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Chemical firms log decent Q3 earnings on tight supply, increased margins

According to Yonhap News,

(SEOUL=Yonhap News) South Korean chemical firms, led by LG Chem Ltd., have delivered decent earnings for the third quarter of the year on the back of higher oil prices and tight supply, industry sources said Tuesday.

LG Chem and two others -- Lotte Chemical Corp. and Hanwha Chemical Corp. -- posted a combined operating income of 1.77 trillion won (US$1.58 billion) and sales of 12.7 trillion won in the July-September period, which marks a 16.9 percent rise and a 35.4 percent jump from a year earlier.

LG Chem's third-quarter earnings surged 83 percent from a year earlier on steady demand for its key products, particularly basic materials and increased battery sales.

Its operating income rose 72 percent on-year to reach a record 789 billion won, and sales also rose 26 percent to 6.39 trillion won over the cited period, the company said.

LG Chem said its business division for basic materials managed to jack up its profitability due to seasonal factors with demand for other key products and higher spreads helping it log recent earnings.

Lotte Chemical also saw its third-quarter earnings jump 40 percent on-year as margin spreads on its key products widened thanks to stable demand.

Operating income spiked 19 percent on-year to reach 766 billion won in the third quarter with sales soaring 16.4 percent to 3.99 trillion won over the cited period.

Hanwha Chemical also enjoyed improved bottom lines with its operating income also advancing 5.18 percent on-year to reach 215 billion won.

Analysts said chemical firms will continue to see improved earnings during the fourth quarter of the year, aided by tight supply and higher margins.

"Tight supply may continue into next year, and local chemical firms will continue to log decent earnings," said Lee Ji-yun, an analyst at Shinyoung Securities.

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Source: Yonhap News (Nov. 14, 2017)
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