LG Chem's net profit plummets 45 percent in 2022

LG Chem CEO Shin Hak-cheol speaks during a live-streamed session revealing the company's future plan last year. [LG CHEM]

LG Chem's net profit plummeted 45 percent in 2022 amid shrinking demand for petrochemicals, the company's traditional cash cow.

Net profit stood at 2.2 trillion won ($1.8 billion) last year, down 44.5 percent, missing the market estimate of 2.7 trillion won compiled by FnGuide.

But yearly revenue hit a record high of 51.9 trillion won, up 21.8 percent on year, but still fell short of the consensus of 52.7 trillion won.

It's the first time LG Chem broke the 50-trillion-won mark in annual revenue.

Operating profit fell 40.4 percent to 3 trillion won, compared to analyst expectations of 3.3 trillion won.

Fourth-quarter net profit swung to a net loss of 5.9 billion won, compared to 336.8 billion won of net profit in the same period the previous year.

"Sales of batteries and battery materials grew, but profitability fell due to the shrinking demand of petrochemicals," Cha Dong-seok, LG Chem’s chief financial officer, explained during a conference call Tuesday afternoon.

The petrochemicals business generated 4.3 trillion won in sales in the fourth quarter, down 21 percent on year. Operating profit plunged 76 percent to 166 billion won.

"The uncertainties will still exist this year, but we aim to raise the profitability of the petrochemicals business by making low-carbon products and strengthening high-valued business," Cha added.

Sales of advanced material business reported 1.88 trillion won in the fourth quarter, up 60 percent on year, in part thanks to robust sales of EV battery materials including cathodes.

Life science business reported 245 billion won in revenues, up 12 percent on year. Operating profit jumped 83 percent to 11 billion won.

"The revenues are expected to reach 1.2 trillion won this year with the acquisition of AVEO," said Yoon Soo-hee, senior vice president at LG Chem's life science business.

LG Chem acquired Nasdaq-listed AVEO Pharmaceuticals for $571 million earlier in the month, which owns Fotivda, an FDA-approved kidney cancer treatment.

LG Energy Solution, 81.8 percent owned by LG Chem, reported 779.8 billion won in net profit in 2022, down 16.1 percent on year.

Its yearly operating profit jumped 57.9 percent on year to a record 1.2 trillion won, while revenues saw a 43.4 percent surge to 25.6 trillion won, also a record figure.

BY SARAH CHEA [chea.sarah@joongang.co.kr]