LG Chem’s profit falls due to sluggish demand

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LG Chem’s profit falls due to sluggish demand

LG Chem, the nation’s leading chemical company and battery manufacturer, on Monday said its 2014 earnings decreased as demand fell due to the sluggish global economy and oil price drop.

The affiliate of LG Group said revenue reached 22.5 trillion won ($20.7 billion) last year, down 2.4 percent from 2013, while its operating profit dipped 24.8 percent year-on-year to 1.31 trillion won.

For the fourth quarter, sales declined 4.8 percent year-on-year to 5.37 trillion won, while operating profit fell 26.8 percent to 231.6 billion won.

The petrochemicals division, which accounts for more than 75 percent of the company’s total revenue, saw annual sales drop 2 percent year-on-year to 17.2 trillion won, while operating profit dropped 16.1 percent to 1.1 trillion won compared to 2013.

LG Chem’s IT & Electronic materials division performed even worse, with sales dropping 11.3 percent to 2.8 trillion won, while operating profit plunged 58.3 percent to 158.1 billion won.

The only bright spot was its battery division, which collected 2.8 trillion won in revenue last year, up 10.5 percent from 2013, while operating profit soared 100 percent to 64.9 billion won.

This year, the company said it plans to bring in 22.4 trillion won from sales, which is 0.4 percent less than in 2014, and it will increase investments in facilities by 13.3 percent year-on-year to 1.79 trillion won.

The biggest portion of the investment will go to increasing the production capacity of superabsorbent polymer and acrylic acid, as well as OLED lighting.

“With the falling price of oil, revenue from petrochemicals can be expected, but considering demand and supply, the drop in the retail price of our products should be limited, so we expect profitability to be better this year,” said LG Chem Chief Financial Officer Cho Suk-jeh.

BY JOO KYUNG-DON [kjoo@joongang.co.kr]

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