LG

■ Q1 Business Performance
▷ Sales: 7.1157 trillion KRW (4.5% decrease compared to the previous quarter)
▷ Operating profits: 236.5 billion KRW (turnaround to black compared to the previous quarter)
 
■ Q1 Performance Analysis
Performance exceeds market expectations due to ▲strong performance in the petrochemical company ▲reduced deficit in energy solutions, and ▲improved profitability in advanced materials, etc.
 
■ CFO and VP Dong-Seok Cha,
“Uncertainties are expected in Q2 such as COVID-19 and drops in oil prices, but managing the crisis and expanding basis for growth through ▲improved efficiency ▲stable cash flow management, and ▲continuing core investments for the future”
 
 
On the 28th, LG Chem announced its Q1 business performance with ▲sales of 7.1157 trillion KRW and ▲operating profits of 236.5 billion KRW.
 
Sales dropped by 4.5% compared to the previous quarter, but operating profits made a turnaround into surplus compared to the previous quarter. Compared to the same quarter of the previous year, sales increased by 7.5%, but operating profits dropped by 15.8%.
 
Regarding this, LG Chem CFO Dong-seok Cha said,  “▲The improved spread of major petrochemical products, ▲reduced deficit through cost-savings for the batteries business, and ▲efficient business structure and expenses for advanced materials made it possible to post performance that exceeded market expectations,” (Market forecast for Q1 operating profits: 142.4 billion KRW*)
* Based on the recent (4/20) monthly consensus (FnGuide Consensus)
 
“Uncertainties such as COVID-19 and drop in oil prices are expected in Q2, but we will manage the crisis and expand the base for growth through ▲concentration on what we can do such as improving efficiency, ▲stable cash flow management, ▲and continuing core investments for the future.”
 
Details of Q1 performance and Q2 forecasts for each business sector are as follows.
 
The Petrochemical company recorded sales of 3.6959 trillion KRW and operating profits of 242.6 billion KRW. Sales dropped compared to the previous quarter due to falling oil prices and COVID-19, but it achieved sound performance by improving spread in major products such as ABC and PVC.
 
While there will still be uncertainties in demand due to the spread of COVID-19, it is expected that low oil prices will continue, thereby restoring profitability of major raw materials and product spread is also expected to improve.
 
The Energy Solutions company recorded sales of 2.2609 trillion KRW and operating loss of 51.8 billion KRW. While there were new investments in automobile batteries, slow season for small IT batteries, and shutdowns due to the spread of COVID-19, deficits were reduced through cost-cutting and improved yield.
 
COVID-19 will have an impact in Q2, but it is expected that sales will grow and profitability will improve through increased shipments of automobile and cylindrical batteries, improved yield in the Poland plant, etc.
 
The Advanced Materials company recorded sales of 1.1074 trillion KRW and operating profits of 62.1 billion KRW. Sales dropped compared to the previous quarter due to the slow season of IT and display industries and from the fallouts from COVID-19, but profitability was significantly improved by making the business structure and expenses more efficient.
 
The Life Sciences company recorded sales of 159.3 billion KRW and operating profits of 23.5 billion KRW, and its subsidiary Farm Hannong posted sales of 221.2 billion KRW and operating profits of 35 billion KRW.
 
 
Reference

■ LG Chem Q1 Performance (Unit: 100 million KRW)