LG Chem (051910) Q2 2024 earnings summary

Executive summary

• Q2 2024 consolidated sales reached KRW 12.3 trillion, up from KRW 11.609 trillion in Q1 2024, but down from KRW 14.336 trillion in Q2 2023; operating profit was KRW 406 billion (3.3% margin), with net income at KRW 60 billion.

• Improved results over the previous quarter were driven by a turnaround in petrochemicals, higher battery materials shipments, and upfront revenue from out-licensing a rare obesity drug, but net income declined sharply YoY.

• Results reflect ongoing business portfolio adjustments, including discontinued and sold businesses.

• H1 2024 consolidated revenue was ₩23.9 trillion, with LG Energy Solution contributing 51.4% of sales.

Financial highlights

• As of Q2 2024, assets were KRW 84 trillion, liabilities KRW 39.9 trillion, and capital KRW 44.3 trillion; cash and equivalents at quarter-end were KRW 7.2 trillion.

• EBITDA for Q2 2024 was KRW 1,562 billion; gross margin was 15.3%.

• Net debt/equity ratio increased to 39.7% from 35.6% in Q1 2024.

• H1 2024 operating profit was ₩670.5 billion, with a net loss attributable to controlling interests of ₩180.1 billion.

Outlook and guidance

• Battery materials shipment guidance for 2024 revised down from 40% to 20% YoY growth due to OEM production cuts; full-year revenue expected to decline 30% YoY due to lower metal prices.

• Q3 battery materials shipments expected to decline 20% sequentially, but profitability should improve as negative metal price effects lessen.

• Petrochemicals expect gradual margin recovery but face persistent macro and geopolitical risks; profitability improvement limited by slow global demand and rising freight rates.

• Life sciences expects continued solid sales of major products, but lower profitability due to clinical trial and R&D costs.

• Energy Solution sales to fall short of initial expectations due to slowing EV growth and weak metal prices; operational efficiency to be improved.