Q3 Business Performance
- Sales: 14.1777 trillion KRW (33.8% increase YoY / 15.8% increase QoQ)
- Operating profits: 901.2 billion KRW (23.9% increase YoY / 2.6% increase QoQ)
- Highest Quarterly Sales Recorded Despite Global Economic Slowdown and Secured Solid Profitability Compared to Market Conditions
- Some decrease in profitability due to worsened petrochemical market conditions, but achieved strong performance owing to growth in sales and improved profitability of new growth engine businesses such as in Advanced Materials and Energy Solution
- CFO Dong Seok Cha: “As the petrochemical market conditions are expected to hit bottom in Q4 and begin to gradually improve, we will continuously expand the battery materials business, which is the backbone of advanced materials such as cathodes to further increase profits”
According to the company’s website press release on October 31, 2022, LG Chem announced its Q3 business performance on October 31, 2022 with ▲sales of 14.1777 trillion KRW and ▲operating profits of 901.2 billion KRW.
Sales rose 33.8% year-over-year and operating profits increased 23.9%. Compared to the previous quarter, sales increased by 15.8% and operating profits grew by 2.6% respectively.
LG Chem CFO Dong Seok Cha explained about the Q3 performance saying, “The petrochemical market conditions worsened due to the global economic slowdown, and this had some impact on decreased profitability. But sales and profits increased in core new growth engine businesses such as in Advanced Materials and Energy Solution, making it possible to achieve strong consolidated performance.”
He added, “As the petrochemical market conditions are expected to hit bottom in Q4 and begin to gradually improve, we will continuously expand the battery materials business, which is the backbone of advanced materials such as cathodes to further increase profits”
Details of Q3 performance and Q4 forecasts for each business area are as follows.
The Petrochemicals Company recorded sales of 5.4931 trillion KRW and operating profits of 92.6 billion KRW. Profitability dropped due to worsened spread of major products because of the decreasing demands as a result of growing gas prices and global inflation.
It is expected that market conditions will be tough in Q4 due to the ongoing slack in global demand and increased supply, but it is expected that it will hit bottom in the second half of this year and the market will gradually begin to recover.
The Advanced Materials Company recorded sales of 2.5822 trillion KRW and operating profits of 415.8 billion KRW. Sales grew continuously as there was increased shipping of battery materials and rise in sales prices, and as the weight of the cathode business increased despite weak IT/semiconductor downstream markets, profitability also expanded.
Sales in cathodes are expected to decrease due to drops in metal prices in Q4, but growth trends are expected to continue through an increase in stable shipping volumes in the future.
The Life Sciences Company recorded sales of 225.2 billion KRW and operating profits of 5.8 billion KRW. Despite growth in sales of major products such as growth hormones, Eucept, etc., profitability dropped because of delays in the recovery of the Chinese aesthetic business, and growth in R&D costs.
Growth in sales is expected in Q4 as shipping of major products such as vaccines and growth hormones are slated to increase, and it is also expected that R&D costs will also rise as clinical studies for global new drug projects will be executed.
Energy Solution recorded sales of 7.6482 trillion KRW and operating profits of 521.9 billion KRW. Highest quarterly sales were achieved due to increase in EV battery shipping volume as demand among European and North American customers improved, and profitability was also enhanced thanks to higher sales prices resulting from rise in metal prices.
Plans are to accelerate business expansion focusing on the North American market where rapid growth is expected in Q4 with increased production capacities and establishment of smart factories, etc. in North America.
Farm Hannong recorded sales of 156.6 billion KRW and operating losses of 3.4 billion KRW. As domestic and overseas sales of crop protection agents such as the increase of Terrad’or exports, sales and profitability improved compared to the same quarter of the previous year.
It is expected that annual sales will grow and profitability will improve in Q4 with higher overseas sales of crop protection agents and increased sales of special fertilizers.
