LG Chem Announces Q1 Financial Results
■ Q1 Consolidated Performance (Incl. LG Energy Solution)
□ Revenue: KRW 11.6094 trillion (18.7% decrease YoY)
□ Operating Profit: KRW 264.6 billion (67.1% decrease YoY)
■ CFO Dong Seok Cha
“In the face of a challenging management environment, we have managed to secure improved profitability compared to the previous quarter, leveraging our adept crisis management capabilities.”
“We anticipate a progressive improvement in our performance, driven by substantial enhancements in our core business competencies, centered around our three new growth engines, and through continuous operational optimization.”
LG Chem reported on the 30th that it achieved consolidated ▲ revenue of KRW 11.6094 trillion and ▲ operating profit of KRW 264.6 billion for the first quarter of this year.
This represents an 18.7% decrease in revenue and a 67.1% decrease in operating profit year-over-year. Compared to the previous quarter, there was an 11.6% decrease in revenue, but a 7.0% increase in operating profit.
CFO Dong Seok Cha remarked, “Despite the challenging management environment, we have achieved an improvement in profitability over the previous quarter, underpinned by our robust crisis management capabilities,” adding, “As we move forward, we will continue to see progressive enhancements in our results driven by substantial strengthening of core business competencies, centered around our three new growth engines and optimization of business operations.”
Reviewing the detailed first-quarter performance and second-quarter outlook by business segment:
The Petrochemicals Company recorded a revenue of KRW 4.4552 trillion and an operating loss of KRW 31.2 billion. Despite rising raw material costs due to geopolitical risks, the Company managed to reduce its loss from the previous quarter through the positive effects of naphtha lagging (lagging in raw material input) and continued cost-cutting efforts.
For the second quarter, uncertainties such as prolonged high oil prices and interest rates persist, but improvements in profitability are expected due to the seasonal peak of home appliances and major products, as well as the operation of new lines for high-value products.
The Advanced Materials Company reported a revenue of KRW 1.5834 trillion and an operating profit of KRW 142.1 billion. The battery materials saw a significant increase in shipments due to base effects from the previous quarter, while the electronic materials improved overall sales and profitability through an increased share of high-value products.
In the second quarter, profitability is expected to improve as the shipment of cathode materials increases and the negative effects of input cost timing (reverse lag effect) diminish with the stabilization of metal prices.
The Life Sciences Company posted a revenue of KRW 284.9 billion and an operating profit of KRW 3.3 billion. Stable sales of key products such as diabetes and growth hormones led to a slight increase in revenue compared to the same period last year, although R&D expenses increased due to global clinical trials.
The second quarter is expected to see a temporary increase in sales and profitability driven by steady sales of key products and particularly due to the recognition of licensing income from a rare obesity treatment.
LG Energy Solution reported a revenue of KRW 6.1287 trillion and an operating profit of KRW 157.3 billion. Despite an increase in cylindrical sales in response to strategic customer demand, revenue and profitability decreased from the previous quarter due to a slowdown in some end markets and a drop in metal prices.
In the second quarter, despite potential weaknesses in end-market demand in regions such as Europe, sales growth is anticipated due to increased volumes to major customers.
Farm Hannong recorded a revenue of KRW 245.7 billion and an operating profit of KRW 34.9 billion. Although revenue decreased compared to the same period last year due to falling fertilizer prices, profitability improved due to expanded overseas sales of crop protection chemicals and price increases.
For the second quarter, while a decrease in sales is expected due to the discontinuation of low-profit fertilizer chemical operations, annual profitability is anticipated to improve with the expansion of overseas sales of crop protection chemicals.
