Seoul: LG Chem Ltd., South Korea's leading chemical firm, announced plans to significantly reduce its planned facility investments by more than 1 trillion won (US$680 million) this year. This decision comes in response to an ongoing downturn in the industries related to its operations, as confirmed by a company executive.
According to Yonhap News Agency, during the 2024 earnings conference call held last month, LG Chem indicated its intention to lower capital expenditures from the previously planned 4 trillion-won level to a range between 2 and 3 trillion won. On Monday, Vice Chairman and Chief Executive Officer Shin Hak-cheol revealed at the company's shareholders meeting that the annual spending figure will be further reduced from the 2.5 trillion-won to 2.7 trillion-won range by more than 1 trillion won.
Shin emphasized the importance of cash flow for the company during this critical period. After the shareholders meeting, he informed reporters that LG Chem has been actively cutting costs and reorganizing its petrochemical business portfolio to navigate the current market downturn.
The company is also contemplating various options, including the sale of its naphtha cracking center (NCC). Additionally, LG Chem is considering selling a stake in LG Energy Solution Ltd., the country's largest battery maker, to secure additional capital. Currently, LG Chem holds an 81.84 percent stake in LG Energy Solution.
For the entire year of 2024, LG Chem experienced a sharp decline in net profit, which fell by 74.9 percent to 515 billion won from 2.05 trillion won in the previous year. This drop is attributed to decreased demand for petrochemical and battery material products.