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[Alpha Biz=(Chicago) Reporter Paul Lee] The LG Chem's operating profit is 615.6 billion won, well below its market forecast (814.9 billion won based on FnGuide). Even this falls below 100 billion won, excluding subsidiaries such as LG Energy Solutions. The LG Chem plans to reduce the proportion of petrochemical businesses whose profitability is deteriorating to overcome this crisis. It is also a strategy to make a breakthrough by moving the weight of the business to three new businesses: secondary battery materials, eco-friendly materials, and innovative new drugs.
According to the industry on the 27th, LG Chem's operating profit in the second quarter was 615.6 billion won, down 29.9% from a year earlier. However, sales increased by 18.8% to 14.5415 trillion won. LG Chem's direct business performance in the second quarter, excluding LG Energy Solutions, is 6.9448 trillion won in sales and 96.8 billion won in operating profit.
The main reason for this deterioration in profitability is the sluggish petrification business. In fact, the petrochemical sector posted an operating loss of 12.7 billion won in the second quarter due to sluggish market conditions and production facility maintenance work. Although the deficit has decreased from the previous quarter (operating loss of 50.8 billion won), it has been in the red for three consecutive quarters.
The high-tech material sector posted sales of 2.22 trillion won and operating profit of 184.6 billion won in the second quarter. The battery materials business declined in profitability due to slowing growth in the European electric vehicle market and falling metal prices, but IT and semiconductor materials businesses increased sales and profitability as market conditions in the front markets partially recovered. The performance of the high-tech material sector is expected to continue to rise in the future with the separation film business.
In the second quarter, the life science division recorded sales of 316.9 billion won and operating loss of 9.2 billion won. It achieved its biggest quarterly sales thanks to the growth in sales of major products such as growth hormones and diabetes treatments and kidney cancer treatments. However, after the acquisition of Abeo (AVEO), it recorded a deficit due to one-off costs. Strong sales of major products are expected to continue in the third quarter.
LG Energy Solutions recorded sales of 8.7735 trillion won and operating profit of 460.6 billion won in the second quarter. Shipments continued to grow mainly in the North American market, and profitability is expected to increase in the third quarter.
The LG Chem will make a full-fledged business transition by improving its constitution in the second half of the year. Through this, the government plans to turn the crisis into a new growth opportunity.
In fact, LG Chem has announced its plan to reorganize its business structure focusing on 'three new growth engines' such as battery materials, eco-friendly materials, and innovative new drugs.
The LG Chem raised its sales target of three new growth engines in 2030 from 30 trillion won to 40 trillion won, raising its total target sales from 60 trillion won to 70 trillion won.
AlphaBIZ 폴 리(hoondork1977@alphabiz.co.kr)
