Tesla battery supplier LG Chem expects record third quarter profit
By Hyunjoo Jin and Heekyong Yang
SEOUL (Reuters) – South Korea’s LG Chem Ltd, an electric vehicle (EV) battery supplier for Tesla and a maker of petrochemicals, said on Monday that its third-quarter operating profit was likely to hit an all-time high , exceeding analysts’ estimates.
The company did not specify the reasons for its optimistic outlook, but analysts attributed it to Tesla’s orders and the coronavirus pandemic which has increased demand for home appliances – one of the applications of petrochemicals.
LG Chem estimated that its operating profit jumped 159% to 902 billion won ($ 788.94 million) in the quarter ended September, above the 746 billion won forecast by analysts at Refinitiv SmartEstimate.
Revenue likely rose 9 percent to 7.5 trillion won from a year earlier, the company said.
The company is expected to release detailed results later this month.
LG Chem, along with the Chinese CATL, supplies batteries for Tesla’s electric cars made in Shanghai. Tesla posted record quarterly deliveries in the third quarter.
Analysts expect LG Chem’s battery business to remain profitable in the third quarter and its core petrochemical business to post strong earnings.
Despite the bullish outlook, LG Chem shares fell 2.3% on fire risks associated with its battery cells for Hyundai Motor’s Kona electric vehicles.
LG Chem said faulty battery cells were not the cause of the fires in Kona EVs and the exact cause had not been determined.
Tesla’s long-term plan to produce its own cells hurt LG Chem stocks, which had rallied this year amid expectations for electric vehicles.
LG Chem shares have also come under pressure after announcing last month that it intends to separate its battery business into an independent unit.
($ 1 = 1,143.3,100 won)
(Reporting by Hyunjoo Jin and Heekyong Yang; Editing by Stephen Coates)