LG Chem posted a second quarter revenue of 6.9 trillion won ($5.8 billion) and an operating profit of 571.6 billion won on Friday, marking an earnings surprise on the back of its electric vehicle batteries.
The revenue is a 2.3 percent on-year increase and the operating profit a 131.5 percent jump, the best performance LG Chem has shown in any quarter.
LG Chem credited improved productivity at its Poland plant -- arising from an increased number of quality products among all manufactured goods -- and cost streamlining as factors behind the automotive battery business’ profits.
Specifically in the EV battery and ESS energy storage service, LG Chem made a record quarterly revenue of 2.8 trillion won and an operating profit of 155.5 billion won.
Cha Dong-seok, chief financial officer at LG Chem, said the company’s improved efficiency led to the forecast-beating earnings, despite the fallout of the COVID-19 pandemic.
The EV battery business unit could continue to post sharp growth in the current quarter due to increased shipments of EV batteries to Europe and increased sales of cylindrical batteries, Cha explained.
LG Chem is a key supplier of batteries to electric vehicles, including those of GM, Ford, Renault, Volvo, Audi, Volkswagen and Daimler, as well as South Korea’s largest carmaker, Hyundai Motor, and Kia Motors.
LG Chem said it is on track to boost its production capacity to 100 gigawatt-hours by the end of this year. That level of production is enough to supply batteries for about 1.7 million electric cars.
LG Chem said its order backlog for EV batteries is currently valued at more than 150 trillion won.
In the petrochemical division, LG Chem marked a 3.3 trillion won revenue and a 434.7 billion won operating profit.
Due to a drop in the oil price, the revenue was smaller than the same period last year. However, demand from China had picked up, leading to the recovery of two-digit operating profit rate in five quarters, at 13.1 percent.
By Lim Jeong-yeo and news reports (firstname.lastname@example.org)