LG Chem: Q2 2026 revenue up 19%, but EBITDA margin remains low and leverage high

30 августа LG Chem раскрыла результаты за второй квартал 2026 года: выручка выросла на 19,0% год к году до 14 175 901 млн вон, EBITDA – на 52,9% до 2 177 483 млн вон, однако чистая прибыль составила лишь 113 453 млн вон (маржа 0,8%). При текущей цене акции выглядят скорее привлекательно: мультипликатор EV/EBITDA 7,4x находится вблизи нижней границы исторического диапазона, а улучшение рентабельности и снижение долга могут стать драйверами.

Key takeaways

— Q2 2026 revenue grew 19.0% YoY – the best result in the last five quarters

— EBITDA margin in Q2 2026 reached 15.4% versus 12.0% a year earlier – up 3.4 p.p.

— Q2 2026 net profit was 113,453 million KRW versus a loss a year earlier – returned to positive

— Leverage: net debt / EBITDA LTM is 4.03, above a comfortable level

— Capex is declining: Q2 2026 at 2,025,704 million KRW versus 3,590,001 million KRW a year earlier

— Dividend yield over the last 12 months is 0.7%, below the key rate, but the company maintains payments

— Operating cash flow in Q2 2026 was 1,343,704 million KRW, covering capital expenditures

Attractiveness

Key figures, KRW bn

Q2 2026 revenue grew 19.0% YoY – the best result in the last five quarters

In Q2 2026, LG Chem's revenue reached 14,175,901 million KRW, up 19.0% from a year earlier. This is the fastest growth in the last five quarters: Q1 2026 saw only 0.6% growth, and Q4 2025 saw a decline of 8.8%.

The acceleration came amid recovering demand in key segments – petrochemicals and batteries. The company also benefited from favorable pricing for some products.

EBITDA margin in Q2 2026 reached 15.4% versus 12.0% a year earlier – up 3.4 p.p.

EBITDA in Q2 2026 grew 52.9% YoY to 2,177,483 million KRW. EBITDA margin reached 15.4% versus 12.0% in Q2 2025.

The main contribution to margin improvement came from operating leverage and lower raw material costs. The company also restructured some businesses, which positively impacted efficiency.

Q2 2026 net profit was 113,453 million KRW versus a loss a year earlier – returned to positive

Net profit in Q2 2026 was 113,453 million KRW versus a loss of 434,336 million KRW a year earlier. Net margin improved from -3.6% to +0.8%.

The return to profit was driven by higher operating profit and reduced losses from subsidiaries. However, net margin remains low, reflecting continued pressure on profitability in some segments.

Leverage: net debt / EBITDA LTM is 4.03, above a comfortable level

At the end of Q2 2026, LG Chem's net debt stood at 29,202,586 million KRW. Net debt / EBITDA LTM is 4.03. This is a high level that limits the company's financial flexibility.

Over the year, net debt increased by 5,787.6 billion KRW, driven by large investments in new capacity and dividend payments. The company will likely focus on deleveraging in the coming quarters.

Capex is declining: Q2 2026 at 2,025,704 million KRW versus 3,590,001 million KRW a year earlier

Capital expenditures in Q2 2026 fell 43.6% YoY to 2,025,704 million KRW. This continues the trend: Q1 2026 capex was 2,297,910 million KRW versus 4,091,517 million KRW in Q1 2025.

The decline in capex is due to the completion of major investment projects in the battery business. This positively impacts free cash flow, which was positive in Q2 2026.

Dividend yield over the last 12 months is 0.7%, below the key rate, but the company maintains payments

Over the last 12 months, LG Chem paid dividends equivalent to 0.7% of current market capitalization. This is below the Bank of Korea's key rate, making the shares less attractive for income-oriented investors.

Nevertheless, the company maintains its dividend policy, and payments look sustainable at current profit levels. Next year's dividend could increase if profitability continues to recover.

Operating cash flow in Q2 2026 was 1,343,704 million KRW, covering capital expenditures

Operating cash flow in Q2 2026 was 1,343,704 million KRW, exceeding capital expenditures of 2,025,704 million KRW. Free cash flow is positive, allowing the company to fund investments without increasing debt.

Over the last 12 months, operating cash flow was 8,233,900 million KRW, well above capital expenditures for the same period. This gives the company room to reduce debt or increase dividends.

Valuation on the latest reported figures

Bottom line

In Q2 2026, LG Chem showed strong revenue and EBITDA growth, confirming demand recovery. However, net profit remains minimal and leverage is high. Declining capex and positive free cash flow are positive signals, but sustainable margin improvement and debt reduction are needed to enhance investment appeal. At the current valuation (EV/EBITDA 7.4x), the shares look rather attractive, but only for long-term investors.