ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintTitle ChevronIcon Twitter
Companies

LG Chem's operating profit dips 60% in 2019 on battery woes

Higher demand from EVs helps, but cutthroat competition hurts profitability

LG Chem's operating profit fell for the second straight year.

SEOUL -- LG Chem's operating profit fell 60% in 2019 to 895.6 billion won ($750 million), the company said on Feb. 3, as it spent around 320 billion won to prop up its ailing battery business.

The South Korean chemical and battery maker was hit hard last year by problems with its energy storage systems, a number of which caught fire in South Korea. The batteries are designed to store electricity generated by solar and wind power systems.

LG Chem's sales of batteries for electric vehicles rose. Overall, the company's revenue increased 2% to 28.6 trillion won. However, operating profit fell for the second straight year.

The petrochemical business, which accounts for 54% of the company's sales, produced an operating profit of 1.42 trillion won. But the battery operations, which contribute less than 30% of sales, lost 454.3 billion won.

Despite the setbacks, LG Chem continues to invest heavily in EV batteries, including a joint venture with U.S. automaker General Motors to build a new factory that will produce batteries for electric cars. LG Chem forecasts battery sales will rise 79% to 15 trillion won in 2020, which would put the business on par with the petrochemical operations.

The company faces tough competition from Chinese rivals in EV batteries, weighing on its profitability, in addition to weak demand for smartphone batteries. In the EV battery market, China's Contemporary Amperex Technology Co. Ltd. and BYD are spending heavily on development and manufacturing, in tie-ups with big automakers.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends January 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more