LG Chem (051910) Q2 2025 earnings summary

Executive summary

• Q2 2025 saw modest profitability improvements, mainly due to the earnings recovery of the Energy Solution subsidiary and Life Sciences, despite a challenging business environment with ongoing U.S. tariff disputes, cautious customer inventory policies, and subdued demand.

• Sales declined to KRW 11,418 bn in Q2 2025, down from KRW 12,121 bn in Q1 2025 and KRW 12,242 bn in Q2 2024, reflecting cautious purchasing sentiment.

• Operating profit improved to KRW 477 bn (4.2% margin) from KRW 438 bn in Q1 2025, despite lower sales.

• Net income turned negative at KRW -112 bn, compared to KRW 260 bn in Q1 2025 and KRW 60 bn in Q2 2024.

• The company is focusing on business optimization, high-value product portfolios, and operational efficiency to navigate market volatility and drive future growth.

Financial highlights

• Energy Solution reported KRW 5.56 trillion revenue and KRW 492 billion operating profit, achieving an 8.8% operating margin.

• Life Sciences segment returned to profitability in Q2 with KRW 337 billion revenue and KRW 25 billion operating profit, driven by strong vaccine, oncology, and autoimmune product sales.

• Farm Hannong posted KRW 242 billion revenue and KRW 13 billion operating profit, with profitability slightly down year-over-year due to higher raw material costs.

• Advanced Materials: Sales at KRW 1,617 bn, operating profit KRW 71 bn (6.7% margin); battery material shipments declined.

• EBITDA reached KRW 1,715 bn (15.0% margin), and gross margin remained stable at 16.6% in Q2 2025.

Outlook and guidance

• Demand recovery is expected to be slow despite the finalization of U.S. IRA and reciprocal tariff policies.

• Petrochemicals anticipate gradual profitability improvement in H2, supported by Chinese stimulus and production cuts, but overall demand weakness from tariffs will persist.

• Advanced Materials faces slowing EV battery materials demand due to early IRA subsidy termination and high U.S. tariffs, with significant volume growth anticipated in 2026 as new customer shipments ramp up.

• Life Sciences anticipates higher revenue and profit from rare obesity treatment out-licensing and will continue portfolio rebalancing, focusing on oncology.

• Farm Hannong expects improved profitability in 2H 2025 from crop protection sales growth.