LG Chem's Third Quarter Operating Profit Plummets by 42.1%

On October 28, 2024, LG Chem announced its third-quarter earnings report. According to the report, sales for the quarter came in at a staggering 126,704 trillion won, while operating profit came in at 498.4 billion won. Sales and operating profit grew by 3.0 percent and 22.8 percent, respectively, compared to the previous quarter. However, sales and operating profit were down 6.1% and 42.1%, respectively, from the same period last year.

LG Chem's chief financial Officer Cha Dong-seok said when announcing the results, "Despite the current business environment, we achieved differentiated results through our superior process technology and continued strengthening of cost competitiveness. We remain committed to improving efficiency and well-positioned our new growth engines to capture new opportunities for future development."

The petrochemical division posted sales of 4.8132 trillion won but operating losses of 38.2 billion won. A slight loss resulted from temporary increases in raw material prices and freight costs, as well as exchange rate declines. However, profitability is expected to improve significantly in the fourth quarter as raw material prices decline, new plant operating rates increase and sales volume increases in Europe and the United States.

In the advanced materials segment, sales were 1.7124 trillion won and operating profit was 150.2 billion won. Mainly due to the small decrease in battery material shipments and selling prices, as well as the impact of exchange rate fluctuations. It is expected that in the fourth quarter, the room for improvement in sales and earnings will be somewhat limited due to the impact of customers' year-end inventory adjustment and the seasonally slow season in the electronic materials industry.

In the life sciences segment, sales were 307.1 billion won and operating loss was 900 million won. Higher research and development expenses led to a slight loss despite good shipments of key products such as diabetes and vaccines. In the fourth quarter, sales of key products are expected to remain stable, but the progress of global clinical programs will lead to an increase in research and development expenses, which may lead to a decrease in profitability.

In the LG Energy division, sales were 6.8778 trillion won and operating profit was 448.3 billion won. Sales were driven by recovering customer demand in Europe and increased production in North America. Profitability has also improved significantly due to the continued rise in operating rates and the stabilization of metal prices. Shipments are expected to grow in the fourth quarter as the supply of batteries for electric vehicles and energy storage systems (ESS) expands, although there may be some impact from inventory adjustments by customer companies and lower metal prices.

At the Farm Hannong division, sales were 112.8 billion won and operating losses were 19.6 billion won. Although the sales volume of crop protection agents in South Korea recorded a small increase, the interruption of low-yield fertilizer chemical projects led to losses. In the fourth quarter, the company will continue to expand the global sales volume of crop protection agents in an effort to improve the revenue mix.