LG CHEM said on the 31st that it posted revenue of 11.1962 trillion won and operating profit of 679.7 billion won in the third quarter of this year. Revenue fell 11.3% from a year earlier, but operating profit rose 38.9%. Compared with the previous quarter, revenue decreased 1.9%, while operating profit increased 42.6%.
Chief Financial Officer Cha Dong-seok (CFO, president) of LG CHEM said, "In the third quarter, we generated improved revenue through growth across our diversified business portfolio—such as the petrochemicals' return to profit, receipt of an upfront payment from a life sciences license-out, and performance improvement at LG Energy Solution—and expense reduction efforts across the entire value chain," and added, "While a difficult business environment is expected to persist due to weak global demand, we will overcome this challenging period by accelerating a shift to a high-value, high-profit business portfolio, discovering future new businesses, and optimizing operations."
By business unit, the petrochemicals unit recorded revenue of 4.4609 trillion won and operating profit of 29.1 billion won. Revenue decreased from the previous quarter due to the impact of U.S. tariffs and slower demand in downstream industries, but it returned to profit thanks to spread improvement from lower feedstock prices and expense-saving efforts. In the second quarter, the petrochemicals unit posted revenue of 4.6962 trillion won and an operating loss of 90.4 billion won.
The advanced materials unit posted revenue of 838.2 billion won and operating profit of 7.3 billion won. Shipments of battery materials declined due to conservative inventory management by customers following the end of U.S. electric vehicle purchase subsidies, but sales and profitability of high-value products in electronic materials and engineering materials remained solid.
The life sciences unit recorded revenue of 374.6 billion won and operating profit of 100.6 billion won. Revenue and operating profit increased with receipt of the remaining milestone payment from a technology transfer for a rare obesity treatment. Subsidiary Farmhannong posted revenue of 101.5 billion won and an operating loss of 20 billion won. Subsidiary Energy Solution posted revenue of 5.6998 trillion won and operating profit of 601.3 billion won. Although electric vehicle demand remained weak due to factors including the end of U.S. electric vehicle purchase subsidies, profit and loss improved on increased shipments of new small batteries and North American energy storage systems (ESS; Energy Storage System) and companywide expense reduction efforts.
LG CHEM expects its fourth-quarter results to be weak. In the petrochemicals unit, spreads are forecast to narrow due to continued sluggish global demand, and opportunity losses are expected from scheduled maintenance at the Daesan plant. In the advanced materials unit, revenue is projected to decline due to year-end inventory adjustments by battery materials customers and seasonal off-peak effects in electronic materials. The life sciences unit is also expected to see lower profitability due to the base effect from one-off technology transfer revenue and increased research and development (R&D) expense.
However, LG Energy Solution plans to focus on building a leading position in the market by securing orders based on a new product lineup and meeting North American ESS demand, even amid slowing North American electric vehicle demand and intensifying price competition in Europe.