SEOUL, July 27 (Korea Bizwire) – LG Chem Ltd. said Wednesday its second-quarter net income shrank 54.1 percent from a year earlier, dented by higher oil prices, global inflation and China’s COVID-19 lockdowns.
Net income came to 718.3 billion won (US$547 million) in the April-June period, compared with 1.56 trillion won the previous year, the company said in a regulatory filing.
Operating profit dipped 59 percent on-year to 878.5 billion won, with the sales rising 7 percent to 12.23 trillion won in the same period.
Excluding the earnings of its battery-making subsidiary, LG Energy Solution Ltd., its operating profit reached 820 billion won and sales at 8.32 trillion won.
“Business environments continued to be challenging due to higher oil prices, global inflation and the COVID-19 lockdowns in China,” LG Chem CFO Cha Dong-seok said.
“We will continue to prepare for future growth through investments in the three new growth drivers,” Cha added, referring to plastic recycling, biodegradable materials and energy transition.
The earnings exceeded market expectations. The average estimate of net profit by analysts stood at 568 billion won, according to the survey by Yonhap Infomax, the financial data firm of Yonhap News Agency.
Its petrochemical division posted 513.2 billion won in operating profit and 5.98 trillion won in sales.
LG Chem gave a dim third-quarter outlook for the sector, as the rise in oil prices and inflation, coupled with the off-peak season, are expected to keep demand stagnant.
In advanced materials, which include EV battery materials, like high-nickel cathodes and chip components, the company booked 335.4 billion won in operating profit, with the sales at 2.02 trillion won, record quarterly sales.
Its life sciences unit generated 24.2 billion won in operating profit and 221.7 billion won in sales, backed by firm demand for antidiabetic drugs and growth hormone treatment.
Shares in LG Chem closed down 0.35 percent to 565,000 won on the main Seoul bourse on Wednesday, underperforming the broader KOSPI’s 0.11 percent gain. The earnings results were released after the market closed.