LG Chem (051910) Q3 2024 earnings summary

Executive summary

• Q3 2024 consolidated sales reached KRW 12.67 trillion, with operating profit at KRW 498 billion and an OP margin of 3.9%.

• Net income for Q3 2024 was KRW 1,013 billion, a significant increase from Q2 2024.

• Profitability improved due to Energy Solution's strong performance and stable advanced materials, while Petrochemicals and Farm Hannong faced margin pressures.

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

• Achieved consolidated revenue of ₩36.6 trillion for the first nine months of 2024, with LG Energy Solution contributing 52.4% of sales.

Financial highlights

• Assets at Q3-end were KRW 80.8 trillion, liabilities KRW 43.2 trillion, and capital KRW 45.6 trillion.

• Debt ratio increased to 94.7% due to higher borrowings.

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

• Cash and equivalents increased to KRW 8.8 trillion at quarter-end.

• Operating profit for the first nine months was ₩1.17 trillion, with net income attributable to controlling interests at ₩364.6 billion.

Outlook and guidance

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

• Q4 expected to see improved profitability in petrochemicals from better spreads and utilization, but advanced materials and cathode sales to decline due to inventory adjustments and lower metal prices.

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

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

• Life Sciences projects solid sales for major products, but R&D costs from global clinical trials will weigh on margins.