Solution posted revenue of 9.6434 trillion won and operating profit of 756 billion won. Revenue grew as ESS shipments rose significantly and supplies of cylindrical batteries for electric vehicles and high-voltage mid-nickel pouch batteries increased. Fixed-cost burdens also eased as capacity utilization improved at its European plants and ESS production stabilized in North America.

The advanced materials division recorded revenue of 1.0726 trillion won and operating profit of 39.7 billion won, improving from the previous quarter. Higher sales volumes of battery materials and one-off gains contributed to the results, while electronic materials for semiconductors and automobiles also performed solidly. Revenue is expected to rise in the fourth quarter as battery material volumes expand, but profitability is forecast to remain similar to the third quarter due to the base effect of one-off gains.

The life sciences division recorded revenue of 337.3 billion won and operating profit of 23.2 billion won, down from the previous quarter due to lower export shipment volumes and higher research and development (R&D) costs. Results are expected to improve in the fourth quarter as exports of some products, including vaccines, are concentrated in the period and the company receives an additional upfront payment under an amended technology export agreement for its rare obesity treatment. Subsidiary Farm Hannong recorded revenue of 100.3 billion won and an operating loss of 20.7 billion won.

LG Chem is allocating funds secured from the sale of its stake in LG Energy Solution to growth investments, strengthening its financial health, and shareholder returns. Going forward, it plans to consider measures to enhance shareholder value, including dividends and the purchase and cancellation of treasury shares, in connection with further stake sales.

Cha Dongseok, chief financial officer (CFO) of LG Chem, said, "Despite rising oil prices due to geopolitical risks in the Middle East and increased volatility in raw material prices, improved profitability in advanced materials and energy solutions kept overall company performance stable. We will strengthen profitability and competitiveness by expanding high-value-added businesses based on customer collaboration and transforming our business portfolio. We will also pursue various shareholder return measures while balancing growth investments with financial soundness."

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