LG Chem unlikely to spin off EV battery biz this year

LG Chem, a leading lithium-ion battery supplier, seems unlikely to push ahead with plans to spin off its battery business this year, a news report suggested Monday.

The report said the company’s task force team responsible for the battery spinoff had concluded last week that it would not be profitable due to various business hurdles and difficult market conditions.

The South Korean battery maker said last year in a regulatory filing that the company was seeking to enhance the competitiveness of its battery business unit through various means, in response to a possibility of the spinoff raised by local media.

At the time, it was reported that LG Chem had planned to spin off the unit by July 2020.

There were rumors that LG Chem was planning to launch the battery business as a subsidiary and go public on the stock market to attract sufficient investment.

To meet the rapidly increasing demand for lithium-ion batteries for electric vehicles, the Korean company is expanding investment every year to raise its production capacity.

LG said last Tuesday that it would acquire a home appliance assembly factory in Poland from the Turkish firm Vestel to ramp up its battery plant in the country.

The company has said it will increase its total production capacity to 120 gigawatt-hours by the end of 2021.

Despite bright prospects for growth, the company is suffering lower-than-expected profit margins due to massive investment in production infrastructure.

Last year, LG Chem’s battery unit recorded an operating loss of 454.3 billion won even though its sales reached 8.34 trillion won.

“Regarding the spinoff possibility, the company hasn’t officially confirmed any details,” a company official said. “If there is any change in the plan, it will be revealed through a regulatory filing.”

By Song Su-hyun (song@heraldcorp.com)