S Korea's LG Chem expected to improve profitability in '13 – Moody's

30 January 2013 07:31  [Source: ICIS news]

SINGAPORE (ICIS)--South Korean chemical company LG Chem’s profits are expected to improve this year on the back of a recovery in the key China market, ratings firm Moody's Investors Service said on Wednesday.

“Moody's expects its profitability to improve in 2013 due to a bottoming out of the Chinese economy, which is the key driver for the profit margins of the region's major chemical products,” it said in a statement.

“However, the extent of improvement will likely be constrained by margin pressures on its electronics materials and rechargeable battery businesses,” Moody's added.

LG Chem on 29 January posted a 22.5% year-on-year fall in its fourth-quarter 2012 net profit at won (W) 292bn ($270m), despite a 1.5% increase in sales between October and December.

The chemical producer said its consolidated operating income was at W364bn in the fourth quarter of last year, a 28% year-on-year drop.

This was largely driven by a 43% year-on-year fall in operating income at its non-petrochemicals business.

However, the decline in LG Chem’s petrochemicals business was “relatively modest at 24%”, according to Moody’s.

“The firm’s weaker operating performance in the fourth quarter will not have an immediate impact on its A3 issuer rating and stable outlook, but the financial headroom for its A3 rating has reduced,” the ratings firm said.

LG Chem also posted a 30.6% year drop in its full-year 2012 net profit, despite a 2.6% increase in sales.

The company could not be immediately reached for comment.

($1 = W1,083)

By: Nurluqman Suratman

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