LG Chem may well be able to make a turnaround and post a profit in its electric car battery business for the first time ever in the fourth quarter, market watchers said Thursday.
The South Korean company does not separately disclose the performance of the EV battery business, but the prevalent view is that it will hit an annual operational profit of 196 billion won ($176 million) next year. The balance last year was 114 billion won in the red, which is expected to shrink to 56 billion won in the red this year.
"The basic price of metal that makes up anodes has fallen, and the production cost of rechargeable batteries has also fallen from increased output," Hwang Yoo-shik, an analyst with NH Investment & Securities, said in his report released Wednesday. NH is one of the securities firms that projected the profit turnaround.
The EV battery business was viewed as a long-term project that eventually would become the next profit generator. It became a highlighted segment for the company after LG Group's new Chairman Koo Kwang-mo initiated promotions, as well as scouting outside experts and investments.
Thirty-nine senior-level officials at LG Chem were promoted, the largest scale ever for the company, in last month's reshuffle.
For investment, the firm decided in July to build a second EV battery plant in Nanjing, China.
The proportion of LG Chem's battery business to the company's entire sales is estimated to grow from about 23 percent this year to 32 percent next year.
"If we see a profit turnaround in the fourth quarter, then it will be proof that the EV battery business is a revenue generator," a company official said. "It will be a chance for (the EV battery sector) to not just become a promising star but an MVP." (Yonhap)