After battery spinoff, LG Chem focuses on legacy business

20-Oct-2020 Intellasia | KoreaTimes | 6:02 AM Print This Post

After announcing its plan to spin off its battery business, LG Chem is trying to shift investors’ focus to its legacy businesses ? chemicals and biotechnology ? as the company has announced a series of new products under development and future business plans.

On Monday, LG Chem said it has developed a new biodegradable material that can be widely used in packaging including for plastic bags, air cap buffers and disposable cups, as part of efforts to be more eco-friendly.

The company said the material, which was developed for the first time in the industry, is made of 100 percent biodegradable content, using corn-based glucose and crude glycerol.

“At a time when the interest toward eco-friendly materials is increasing, it is very meaningful that the company has successfully developed biodegradable materials using 100 percent organic ingredients,” LG Chem Ro Ki-su said in a statement. “LG Chem will continue to focus on developing eco-friendly materials to lead the virtuous cycle of resources and preservation of the natural ecosystem.”

The release could be interpreted as LG Chem will be putting more focus on its core chemical business to assuage investors’ anger over its recent decision to spin off its battery business. Last month, LG Chem confirmed its plan to separate its battery business on December 1, under the new name LG Energy Solution. The announcement came after its battery business reached the break-even point in the second quarter.

LG Chem explained that its shareholders can still benefit from the solid performance of its affiliate. Investors have cast doubt on the company’s move because LG Chem has never released its preliminary earnings before filing its quarterly earnings report with the Financial Supervisory Service.

On October 12, LG Chem also announced its preliminary earnings for the July-September period for the first time, in an apparent move to soothe angry retail investors who bought LG Chem stocks before the company abruptly declared the spin-off of its battery business.

Market analysts said the company would be able to come up with a quarterly record-high profit as it had enjoyed a surge in the price of key products such as acrylonitrile butadiene styrene (ABS), polyvinyl chloride (PVC) and acrylonitrile butadiene (NB) latex. Also, the company had retained a quarterly surplus in the EV battery business.

Earlier this month, the company said it signed an agreement with local biotech company Cellid to develop and mass-produce a COVID-19 vaccine. As part of its efforts to improve shareholder value, the company further announced on October 14 that it will offer dividends of at least 10,000 won per common share over the next three years.

An LG Chem official said the development of the biodegradable material is its strategy to invest more in downstream plastic products.

“For LG Chem’s petrochemical business, broadly speaking, there are naphtha cracking centers (NCCs) to make materials to produce plastic and downstream plastic products. Downstream plastic products are not finished plastic products ? they are referred to as raw materials for plastic production,” the official said.

“We plan to invest about 10 percent of the planned investment for our downstream product business in plastic waste-related initiatives. We are considering investments in areas of biodegradable plastic and raw materials for biodegradable plastic materials.”


Category: Korea

Print This Post

Leave a Reply

You must be logged in to post a comment.