09 September 2004 08:01 [Source: ICIS news]
SINGAPORE (CNI)--LG Chem, South Korea’s biggest chemicals company, has no immediate plans to revise its earnings forecast for 2004 in light of a sharp downturn in the domestic construction market, a company spokesman told CNI on Thursday.
The spokesman said that the company had already anticipated a weakening of the local construction industry in its earlier financial forecast, as well as the revision issued in late July. Local construction firms take up much of the output of LG Chem’s industrial materials division.
The National Statistical Office (NSO) said on Monday that the number of domestic construction orders received was down by 14.2% year-on-year in the first quarter and down 27.7% in the second quarter. The number of construction permits issued in the first half of 2004 fell to 74 137 compared with 91 904 in the same period a year earlier.
The spokesman noted that LG Chem had been seeking external markets for its products in the face of the downturn in the local construction sector. “The industrial materials business has been affected (by the downturn) but we are trying to increase our sales overseas and reduce the pressure from the domestic situation.”
He could not immediately provide details on whether the company’s level of exports for this year had increased. However, he noted that the industrial materials division had a target of raising its overseas sales to 24.9% of total sales in 2006 and 29.7% in 2008. Overseas sales were 13.9% of total sales in 2003.
He noted that the downturn’s impact on LG Chem’s industrial materials division would be mitigated by the company’s switch to high value-added materials - specifically noting its HI-MACS artificial marble and its high-gloss sheet products.
LG Chem’s longer-term strategy involves shifting production to higher-value products and reducing its reliance on South Korea’s domestic market. The spokesman said LG Chem was trying to develop its presence in Brazil, Russia, India and China, Those four countries along with Korea, have been referred to by the acronym Bricks (Brazil, Russia, India, China and Korea).
LG Chem’s most recent 2004 earnings forecast sees sales of Won6.71trn and an operating profit of Won592bn. LG Chem’s 2003 sales were Won1.29trn while its operating profit was Won147bn.
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