LG Chem Vice Chairman Shin Hak-cheol. (Photos: LG Chem)

Despite the unfavorable business situation caused by the spread of COVID-19, LG Chem Vice Chairman Shin Hak-cheol revealed his strong determination to achieve this year’s business performance goal.

In his message sent to LG Chem executives and officials on April 6, Vice Chairman Shin said, “If a company grows after managing to overcome a crisis, its capability will be evaluated.”

Last month, Vice Chairman Shin announced the 2020 goal to post 35.3 trillion won in sales, a 23.4 percent jump over the previous year. Shin said it is important LG Chem attains its stated goals.

Vice Chairman Shin said the “new normal” of extreme uncertainties has dawned, such as the upheaval of global financial markets and unstable global crude oil prices.

He called for improvements to cash flows and not giving up future investments as part of steps to overcome the economic fallout from the COVID-19 crisis.

“A crisis surpassing the 2008 global financial crisis might be launched, and most companies had seen sales and operating profit decline at each financial crisis, but there were companies which had translated it into growth platforms,” Shin said.

He stressed the need to cut costs and raise profits and procurement efficiency, adding that “successful” and “unsuccessful” companies had adopted different ways to cope with crises.

Vice Chairman Shin cited global examples of improving cash flows at certain companies. Apple secured $25.6 billion in cash in the fourth quarter of 2008 when the financial crisis came to head, and late last year, companies like Amazon, Microsoft and Apple increased cash assets, he said.

Shin emphasized future investments. He noted that the implementing of an emergency management regime was not designed to front-load future resources, saying that there could appear temptations to cut the stomach of a goose that bears a golden egg and cancel savings accounts of hope.

He stressed that his company has to push ahead. As for Vice Chairman Shin’s comments on future investments, an LG Chem official said he was speaking about new businesses such as the EV battery business, which is emerging as the nation’s “2nd Semiconductor Legend.”

A view of cylindrical batteries, supplied to Lucid Motors by LG Chem.

LG Chem’s EV Battery Business on a Roll

LG Chem plans to make the battery business profitable this year by making continuously investments. The battery business targets 10 trillion won in sales from EV and batteries. The figure represents two-thirds of the business’ annual total sales of 15 trillion won.

LG Chem has already secured a backlog through aggressive order winning strategies. Late last year, LG Chem agreed to establish a battery joint-venture with GM in Ohio while signing a contract to supply batteries to Telstra, the world’s No. EV automaker.

Business sources said LG Chem now supplies batteries to not only Hyundai Motor and Kia Motors, but also major global automakers, including Telstra, Geely Auto of China, Audi, Chevrolet, and Volkswagen.

As of last October, LG Chem held 14.2 percent of the global battery market, followed by CATL of China with a 26.7 percent share and Panasonic with 17.5 percent.

On a conference call on Feb. 3, LG Chem Executive Vice President Jang Seung-sae said the profitability of the battery business is forecast to decline due to the new capacity expansion in 2020 Q1.

As each quarter passes by, the business is predicted to be stabilized. Single digit, mid-level, year-on-year growth is still forecasted for operating profit.