LG Chem(051910) said on the 30th that on a consolidation basis in the second quarter this year, it posted sales of 14.1759 trillion won and operating profit of 599.6 billion won. Those figures rose 19.0% and 25.8%, respectively, from a year earlier.
Cha Dong-seok, LG Chem CFO and president, said, "Although volatility in materials and supplies prices was high, we delivered solid results thanks to improved spreads for key products driven by a positive inventory lagging effect in the petrochemicals institutional sector, increased sales of major products in the advanced materials and life sciences institutional sectors."
The petrochemicals institutional sector posted second-quarter sales of 5.3289 trillion won and operating profit of 426.5 billion won. Despite lower sales volumes due to the shutdown of the Yeosu NCC No. 2 plant, profitability improved on the back of a positive inventory lagging effect from higher feedstock prices and wider spreads.
In the third quarter, business uncertainty is expected to increase due to a negative lagging effect from declining feedstock prices and higher logistics costs.
The advanced materials institutional sector recorded sales of 999 billion won and operating profit of 19.9 billion won. Division sales increased on the back of higher prices for cathode materials, greater shipments of separators, and rising sales of battery materials, as well as the full-scale mass production of new electronic materials, and operating profit swung to a surplus.
In the third quarter, battery materials sales are expected to expand based on greater cathode material shipments to new customers and a gradual increase in sales of separators for ESS. For electronic materials, sales of customers' new products, including semiconductor materials, are expected to grow.
The life sciences institutional sector posted sales of 369 billion won and operating profit of 60 billion won. Sales and profitability improved due to increased export shipment volumes. In the third quarter, sales are projected to decline as export volumes of some products, including vaccines, are concentrated in the fourth quarter.
Subsidiary Energy Solution posted sales of 7.5602 trillion won and operating profit of 113.3 billion won. Sales grew thanks to solid demand for cylindrical and pouch batteries for electric vehicles (EVs), increased shipments driven by expanded North American energy storage system (ESS) production capacity, and lower fixed costs. Operating profit swung to a surplus.
In the third quarter, sales growth is expected based on accelerating growth of the North American ESS market with a firm demand base and steady increases in shipments of cylindrical and pouch batteries for EVs.
Subsidiary Farm Hannong posted sales of 274.1 billion won and operating profit of 25.4 billion won. Sales and profitability improved year over year due to increased sales of crop protection products and pre-purchase demand for fertilizers stemming from the Middle East war.
In the third quarter, despite higher sales of crop protection products and seeds, profitability is expected to decline due to rising feedstock prices from a strong won-dollar rate and increased R&D expense.