LG Chem expects to break even in battery biz

South Korea's LG Chem expects to break even in its electric car battery business despite posting a deficit on two consecutive quarters. It also anticipates its annual sales to reach 5 trillion won ($4.2 billion).

LG Chem said on July 24 that its EV battery business in the second quarter hit an accumulated deficit of 275.9 billion won, which fell short of the 267.5 billion won market estimates. The losses were mainly due to the series of fires at the Energy Storage Systems and a lowly yield from its facilities in Poland.

In total, the company logged 7.1 trillion of revenues, up 1.8% on-year. Operating profit fell 62% to reach 267.5 billion won, which was lower than the 300 billion-or-higher estimates from analysts.

“We thought the yield rates in Poland would stabilize in the second quarter, but this never happened,” said Kim Young-sik, executive vice president of business strategy for LG Chem’s battery department. “We expect it to recover to 90% in the fourth quarter.”

At the same time, EV battery orders are expected to rise from the 110 trillion won as of the end of the first quarter. This is owing to orders for the third generation EV batteries, along with requests from existing clients for more supplies. Another factor is the expansion of production lines for cyclical batteries at its Nanjing plant, compared to last year.

To stay vigilant against risks such as export sanctions from Japan, the company said it would becomemore independent in terms of key battery-making materials, such anode.

“We plan on making about 25-30% of the value-added batteries ourselves so that when adding the local suppliers, we can domestically secure about half of our battery anode demand within the next three to four years,” said Chung Ho-young, Chief Operating Officer of LG Chem.

The company currently manufactures about 20% of its anode. The remaining 80% comes from Japan, China and other local suppliers.

The Elec is South Korea’s No.1 tech news platform.