LG Chem posts strong Q3 earnings, buoyed by battery business

South Korea’s top chemicals company LG Chem Ltd. on Monday posted strong third-quarter sales and profit as gains at its battery affiliate offset its mainstay petrochemical business’s lackluster performance.

LG Chem posted 14.18 trillion won ($9.9 billion) in sales in the three months to September on a consolidated basis, up 33.8% from the same period a year earlier. Consolidated operating profit rose 23.9% on year to 901.2 billion won, it said in a regulatory filing.

Its sales revenue missed the market consensus of 14.39 trillion won, but operating profit came above analysts’ estimates of 851.5 billion won.

Sales from LG Chem’s advanced materials segment, including components for secondary batteries, more than doubled to 2.58 trillion won in the third quarter. The division’s operating profit grew more than eightfold to a quarterly record high of 416 billion won.

The robust sales and profit growth reflect LG Chem's expansion in electric vehicle battery materials manufacturing, particularly cathodes, key components used in lithium-ion battery cells.

On a standalone basis, the company’s battery affiliate, LG Energy Solution Ltd., booked 7.64 trillion won in sales and an operating profit of 521.9 billion won in the third quarter.

HIGHER OIL PRICES, INFLATION HURT CHEMICAL BUSINESS

LG Chem’s petrochemical division saw its operating profit tumble to 75.4 billion won from 1.08 trillion won, weighed by higher oil prices and global inflation.

Petrochemical sales decreased to 5.49 trillion won from 5.63 trillion won.

LG Chem officials said its earnings growth will continue into the fourth quarter, driven by its battery affiliate’s strong performance.

LG Energy is building a new cathode factory in the southeastern industrial city of Gumi, aiming to boost its annual production capacity to 60,000 tons by 2025. It is also considering building a plant in the US.

“We will continue to expand our battery business, which we expect to lead to increased profitability at LG Chem,” said LG Chem Chief Financial Officer Cha Dong-seok.

Write to Seo-woo Jang at suwu@hankyung.com
In-Soo Nam edited this article.