Hundreds of billions of forints worth of automotive investment could fall through in Hungary
In October 2021, we reported that the largest South Korean chemical group LG Chem and Japan's Toray Industries would set up a battery separator manufacturing plant in Hungary in a joint venture.
The investment, worth 267 billion forints at the exchange rate at the time, would have resulted in an annual production capacity of 800 million square metres of battery separators.
Under the plan, the parties would have shared the investment 50-50, with LG Chem acquiring a 20% stake from Toray for 642.7 billion won in the 30th month after completion of the plant.
Since then, there hasn't been much news about the project, but now there are two short headlines from Bloomberg:
- one is that LG Chem is reconsidering its battery separator joint venture in Hungary, and
- the other is that the company has made a loss due to interest costs and depreciation.
The company is therefore not in an easy position, and the latest financial figures are also prompting a review of previously decided investments.
LG Chem's final quarter of last year was indeed not a bright one, with the company's
- sales down 6% to 12.4 billion won,
- EBITDA down 21% to 1,027 billion won and
- a loss of 899 billion won in after-tax profit, according to a flash report released today.
In the preliminary earnings report, management highlights that
one of its key objectives for 2025 is to refine investment priorities to optimise resource allocation and improve financial stability.
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