“Stable profitability will be maintained in the petrochemical sector, and large growth in the energy solutions sector is also expected,” Cha Dong-Seok, LG Chem’s chief financial officer and executive vice president, said on Friday July 31 while the company presented its second-quarter financial results.
LG Chem Energy Solutions manufactures batteries for the automotive manufacturing, energy storage and the consumer electronics sectors. During the second quarter of 2020, a 25% surge in sales quarter-on-quarter meant that it showed a surplus for its EV battery business, the company said.
This was the best quarterly performance recorded by the company’s EV battery unit and exceeded market expectations, despite the problems caused by the Covid-19 pandemic.
Among key factors contributing to the positive performance in the sector, the company cited growing sales of EVs because of a raft of new emission-reduction policies, especially in Europe and China, as well as development of the large-scale Energy Storage System (ESS) project in North America. There was also a reduction in costs at LG Chem’s battery plant in Poland.
LG Chem’s strong second-quarter results came against the backdrop of an expected surge in electric vehicles sales in the years ahead. Europe and other countries and regions are continuing to tighten their regulations on vehicles with internal combustion engines (ICEs) while the shift to cleaner transportation systems gains pace, thanks to generous government incentives spurring more EV sales.
“It is encouraging that LG Chem’s energy solution division turned a profit in the second quarter and it expects to see large growth in this sector,” William Adams, head of battery materials and base metals research at Fastmarkets, said.
“With EVs gaining market share, with sales encouraged in many countries by government incentives, the outlook is brighter for lithium-ion battery sales and this should, in time, flow back up the supply chain,” he added. “It is particularly interesting to see the company point to ESS projects in North America as also boosting battery sales.”
The Korean firm’s belief that the regulatory backdrop should provide support for an accelerated adoption of EVs in the mid to long term was recently echoed by Belgian battery materials manufacturer Umicore