Q2 net profit of LG Chem rises by 60% on upbeat petrochem sales

17-Jul-08

South Korea's largest chemicals maker - LG Chem, has recorded a 60% increase in net profits fro the quarter. Net profit for Q2 was at 375.3 bln won (US$372.2 mln). This dramatic rise can be attributed to bullish petrochemical sales that have offset record high feedstock cots. Another major factor supporting the increased profits has been LG Chem's acquisition of affiliate LG Petrochemical Co Ltd. thereby leading to an increase in its ethylene capacity. With this acquisition that pushed up total ethylene production to 1.66 mln tpa, LG Chem's listing elevated to number 5 ethylene producer in Asia, and number two in South Korea. The augmented capacity coupled with robust demand from Asia has pushed up petrochem sales by over 35%. Despite soaring raw material prices, robust demand has prevailed in Q2 for LG Chem's main product offering of ABS and PVC. In fact, strong petrochemical prices are estimated to alleviate the load of high feedstock prices through Q3. However, as added capacity comes onstream in China and India towards the end of the year, increasing supply in these region is expected to affect bottom line of refining and petrochemical firms across Asia.