LG Chem Ltd., a leading South Korean chemical company, reported a significant 67.1% drop in its operating profit for the first quarter of 2024, totaling 264.6 billion won ($178.4 million). This decrease is mainly attributed to increased raw material costs and stiff competition in the petrochemicals sector, compounded by geopolitical tensions affecting supply chains. Despite these challenges, the company remains optimistic about the coming quarters, expecting a rebound driven by higher demand for its advanced materials and stabilized pricing.
The company’s consolidated net profit also fell by 48.9% to 341.7 billion won, with overall sales declining 18.7% to 11.6 trillion won. The petrochemicals division, in particular, faced a loss of 31.2 billion won, although this was an improvement from a 117 billion won loss in the previous quarter. LG Chem cited cost pressures from geopolitical risks as a significant factor for these results.
On a more positive note, LG Chem’s advanced materials business, particularly battery materials for electric vehicles, is showing signs of recovery. This sector saw a 20% increase in sales from the previous quarter, and the company expects further growth as global demand for battery components strengthens and metal prices stabilize. Battery materials now account for 60% of the division’s sales, up from 55% in the prior quarter.
The life sciences division of LG Chem also reported growth, with sales reaching 285 billion won in the first quarter, buoyed by strong demand for diabetes and growth hormone treatments. Additionally, a notable development includes a licensing deal with Rhythm Pharmaceuticals Inc. in the U.S. for a potential genetic obesity treatment, which could bring up to $350 million in revenue.
Looking ahead, LG Chem is confident about the upcoming quarter, particularly in its petrochemicals business, as it enters the peak season for home appliances and launches new production lines for high-value-added products. The company continues to focus on its three strategic growth engines: battery materials, eco-friendly materials, and life sciences, aiming to enhance overall business competitiveness and ensure sustainable growth.
