LG Chem's 2020 net profit breaks 1 trillion won

LG Chem reported more than 1 trillion won ($904.5 million) in net profit, nearly a three-fold increase, in 2020.

According to a regulatory filing, Wednesday, LG Chem reported 30 trillion won in annual revenue, a 9.9-percent increase on year, and 2.35 trillion won in operating profit, which represents a 185.1-percent jump from 2019.

Net profit hit 1.09 trillion won.

“Despite an unprecedented crisis caused by the coronavirus pandemic, our annual sales rose 10 percent on year to surpass 30 trillion won for the first time,” said LG Chem’s chief financial officer, Cha Dong-seok, in a Wednesday conference call.

“We were able to achieve records in both revenue and profitability in 2020. The achievement is meaningful for us as it’s the result of years of early investment in growth engines, like our battery business, and heavy cost-cutting efforts to improve profitability.”

All of LG Chem’s business units, including petrochemicals, materials, life science and batteries achieved on-year growth.

The battery unit, which spun off as wholly-owned subsidiary LG Energy Solution in December, reported 388.3 billion won in operating profit, from a 454.3 billion won in operating loss in 2019. Annual revenue generated from the business increased 50 percent on year to 12.3 trillion won.

“World governments including the United States are enforcing environmental regulations and so we anticipate the growth of electric vehicles and transition to new energy sources will continue,” said Chang Seung-se, LG Energy Solutions senior vice president, during the conference call.

“As such, we're planning for more than 50-percent growth in battery sales this year. Capacity growth is planned to reach an annual 155 gigawatt hours this year, from the current 120 gigawatt hours.”

Fourth-quarter net profits in 2020 made a turnaround in the black to 60.6 billion won. Quarterly revenue rose nearly 20 percent on year to 8.8 trillion won while operating profit was reported at 673.6 billion won, from making losses in the fourth quarter of 2019.

The operating profit fell short of expectations due to recalls and the cost of the spinoff, according to a Reuters report. Analysts had been looking for 777 billion won.

While conceding that the business environment for year 2021 remains murky due to the ongoing coronavirus pandemic, Cha expressed confidence that the company will be able to achieve better performance once again this year.

“Our revenue goal for 2021 is set at 37 trillion won, 24-percent higher than last year,” he said during a Wednesday conference call.

LG Chem shared four initiatives to drive growth in business segments.

“In 2021, we’ll be focusing assets and capacity in developing battery materials, sustainable materials, e-mobility parts and new drugs,” Cha said.

BY SONG KYOUNG-SON [song.kyoungson@joongang.co.kr]