LG Chem to sell polarizer businesses to Chinese peers for $800 mn  

LG Chem Ltd., the parent of South Korea’s No. 1 battery maker LG Energy Solution Ltd., will unload its polarizer businesses to two Chinese players for a combined $800 million as part of its business reorganization to focus on its new growth engines, battery materials, green materials and life sciences.

The company announced in a regulatory filing on Wednesday that its board of directors approved a plan to sell off its polarizer business to Suzhou-based Shanjin Optoelectronics for $200 million and the polarizer materials business to another Chinese company Hefei Xinmei Materials Technology Co. for 4.5 billion yuan ($616 million).  

A month ago, The Korea Economic Daily reported exclusively on LG Chem’s move to seek a new owner for its display film business to exit from the IT materials business amid the rapid ascent of Chinese players.

Many Chinese petrochemical peers have recently jumped into the IT film market, intensifying competition and deteriorating profitability.

The latest decision is also part of LG Chem’s broad business shakeup plan to bolster its new growth drivers -- battery materials, eco-friendly materials and life sciences for innovative medicine development, the company said in the filing.

THREE NEW GROWTH PILLARS

LG Chem has set a goal to earn 40 trillion won ($29.6 billion) in sales from its three new growth pillars by 2030 under the direction of Chief Executive Officer Shin Hak-cheol.

After letting go of its polarizer film business, the company plans to focus on special premium film used in batteries, one of its three new growth engines.

LG Chem’s advanced material division, which produces battery materials like cathodes and separators, has been outperforming its traditional mainstay petrochemical business, with nearly 1 trillion won ($740 million) in operating profit in 2022.

It is seeking to beef up its battery materials business to boost its sales by six times to about 30 trillion won by 2030 from 2022. LG Chem is the parent of the world’s second-largest EV battery maker LG Energy Solution.

It also plans to build 10 factories to produce green materials, such as biodegradable random copolymer polybutylene adipate terephthalate (PBAT) and high-value-added polyolefin Elastomer (POE)-based solar film facilities slated to commence mass production in phases from 2024.

It aims to earn 8 trillion won from the business by 2030.

LG Chem also set a target to raise 2 trillion won in sales from innovative drug development by 2030 from nearly zero in 2022.

The three businesses made up 21% of LG Chem’s entire sales in 2022 but are expected to represent 57% of its total sales in 2030, which are forecast to amount to 70 trillion won.

Write to Hyung-Kyu Kim at khk@hankyung.com

Sookyung Seo edited this article.