LG Chem surges 4% on record-high quarterly sales… LG Ensol battery business declines in operating profit
LG Chem’s share price is strong as it achieved record sales in the first quarter of this year. However, operating profit declined due to deterioration in profitability of the battery business, which is in charge of the subsidiary LG Energy Solution.
At 11:40 am on April 28, LG Chem is trading at 490,500 won, up 6.37% from the previous trading day. During the day, the stock price rose 6.58% to 493,500 won, maintaining an upward trend so far.
The rise in LG Chem’s share price is believed to be the result of the announcement of good results the day before. LG Chem announced on the 27th that in the first quarter of this year, consolidated sales were 11.608 trillion won, up 20.4% from the same period of the previous year, and operating profit decreased 27.3% to 1.243 trillion won. Compared to the previous quarter, both sales and operating profit increased by 6% and 36.9%, respectively.
Sales are at an all-time high on a quarterly basis since the founding of LG Chem. The petrochemical division posted the highest quarterly sales with differentiated product portfolios such as film for solar panels (POE) and super absorbent polymer (SAP) for diapers. In the advanced materials sector, profitability improved centering on the expansion of shipments of premium products such as battery materials, high nickel cathode materials, organic light emitting diode (OLED) materials, and semiconductor materials.
However, operating profit decreased from the previous year due to deterioration in profitability mainly in the petrochemical and battery businesses. The operating profit of the petrochemical division was 634.6 billion won, down 35.5% from the same period of the previous year (983.8 billion won), and it is analyzed that the increase in raw material prices due to the rise in oil prices and the deterioration of the external environment including the blockade measures in major cities in China had an impact. The battery business (energy solution) division, in charge of the subsidiary LG Energy Solution, recorded an operating profit of 258.9 billion won, about 24.1% from the same period last year (341.2 billion won) due to a shortage of automotive semiconductors and a shortage of parts due to the Russian invasion of Ukraine. decreased. At the same time, LG Energy Solutions was trading at 413,500 won, down 1.2% from the previous trading day, drawing a downward curve.
On the other hand, LG Chem predicted that the petrochemical business will continue to see sales growth centered on high value-added products, despite a difficult environment expected due to high oil prices and stagnant demand in the second quarter of this year. In the energy solution business, uncertainties such as disruptions in supply and demand for automotive semiconductors and geopolitical risks are expected to continue, but sales targeting key customers are expected to increase.
LG Chem’s CFO (Chief Financial Officer), Vice President Cha Dong-seok explained, “We achieved the highest quarterly sales and operating profit of KRW 1 trillion by reorganizing our portfolio (product composition) centered on high value-added products and strengthening product competitiveness.” He added, “We are also forecasting sales growth compared to the first quarter by generating solid profits in the second quarter.”
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