By Kim Eun-jung
SEOUL, Aug. 6 (Yonhap) -- LG Chem Ltd., South Korea's largest chemicals company, said Wednesday its battery division has shown better-than-expected results in the first half of the year on robust demand for batteries for mobile devices.
The battery division posted 1.4 trillion won (US$1.35 billion) in sales in the period, up 16.1 percent from a year ago, and 42.4 billion won in operating profit, growing more than tenfold.
On the back of the stellar performance, the company raised this year's sales target in the battery division to about 3 trillion won, up 15 percent from 2.6 trillion won last year.
LG Chem said the rise is based mostly in increased sales of batteries for mobile devices like smartphones.
Market watchers saw LG Chem's growth potential in its mid- and large-sized battery business.
"The strong prospects for large-size batteries have been priced in, but LG Chem remains a good longer-term investment," said Andrew Yoon, an analyst at Daishin Securities Co..
However, the battery business takes up a smaller part of the company's overall profit, with its first-half operating profit accounting for a mere 5.9 percent of overall operating profit.
LG Chem plans to expand the electric vehicle (EV) battery business, eyeing growing demand in China on the back of Beijing's plans to tackle air pollution by introducing more EVs.
Although Chinese demand for electric vehicles has yet to pick up as much as some analysts had expected, global carmakers are rushing to introduce emission-free cars in the world's largest car market after Beijing announced it will have 500,000 electric vehicles on the road by 2015 and 5 million by 2020.
In the latest move to tap the Chinese market, LG Chem struck a deal to build a factory in Nanjing with an annual capacity of 100,000 batteries to supply Chinese and global carmakers. The factory is expected to begin operations in 2016, the company said.
LG Chem said the battery sales will reach 1 trillion won this year and 2 trillion won in 2016, considering the battery production deal in Nanjing and supply contracts with major Chinese carmakers, as well as the EV battery line-up expansion expected from 2016.
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