• Korean company sees surge in demand for electronics, batteries
• Firm to build $1.1bn battery-cell plant in Indonesia with Hyundai
South Korea’s LG Chem on Thursday posted a four-fold surge in quarterly profit on pandemic-led demand for its chemicals used in making electronic products such as laptops and TVs, and said sales of batteries used in electric vehicles were improving.
The company’s LG Energy Solution business, a supplier of batteries used in EVs made by General Motors and Tesla, has thrived on growing demand for such cars in Europe and the United States. But analysts have said a month’s-long chip shortage that hit global auto production has recently weighed on LG Chem‘s profits.
“We are seeing gradual increases in our cylindrical battery shipments and we expect to see continuous growth as the global EV demand continues to grow,” Chief Financial Officer Cha Dong-seok said during an earnings briefing on Thursday.
Recently, some executives at chipmakers and car companies have turned cautiously optimistic over a potential easing of the supply crunch in the second half of the year.
But others, such as Stellantis, said they expect the shortage to continue well into next year.
LG Chem, which is on track to hive off its battery business, said on an analyst call that it plans to secure EV battery production capacity of 430 gigawatt hours in 2025 that could power about 11.6 million EVs. It had earlier forecast capacity of 155 GW hours for end-2021.
Battery-cell plant in Indonesia
Earlier on Thursday, LG Chem said it would set up a $1.1-billion joint venture with Hyundai Motor Group to build a battery cell plant in Indonesia.
The company, which gets nearly 60% of its operating profit from its chemicals business, said its operating profit jumped to 2.2 trillion won ($1.92 billion) for the April-June period.
The latest quarterly profit included a settlement payment from rival SK Innovation Co Ltd worth 1 trillion won ($872.5 million), and a previously announced 400 billion won cost to replace batteries for energy storage systems (ESS) after fire risks were found.
The quarterly profit beat an average broker forecast of 1.2 trillion won, compiled by Refinitiv SmartEstimate.
In April, SK Innovation said it would pay LG Chem nearly $2 billion to drop all litigation in a bitter trade secrets dispute that had threatened a plant in the US state of Georgia which SK is building to supply Ford Motor Co and Volkswagen AG.