South Korea’s chemical and battery firm LG Chem Ltd. reported profits in the second quarter, mainly driven by improved profitability in its basic materials and chemicals sector. In particular, its operating profit reached the highest level in 18 quarters.

The chemical company announced on Thursday in a regulatory filing that its net income for the second quarter ended June jumped 9.3 percent to 385.6 billion won ($339.2 million) from the same period a year earlier. Operating profit also climbed 9.3 percent on year to 615.8 billion won, the highest operating profit since the third quarter of 2011, while its sales rose 2.8 percent to 5.22 trillion won.

LG Chem’s basic materials and chemicals business recorded a five-year high operating profit of 649.1 billion won, up a whopping 39.2 percent from the previous quarter, on sales of 3.65 trillion won, up 4.0 percent. The sector reported the highest operating profit since the second quarter in 2011 when it recorded 627.7 billion won.

The company forecasts that profitability in the basic materials and chemicals sector should remain solid in the third quarter, led by increasing sales in high value added products and stabilizing raw material costs.

The company’s energy solutions sector, however, posted an operating loss of 31.2 billion won, extending losses from the previous quarter, and 809 billion won in sales, down 0.7 percent on quarter. Its IT and electronics materials business also continued to report operating loss, 14.5 billion won, while sales rose 3.6 percent on year to 649.6 billion won.

LG Chem expected that demand for its small batteries would recover in the following quarters as its customers are scheduled to release new products, likely helping improve profitability in the energy solutions business. Demand for its vehicle and energy storage system (ESS) batteries is also expected to steadily increase, it said.

On Thursday, LG Chem stocks closed at 249,000 won, down 2.7 percent, or 7,000 won, from the previous session.

By Chung Wook

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]