[Photo provided by LG Chem Ltd.]

<이미지를 클릭하시면 크게 보실 수 있습니다>

Analysts have become buoyant about battery major LG Chem Ltd. after it entered joint-venture business with General Motors and expect better earnings next year.

According to estimates compiled by Seoul-based financial data provider FnGuide, LG Chem’s operating profit is estimated to reach 1.89 trillion won ($1.58 billion) next year, up a whopping 59.7 percent from estimates for full 2019.

Estimated revenue for 2020 also jumped 22.5 percent on year to total 35.46 trillion won, data showed.

LG Chem is expected to gain traction to boost its global market share with expanded output from its new battery cell plant in Ohio, the U.S.

LG Chem last week announced that it will set up a 2.7 trillion won joint venture in Ohio with GM, in which each company put up 1 trillion won, to build a battery cell plant with an annual capacity of more than 30 gigawatt-hours (GWh).

LG Chem Vice Chairman and CEO Shin Hak-cheol (right) and GM Chairman and CEO Mary Barra shake hands after signing a contract to build a battery cell factory in Ohio, the U.S. [Photo provided by LG Chem Co.]

<이미지를 클릭하시면 크게 보실 수 있습니다>

Construction is scheduled to start in mid-2020, and the new factory will exclusively supply battery cells for GM’s next generation of electric vehicles.

Markets say the partnership will bring more benefits to both companies amid possible shortages of battery supply in the booming EV market. With joint-ventures, automakers and battery producers can establish the stable supply and demand system and also the optimal price target.

“LG Chem used to avoid setting up a joint-venture in fear of technology leaks. Recent change in its policy is positive for its growth and markets now expect additional setups,” said Kang Dong-jin, an analyst at Hyundai Motor Securities.

LG Chem shares on Wednesday closed 0.5 percent higher at 300,500 won in Seoul.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]