LG Chem (051910) Q3 2024 earnings summary

Executive summary

• Q3 2024 consolidated sales rose to KRW 12.67 trillion, with operating profit at KRW 498 billion and net income at KRW 1,013 billion, marking sequential improvement.

• Profitability was driven by strong Energy Solution and stable Advanced Materials, while Petrochemicals, Life Sciences, and Farm Hannong faced margin pressures.

• Sale of the polymer material business was completed, boosting non-operating income.

• LG Chem ranked 4th globally in chemical firms by C&EN and 2nd in brand strength by Brand Finance.

• Business performance varied by segment, with Energy Solution and Advanced Materials showing resilience, while Life Sciences and Farm Hannong faced profitability pressures.

Financial highlights

• Gross margin improved to 18.1% in Q3 2024 from 15.3% in Q2 2024.

• EBITDA margin rose to 13.0% in Q3 2024 from 12.7% in Q2 2024.

• Cash and equivalents increased to KRW 8.8 trillion at quarter-end, up from KRW 7.2 trillion in Q2 2024.

• Liabilities/equity ratio rose to 94.7% in Q3 2024 from 90.2% in Q2 2024.

• Net debt/equity ratio increased to 42.3% in Q3 2024 from 39.7% in Q2 2024.

Outlook and guidance

• CapEx for 2024 reduced from KRW 4 trillion to mid-KRW 2 trillion range due to market uncertainties.

• Energy Solution expects continued volume growth despite inventory adjustments and lower metal prices, driven by EV and ESS demand.

• Advanced Materials anticipates lower sales and profitability in the next quarter due to inventory adjustments and seasonality.

• Petrochemicals profitability is expected to gradually improve as raw material prices fall and new capacity utilization increases.

• Full-year cathode shipments expected to rise 25% YOY, but ASP to fall 40% YOY, weakening profitability.