SEOUL, Oct. 31 (Korea Bizwire) — LG Chem Ltd. said Monday its third-quarter operating profit grew 23.9 percent from a year earlier on the back of strong battery materials demand that helped offset lackluster performance in the petrochemicals segment.
Operating income came to 901.2 billion won (US$638.1 million) in the July-September period, compared with 727.2 billion won the previous year, the South Korean chemical company said in a regulatory filing.
Sales reached 14.17 trillion won, up 33.8 percent from a year ago. Net profit came in at 713.9 billion won, up 5 percent from a year earlier.
The earnings beat market expectations. The average estimate of net profit by analysts stood at 585.4 billion won, according to a survey by Yonhap Infomax, the financial data firm of Yonhap News Agency.
“Although deterioration in the petrochemical market due to the global economic slowdown had an impact on profitability, we achieved solid results with sales growth in new growth engines like advanced materials and energy solutions,” LG Chem CFO Cha Dong-seok said.
The advanced materials segment, including components for secondary batteries, posted 2.58 trillion won in sales, more than doubling from the 1.16 trillion won a year earlier. Operating profit grew more than eightfold to 415.8 billion won in the third quarter.
The robust growth reflects LG Chem’s expansion in electric vehicle (EV) battery materials manufacturing, particularly cathodes, one of the key components used in lithium-ion battery cells.
LG Chem is building a new cathode factory in the southeastern industrial city of Gumi, aiming to boost production capacity to 60,000 tons by 2025.
LG Chem set up a joint venture with Huayou, a Chinese mining company, to produce cathode materials, such as nickel, cobalt manganese and aluminum.
LG Chem is also building a battery precursor plant in South Korea with a raw battery materials producer backed by Korea Zinc Co.
The petrochemical division saw its operating profit tumble to 75.4 billion won, from 1.08 trillion won in the same period, as a fall in demand, due to higher oil prices and global inflation, narrowed the profit margins of major products, the company said.
Sales also decreased to 5.49 trillion won in the third quarter, from 5.63 trillion won a year ago.
Its energy solutions unit, LG Energy Solution Ltd., booked 7.64 trillion won in sales, with operating profit at 521.9 billion won.
Excluding the energy solutions, LG Chem’s sales grew 19.4 percent on-year, while the operating profit sank 59.1 percent.
The drugs-developing life sciences unit posted 225.2 billion won in sales and 5.8 billion won in operating profit.
Farm Hannong, its agricultural chemicals affiliate, logged an operating loss of 3.4 billion won, and 156.6 billion won in sales.
Shares in LG Chem rose 1.79 percent to 626,000 won on the main Seoul bourse on Monday, outperforming the broader KOSPI’s 1.11 percent gain. The earnings results were released after the closing bell.