LG Chem : sales and operating profits in Q3 recorded the highest ever

LG Chem's sales and operating profits in Q3 recorded the highest ever

- Highest performance ever in petrochemical and battery sectors, 'earning surprises'

■ Q3 Management Performance

- Sales: 7.5073 trillion KRW (8.2% increase compared to the previous quarter, 8.8% increase compared to the same quarter in the previous year)

- Operating Profits: 902.1 billion KRW (57.8% increase compared to the previous quarter, 158.7% increase compared to the same quarter in the previous year)

■ Q3 Performance Analysis

▲Petrochemicals : recorded the highest operating profits ever due to improving spread resulting from continued low costs of raw materials and recovery in demand for major products (20.1%, operating profits 721.6 billion KRW)

▲Batteries : maintained a surplus and reached the highest sales (3.1439 trillion KRW) and operating profits (168.8 billion KRW) ever for a quarter due to an expanded supply of automobile and small sized batteries.

■ CFO and VP Dong Seok Cha

"It is the result of our effort focusing on core tasks such as improving efficiency, stable cash flow management and continuing investments for the future, etc. from the beginning of the year despite COVID-19."

"Performance Improvement such as a growth in sales and an expansion in profits in the future, etc. will continue"

On the 21st, LG Chem announced its Q3 business performance with ▲ sales of 7.5073 trillion KRW and ▲ operating profits of 902.1 billion KRW.

Sales increased by 8.2% and operating profits increased by 57.8% compared to the previous quarter. Compared to the same quarter of the previous year, sales increased by 8.8% and operating profits increased by 158.7%.

With regard to operating profits, it has revised its highest quarter record approximately in 10 years (38 quarters). The highest operating profits and sales records immediately prior to the above was 831.3 billion KRW in 1Q in 2011 and 7.4510 trillion KRW in Q4 in 2019 respectively.

LG Chem announced that ▲ it has recorded the highest ever operating profits for a quarter due to recovery in demand for major petrochemical products, etc. (20.1%, 721.6 billion KRW) and ▲ significantly exceeded market expectations and demonstrated a balanced performance improvement in the entire businesses, such as reaching the highest ever sales (3.1439 trillion KRW) and operating profits (168.8 billion KRW) for a quarter due to an expanded supply of batteries for automobile and small sized batteries in the battery sector, etc.

* Q3 market expectations for operating profits: 739.6 billion KRW, based on the recent (after 14/9) monthly consensus (FnGuide)

Regarding this, LG Chem CFO Dong Seok Cha said, "it is the result of our effort focusing on core tasks such as improving efficiency, stable cash flow management and continuing investments for the future, etc. from the beginning of the year despite COVID-19" and "performance improvement such as growth in sales and an expansion in profits in the future, etc. will continue."

Details of Q3 performance and Q4 forecasts for each business sector are as follows.

The Petrochemical company recorded sales of 3.5836 trillion KRW and operating profits of 721.6 billion KRW, which is the highest operating profits ever for a quarter (20.1%). Sales and profitability have significantly improved due to improvement in spread resulting from an increased major products such as ABS, PVC and NBL, etc. and continued low costs of raw materials.

While it will be affected by the slow season for the products in Q4, it is predicted that it will achieve sound performance due to continued increase in demand for major products.

The Battery company recorded the highest sales and operating profits ever in a quarter with sales of 3.1439 trillion KRW and operating profits of 168.8 billion KRW. The launch of a new model of electric automobile by major European clients, an increase in sales of cylindrical batteries and an expanded supply of IT products, etc. made it possible to achieve the highest performance ever.

In Q4, it is predicted that sales will grow and profitability will improve through an expanded supply of automobile batteries and cylindrical batteries for electric automobiles.

The Advanced Materials company recorded sales of 962.9 billion KRW and operating profits of 59 billion KRW. Sales have increased and profitability has improved as a result of recovery in demand at the front market such as automobile and display panel, etc.

In Q4, it is expected that sales will grow due to increased shipments of industrial materials despite the impact of the slow season of display industries.

The Life Sciences company recorded sales of 172.1 billion KRW and operating profits of 8.5 billion KRW. Sales have increased due to expanded sales of seasonal influenza vaccine and extraction reagent. Its subsidiary Farm Hannong posted sales of 102.1 billion KRW and operating loss of 9.6 billion KRW.

In Q4, it is expected that the Life Science will experience recovery in demand for aesthetics (filler), etc. and for Farm Hannong, it is predicted that performance will improve within the year due to expanded sales in major products such as Terrad'or (herbicide).

Reference

■ LG Chem Q3 Performance (Unit: million KRW)

'20. 3Q

'19. 3Q

Increase/decrease compared

to the same quarter of

the previous year

'20. 2Q

Increase/decrease compared to the previous quarter

Sales

75,073

68,989

8.8%

69,352

8.2%

Operating Profits

9,021

3,488

158.7%

5,716

57.8%

■ sales and operating profits for each business sector (Unit: million KRW)

* The above table was prepared reflecting the relevant business performances retrospectively due to discontinuation and sale of some businesses of the company, performances in Q4 in 2019 will be reflected retrospectivley in the future.