LG Chem (051910.KS) said Wednesday it posted an operating loss of 49.7 billion won ($36 million) in the first quarter, swinging to a loss from an operating profit of 437.7 billion won a year earlier.
The operating loss narrowed from 413.3 billion won in the previous quarter. Revenue fell 2.6% year-on-year to 12.25 trillion won ($9 billion).
By business segment, the petrochemical division recorded revenue of 4.47 trillion won and operating profit of 164.8 billion won. Profitability improved from the previous quarter due to inventory lagging effects from rising raw material prices following the Middle East conflict, along with a one-time gain from European anti-dumping tariff refunds.
For the second quarter, LG Chem expects sales volume to decline due to a temporary shutdown of its No. 2 naphtha cracking center (NCC). However, the company projected profitability similar to the current quarter as naphtha lagging effects continue.
The advanced materials division posted revenue of 843.1 billion won and an operating loss of 43.3 billion won. Revenue rose on expanded cathode material volumes and the launch of new semiconductor materials.
"In the second quarter, electronics and engineering materials are expected to post solid results centered on high-value-added products, while battery materials are expected to return to profit on expanded cathode material volumes," an LG Chem official said.
The life sciences division recorded revenue of 312.6 billion won and operating profit of 33.7 billion won. The second quarter is expected to see revenue growth from expanded volumes of key products, while research and development investment for global clinical trials continues.
Subsidiary LG Energy Solution (373220.KS) reported revenue of 6.56 trillion won and an operating loss of 207.8 billion won. The loss resulted from initial operating cost burdens from expanding energy storage system (ESS) production bases and a weakened product mix due to declining North American electric vehicle (EV) pouch battery volumes.
Another subsidiary, Farmhannong, posted revenue of 266.2 billion won and operating profit of 34.8 billion won. Profitability improved on expanded domestic sales of crop protection products and advance fertilizer purchasing demand driven by the Middle East war.
"External uncertainties such as Middle East geopolitical risks and weak North American EV market demand will persist, but we will accelerate our business portfolio transformation toward high-value-added, high-margin areas to build a business structure resilient to rapidly changing economic cycles," LG Chem President Cha Dong-seok said.
