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LG Chem: Demand For Rechargeable Batteries Soars, Revenue Is Expected To Increase By 40% In 2020 Mar 19, 2018

March 11 news, according to foreign media reports, LG Chem CEO said that due to rising battery demand, especially for the demand for electric vehicles and energy storage system batteries, LG Chemical's revenue will increase by 40% in the next two years.


Park Jin-soo, chief executive of LG Chem, told reporters on Friday that the company’s revenue is expected to increase by 10 trillion won ($9.3 billion) in the next two years, with battery revenue accounting for “about half”. .


Last year, LG Chemical earned 25.6 trillion won. The company expects that the camp will reach 36.4 trillion won by 2020, an increase of more than 40% from 2017. Considering that the average revenue growth of other major companies after 2010 is less than 1%, this growth figure is quite challenging.


LG Chemicals is the only chemical company in the world that manufactures batteries.


Park Jin-soo, chief executive of LG Chem, said: “A large part of this revenue will come from car batteries. Although this goal sounds a bit difficult, we already have a lot of contracts in hand so we have confidence in this figure. The increase in sales of information technology and raw materials can also be expected."


As of last year, LG Chem has reached a supply agreement with about 30 automakers worldwide worth 42 trillion won. In the United States and Europe, as well as in China, the number of its customers has been growing. Last month, the Korean company also announced a partnership with Indian partner Mahindra & Mahindra, the owner of South Korean automaker Ssangyong Motors, to develop rechargeable batteries.


Park said: "It's hard to say what will happen in the Chinese market in the future, but in the long run, when (the Chinese government stops providing) subsidies, (commercial) will have an opportunity."


Park also mentioned that LG Chemicals has an advantage in manufacturing free-form batteries, which can be used in different designs and can be used in a wider range of applications. Given the rising cost of metals needed for battery manufacturing, Park said the company is "planning" to accommodate lithium, nickel and cobalt prices, including "co-production or setting up the necessary joint ventures."


In order to achieve the company’s ambitious revenue target, LG Chemical also announced that there has been a major upgrade in investment this year compared to 2017. This year, LG Chemicals will invest 3.8 trillion won, including 1.1 trillion won for R&D, 140 billion won for facility safety, and 1,500 employees.


Park said, "When we talk about the company's portfolio, we will stay away from those products that are easy to use in ethylene and avoid large-scale production (to remain competitive with other companies). That's why we invest heavily in research and development." Funds, which account for approximately 4% of the company's revenue, allow us to reach the level of R&D investment by global companies such as BASF and Dow."


LG Chemical's radical investment results began to appear at the Daesan complex, which is building a 400 billion won plant to produce synthetic rubber and plastic composite materials that are widely used in car bumpers, insoles and cables.


Once the plant is completed, the annual production capacity of elastic materials at the Daesan plant will increase from 90,000 tons to 290,000 tons, making LG Chemical the world's third-largest elastomer producer after Dow Chemical and ExxonMobil.


The Daesan complex also invested 287 billion won to expand its naphtha cracking center (NCC) facility to 230,000 tons. NCC is responsible for the production of ethylene and propylene. According to LG Chem, once the facility is completed, the facility will be able to produce 1.27 million tons of ethylene per year, making it the largest single ethylene plant in the world, with an annual revenue increase of more than 400 billion won.