LG Chem has slipped further away from achieving its annual 10 trillion won revenue goal for its battery business, as its accumulated sales up until the third quarter of this year fell short of 6 trillion won.
The biggest factors were the disruption in mass production plans at its EV battery plant in Poland and sluggish domestic sales caused by fires at Energy Storage Systems.
On an upside, the company managed to post an operating profit in the third quarter after experiencing consecutive deficit in the first and second quarters.
The lackluster performance in its battery division has made it difficult for LG Chem to achieve its company-wide sales goal of 32 trillion won, according to industry watchers. Its chemical sector is also suffering on account of sluggish global economic conditions, and if this continues, the company is forecast to post around 28 trillion won of sales, which is not much of an improvement from last year.
“We hope to improve our revenues next year to around 10 trillion won,” said Yoon Hyun-suk, head of LG Chem’s IR division.
The lower-than-expected battery sales are most likely to affect its capacity as well. Earlier this year, LG Chem was aiming for capacity of around 100-110 GWh by 2020. This is assuming that the company’s Poland plant will show stellar performance; as of the end of next year, the facilities there will account for up to 60% of LG Chem’s battery production. Other facilities in China and Korea take up around another 30%, with the rest coming from the US.
Meanwhile, from its ESS business, LG Chem could incur up to 100 billion won of losses this year. Up until the third quarter of this year, its accumulated deficit reached 204.7 billion won.
For the entire Q3, LG Chem posted 7.34 trillion won of sales and an operating profit of 380.3 billion won, which beat market estimates. Analysts expect the firm to improve in the fourth quarter on better productivity and more shipment of car batteries.
The Elec is South Korea’s No.1 tech news platform.