LG Chem (051910) Q4 2023 earnings summary

Executive summary

• FY2023 sales reached KRW 55.25tn; operating profit was KRW 2.529tn and net income KRW 2.053tn, against KRW 50.98tn, KRW 2.979tn and KRW 2.196tn, respectively, in FY2022.

• Q4 sales were KRW 13.135tn, operating profit KRW 247bn and net income KRW 129bn; operating margin was 1.9%.

• Results reflected continued weakness in petrochemicals and battery-material profitability, partly offset by growth in energy solutions and life sciences.

Financial highlights

• FY2023 gross profit was KRW 8.786tn, or 15.9% of sales, versus KRW 9.861tn and 19.3% in FY2022.

• FY2023 EBITDA was KRW 6.486tn, 11.7% of sales, versus KRW 6.391tn, 12.5%, in FY2022.

• Q4 gross profit was KRW 1.750tn, or 13.3% of sales; operating profit was KRW 247bn, or 1.9%.

• FY2023 EPS was KRW 17,086, compared with KRW 23,670 in FY2022.

Outlook and guidance

• 2024 sales target excluding Energy Solution is KRW 27.8tn, up 5% from KRW 26.6tn in 2023; targets include petrochemicals KRW 18.8tn, advanced materials KRW 7.5tn and life sciences KRW 1.3tn.

• Petrochemicals expects weak demand and lingering effects of cumulative capacity additions; profitability is expected to improve with gradual supply-demand recovery and cost and portfolio actions.

• Advanced Materials expects higher North American shipments and cathode sales to external customers, while falling metal prices may limit sales growth.

• Energy Solution expects sales growth despite temporary EV-market slowing and lower battery selling prices; priorities include technology leadership and cost competitiveness.

• Life Sciences expects growth from leading products and overseas sales, with progress across clinical programs and potential licensing-out of its rare-obesity treatment.