■ Q3 Consolidated Performance (Including LG Energy Solution)
□ Revenue: KRW 15.4960 trillion (34.0% increase YoY)
□ Operating Profit: KRW 561.2 billion (17.4% decrease YoY)
■ CFO Dong Seok Cha:
"Amid heightened market uncertainty driven by factors such as rising oil prices and increased volatility in raw material prices, our company-wide performance remained stable, supported by improved profitability in Advanced Materials and LG Energy Solution."
"We will further strengthen our profitability and business competitiveness by expanding our high-value-added businesses and transforming our business structure, while pursuing a range of shareholder return measures that strike a balance between growth investment and financial soundness."
LG Chem announced on the 5th that it recorded consolidated revenue of KRW 15.4960 trillion and operating profit of KRW 561.2 billion for the third quarter of this year. Compared to the same period last year, revenue increased by 34.0%, while operating profit decreased by 17.4%. On a quarter-over-quarter basis, revenue rose by 9.3%, while operating profit declined by 6.4%.
CFO Dong Seok Cha stated, "Amid heightened market uncertainty driven by factors such as rising oil prices stemming from geopolitical risks in the Middle East and increased volatility in raw material prices, our company-wide performance remained stable, supported by improved profitability at the Advanced Materials Company and our subsidiary LG Energy Solution."
He added, "We will further strengthen our profitability and business competitiveness by expanding our high-value-added businesses based on customer collaboration and transforming our business structure, while continuing to pursue a range of shareholder return measures that strike a balance between growth investment and financial soundness."
The detailed third-quarter performance and fourth-quarter outlook by business division are as follows.
The Petrochemicals Company recorded revenue of KRW 4.7547 trillion and an operating loss of KRW 175.6 billion. The Company swung to an operating loss due to narrower spreads for key products resulting from the unfavorable inventory lagging effect of feedstock prices, higher freight costs, and the impact of a lower exchange rate, among other factors.
In the fourth quarter, despite the expected burden of high oil prices driven by geopolitical risks and opportunity losses from scheduled maintenance at NCC Plant 1 in Yeosu, the Company plans to continue its efforts to improve profitability by expanding sales of high-value-added products such as IPA (isopropyl alcohol) for semiconductor cleaning and SSBR (solution styrene butadiene rubber), a high-performance synthetic rubber for EV tires, together with cost reduction and optimized inventory management.
The Advanced Materials Company posted revenue of KRW 1.0726 trillion and an operating profit of KRW 39.7 billion. Revenue and profitability improved compared to the previous quarter on the back of higher battery materials volumes, the recognition of one-off gains, and solid results in electronic materials for applications such as semiconductors and automotive.
In the fourth quarter, revenue is expected to increase on the back of expanded battery materials volumes, while profitability is projected to remain at a similar level due to the base effect from one-off gains recognized in the third quarter.
The Life Sciences Company recorded revenue of KRW 337.3 billion and an operating profit of KRW 23.2 billion. Revenue and profitability declined compared to the previous quarter due to lower export shipment volumes and higher R&D expenses.
In the fourth quarter, revenue and profitability are expected to improve, driven by the concentration of export volumes for certain products, including vaccines, and the receipt of an additional upfront payment following the signing of an amended licensing-out agreement for a rare obesity treatment.
The subsidiary Farm Hannong recorded revenue of KRW 100.3 billion and an operating loss of KRW 20.7 billion. Although sales of crop protection products and seeds increased, revenue and profitability declined slightly year-on-year due to the base effect from advance purchasing of fertilizers in the first half.
In the fourth quarter, despite expanded overseas sales of crop protection products, revenue and profitability are expected to decline year-on-year due to lower fertilizer sales and increased R&D expenses.
The subsidiary LG Energy Solution reported revenue of KRW 9.6434 trillion and an operating profit of KRW 756.0 billion. Revenue grew on the back of a substantial increase in ESS shipments and solid growth in supplies of cylindrical and high-voltage mid-nickel (HV Mid-Ni) pouch batteries for EVs. Profitability improved due to higher utilization rates in Europe, a continued increase in cylindrical battery volumes, and a reduced fixed-cost burden resulting from stabilized ESS production in North America.
LG Chem is allocating the proceeds secured from the sale of its stake in LG Energy Solution in a balanced manner across growth investment, the strengthening of financial soundness, and shareholder returns. Going forward, in connection with further stake sales, the company plans to continue exploring a range of measures to enhance shareholder value, such as dividends and the acquisition and cancellation of treasury shares.