LG Chem Announces Q2 Business Performance

LG Chem Announces Q2 Business Performance

- Highest performance in energy solutions such as vehicle batteries switching to surplus
- Outperforms market expectations despite COVID-19
  (Operating profit rate 8.2%, highest since Q3 of 2018)


■ Q2 Business Performance

□ Sales: 6.9352 trillion KRW (increased 3.1% compared to previous quarter and 2.3% compared to same quarter of previous year)

□ Operating profits: 571.6 billion KRW (increased 177.7% compared to previous quarter and 131.5% compared to same quarter of previous year)

■ Q2 Performance Analysis

▲Petrochemical: Improved profitability through distinguished operational efficiency and expanding spread of major products, and achieved two-digit operating profits after five quarters (13.1%, 434.7 billion KRW) 

▲Energy Solutions: Record-breaking quarterly sales (2.823 trillion KRW) and operating profit (155.5 billion KRW), thus turning into surplus for vehicle batteries



■ CFO and Executive Vice President Cha Dong-Seok,

 

“Q2 is significant in that higher performance compared to market expectations was achieved by improving internal efficiency and strengthening distinguished capacities, while also providing a structural cornerstone for creating profits such as yield normalization and reduction of fixed costs in the automobile battery sector despite the impact of COVID-19.”

“In Q3 as well, ▲Stable profitability will be maintained in the petrochemical sector and ▲large growth in the energy solutions sector is also expected, thereby continuing good performance, and in the mid- to long-term perspective, business efficiency measures will be continued to construct a business structure with stable performance even in times of crisis”


On the 31st, LG Chem announced its Q2 business performance with ▲sales of 6.9532 trillion KRW and ▲operating profits of 571.6 billion KRW.

Compared to the previous quarter, sales increased by 3.1% and operating profits 177.7%, and when comparing to the same quarter of the previous year, sales increased by 2.3% and operating profits by 131.5%.

The operating profit rate was the highest since Q3 of 2018 at 8.2%.

Regarding its Q2 performance, LG Chem announced that ▲by increasing the distinguished operational efficiency and improving spread of major products in the petrochemical sector, it achieved two-digit operating profit rates (13.1%, 434.7 billion KRW), and ▲in the energy solutions sector, it turned to a surplus for vehicle batteries, thus positing its best performance in history and upwards of market expectations.
(Market outlook on Q2 operating profits: * 429.9 billion KRW, based on the recent (7/1) monthly consensus (FnGuide Consensus)

LG Chem CFO and Executive Vice President Cha Dong-Seok said, “Q2 is significant in that higher performance compared to market expectations was achieved by upgrading internal efficiency and strengthening distinguished capacities, while also providing a structural cornerstone for creating profits such as yield normalization and reduction of fixed costs in the automobile battery sector despite the impact of COVID-19.”

He added, “While uncertainties are expected due to COVID-19 in Q3 as well, favorable outlooks for performance are expected by ▲maintaining stable profitability for the petrochemical sector and ▲huge growth in the energy solutions sector. We will construct a business structure to achieve stable performance even during crises by continuing mid- to long-term business efficiency.”

Details of Q2 performance and Q3 forecasts for each business unit are as follows.

The Petrochemical Company recorded sales of 3.3128 trillion KRW and operating profits of 434.7 billion KRW. Sales dropped as product prices dipped due to low oil prices, but by reinforcing distinguished operating capacities and the recovery of Chinese demand that resulted in expanded spread of major products such as ABS, two-digit operating profits (13.1%) were recorded after five quarters since Q1 of last year.

It is expected that in Q3, strong performance will continue due to expectations for the recovery of front industries such as household appliances as global economic activities resume.

The Energy Solutions Company recorded sales of 2.823 trillion KRW and operating profits of 155.5 billion KRW, thus posting its highest ever quarterly sales and operating profits. Sales increased by 25% compared to the previous quarter due to growing sales of EVs following global environment-friendly policies especially in Europe and China, and the large-scale ESS project in North America.

In terms of profitability, productivity was improved and costs were cut thereby improving yield at the Poland plant, resulting in the automobile battery business having earning surpluses and achieving its best performance yet.

It is expected that sales will grow and strong profitability will continue in Q3 by increasing shipments of automobile batteries to Europe and increasing sales of cylindrical batteries for automobiles.

The Advanced Materials Company recorded sales of 789.2 billion KRW and operating profits of 35 billion KRW. Sales dropped due to declining demand in the front industries such as IT and displays because of the spread of COVID-19, but profitability improved due to drop in raw material costs and cost efficiency, etc.

The Life Sciences Company recorded sales of 160.3 billion KRW and operating profits of 14.1 billion KRW, and its subsidiary Farm Hannong posted sales of 177.8 billion KRW and operating profits of 11.6 billion KRW.



Reference


LG Chem Q2 Performance (Unit: 100 million KRW)                                


20. Q2

19. Q2

Fluctuation compared to same quarter in previous year

’20. 1Q

Fluctuation compared to previous quarter

Sales

69,352

67,784

2.3%

67,292

3.1%

Operating profit

5,716

2,470

131.5%

2,059

177.7%

 

 


■ Sales and Operating Profits per Business Area (Unit: 100 million KRW)
*Drafted by retroactively applying business performance according to decisions to stop and/or sell parts of the company’s businesses, Q3 and Q4 pf ‘19 performance to be retroactively applied in the future