SEOUL, July 31 (Korea Bizwire) — LG Chem Ltd., South Korea’s leading chemical firm, said Friday that its second-quarter net profit jumped five times from a year earlier on the back of improved production of electric vehicle (EV) batteries.
Net profit reached 419.1 billion won (US$352 million) in the April-June period, compared with 83.8 billion won a year earlier, the company said in a regulatory filing.
LG Chem said its EV battery plant in Poland began to produce products in a stable manner as the defect rate declined, which in turn improved its bottom line.
LG Chem also operates electric vehicle battery plants in South Korea, China and the United States.
Cha Dong-seok, chief financial officer at LG Chem, said the company’s improved efficiency led to the forecast-beating earnings, despite the fallout of the COVID-19 pandemic.
LG Chem said its operating income surged 131.5 percent on-year to 571.6 billion won, and sales rose 2.3 percent to 6.93 trillion won over the cited period.
LG Chem said its battery business unit achieved an operating income of 155.5 billion won in the second quarter on quarterly record sales of 2.82 trillion won.
Cha said the EV battery business unit could continue to post sharp growth in the current quarter due to increased shipments of EV batteries to Europe and increased sales of cylindrical batteries.
LG Chem is a key supplier of batteries to electric vehicles, including those of GM, Ford, Renault, Volvo, Audi, Volkswagen and Daimler, as well as South Korea’s largest carmaker, Hyundai Motor Co., and its smaller affiliate, Kia Motors Corp.
LG Chem said it is on track to boost its production capacity to 100 gigawatt hours by the end of this year, which is enough to supply batteries for about 1.7 million electric cars.
LG Chem said its order backlog for EV batteries is currently valued at more than 150 trillion won.
The EV battery market has been on a roll as automakers around the world race to go electric and eco-friendly due to tightened regulations on greenhouse gas emissions, which scientists say are to blame for global warming.
Separately, LG Chem said it can settle a dispute with its domestic rival SK Innovation Co. over their EV battery trade secret case before the U.S. International Trade Commission (ITC) is set to give its final ruling on the case in October.
“A settlement is possible if it is a reasonable level based on an objective basis,” LG Chem Vice President Lee Myoung-seok said in a conference call.
“We have dialogue in good faith, and we expect to achieve a settlement in a quick and smooth manner.”
In February, the U.S. commission made a preliminary ruling in favor of LG Chem over SK Innovation in the case, three months after LG Chem asked the commission to recognize that SK Innovation had misappropriated and used its EV battery trade secrets.
LG Chem has claimed that SK Innovation spoiled evidence in the case and is guilty of civil contempt, saying SK Innovation did not follow the ITC’s digital forensics orders.
LG Chem and SK Innovation have been at loggerheads over EV battery-related trade secrets since last year, filing multiple lawsuits in the United States and South Korea.