L&F (066970.KS) Q1 2026: Revenue Doubles, Operating Swing Driven by ₩136.2B Inventory Reversal
L&F's first operating profit in six quarters is real in magnitude but fragile in origin — rising lithium prices unwound a cumulative inventory write-down rather than reflecting a structural improvement in cathode margins, while a ₩161.5 billion surge in financial costs pushed the bottom line to a net loss of ₩65.3 billion.
Source: 27th Fiscal Year Q1 Business Report — Filed May 2026 with DART | Consolidated Financial Statements | Unit: ₩ billions
L&F posted consolidated revenue of ₩739.6 billion in Q1 2026, more than double the ₩364.8 billion recorded a year earlier, as high-nickel cathode shipments hit a third consecutive quarterly record. Yet the eye-catching operating profit of ₩117.3 billion — the company's first positive operating result in six quarters and a figure that surpassed the market consensus of approximately ₩60.7 billion by more than 90% — was propelled not by a durable margin recovery but by a ₩136.2 billion non-cash reversal of inventory write-downs accumulated when lithium and nickel prices were depressed. Strip out that reversal entirely and the normalized operating loss sits at approximately ₩18.9 billion; apply the company's own IR methodology, which nets the reversal against prior-period charges to arrive at a ₩92.6 billion net inventory benefit, and the normalized figure nudges to a narrow ₩24.7 billion positive — thinly profitable by either measure but entirely dependent on commodity price direction. Below the operating line, ₩191.5 billion in financial costs — anchored by ₩121.2 billion in derivative valuation losses on convertible instruments and ₩45.1 billion in foreign exchange translation losses — converted the operating profit into a net loss of ₩65.3 billion. With ₩1.7 trillion in interest-bearing debt, a speculative-grade credit rating, and the counterparty to a ₩9.24 trillion supply contract now in bankruptcy proceedings, L&F's investment case ultimately rests on whether a ₩23.5 trillion order backlog can be monetized before the capital structure constrains it.
