A view of LG Chem’s plant in Daesan, Chungcheongnam-do. (Photo: LG Chem)

Despite unfavorable factors such as the sagging business performance petrochemicals and consequences caused by fires related to energy storage systems (ESS), LG Chem logged a better-than-market consensus 3rd quarter business performance. It was owed to the battery business, which turned a profit in the third quarter.

LG Chem plans to expand its battery production capacity to 100GWh in keeping with the rising global EV market and establish a joint venture with a global automaker.

LG Chem posted 7.347 trillion won in sales and 380.3 trillion won in operating profit in the third quarter of this year. The figures represent a 2.4 percent rise in sales and a 42.2 percent jump in operation sales over the previous quarter. The company chalked up 137.2 billion won in net profit.

The petrochemical business saw profitability decline due to a drop in the spread of major items, but the battery business reversed its course to a profit, and the advanced material and life science businesses also saw operating profit rise to improve the company’s overall business performance, LG Chem said.

LG Chem is forecast to see a rise in sales in a rise in shipment of EV batteries on top of the improving of profitability on the back of rising sales in value-added items in the petrochemical business in the fourth quarter of the year.

The petrochemical business logged 3.964 trillion won in sales due to a reduction in the spread of major items, caused by the sagging demand and posted 31.2 billion won in operation profit in the 3rd quarter 2019, a little drop from the same period of the previous year. The advanced material business chalked up 1.217 trillion won in sales and 32.8 billion won in operating profit.

LG Chem’s better-than-expected business performance was attributable to the growth of the EV battery business. The business logged 2.21 trillion won in sales and 71.2 billion won in operating profit to turn around to a profit in three quarters. LG Chem saw sales rising thanks to a rise in the shipment of small-sized IT batteries and release of new EV car batteries over the previous quarter.

LG Chem was upbeat about the growth of the battery businesses. The company did not disclose how much the losses of the battery business accounted. The improving of losses in the business apparently influenced the improving of LG Chem’s overall business performance.

At a news conference following the announcement of the 3rd quarter 2019 business performance, LG Chem CFO Cha Dong-seok said the EV battery business saw losses decline thanks to the improving of new production capacity, and it targets of a operating profit due to the improving of yield productivity in the fourth quarter of the year.

LG Chem is predicted to see sales in the EV battery business surge to around 10 trillion won due to a rise in production capacity on the back of the growth of the global EV battery market. LG Chem disclosed a plan to establish a joint venture with a global automaker. It was the first time LG Chem officially confirmed the plan.