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LG Chem Q2 net tumbles 43.4 pct on poor sales

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(Globalpost/GlobalPost)

By Kim Eun-jung

SEOUL, July 18 (Yonhap) -- LG Chem Ltd., a South Korean chemicals and battery maker, said Friday its net profit sank 43.4 percent in the second quarter from a year ago due to poor performance in its chemical sales and a strong local currency.

Net income came to 226.8 billion won (US$220 million) in the April-June period, compared with 401 billion won a year earlier, the company said in a regulatory filing.

Sales edged down 0.8 percent to 5.86 trillion won on-year in the period, while operating profit dipped 28.3 percent to 359.6 billion won.

The company said the tepid results in the second quarter stemmed from weak earnings in the petrochemical and vehicle battery sector.

"The performance was worse than expected as we failed to offset the weak global chemical demand despite various efforts," LG Chem President Cho Seok-je said in a briefing. "As the local currency continued to become stronger against the dollar in the second quarter compared with the previous quarter, it weighed on the net profit."

The petrochemical division's sales tallied at 4.51 trillion won in the second quarter, down 4.53 trillion, or 0.4 percent, from the previous year.

Its car battery business posted sales of 724.1 billion won, while the information and technology division logged 715.5 billion won in the cited period.

LG Chem shares remained unchanged to close at 297,000 won the Seoul bourse on Friday, while the main bourse edged down 0.07 percent. The company's second-quarter results were released after trading hours.

Despite the sluggish earnings in the second quarter, market watchers pinned their hopes on the world's largest battery maker which has strengthened its foothold in China, with many of them raising their target price to well over 300,000 won.

LG Chem has won orders from China's four automakers to supply batteries for about 100,000 electric vehicles (EVs). Earlier this month, it announced a plan to build a factory in Nanjing with the capacity to supply batteries for 100,000 EVs annually.

LG Chem is hoping China will reinvigorate sales of EVs, which so far have failed to live up to their initial hype.

Global carmakers have stepped up efforts to introduce new EVs in China, encouraged by Beijing's plans to put 500,000 of them on the road by 2015 and 5 million by 2020.

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