Lotte Chemical Titan wraps up FY2022 with another loss-making quarter amid weakened demand

KUALA LUMPUR (Jan 31): Lotte Chemical Titan Holding Bhd (LCT) posted a net loss of RM317.22 million in the fourth quarter ended Dec 31, 2022 (4QFY2022) — its third consecutive quarter of losses — versus a net profit of RM168.89 million a year earlier.

This was due to a decline in margin spread amid weakened market demand resulting from a volatile external environment, higher foreign exchange (forex) losses of RM32.7 million, and its share of loss from Lotte Chemical USA Corporation (LC USA) of RM6.4 million.

Quarterly revenue declined 22.97% to RM2.07 billion from RM2.68 billion, on lower average product selling price and sales volume.

On a quarter-on-quarter basis, LCT trimmed its net loss by 10.77% from RM355.5 million in 3QFY2022, mainly contributed by a reversal of royalty expenses, a reversal of write down of inventories to net realisable value, and a lower share of loss from an associate company. Revenue decreased 16% q-o-q from RM2.37 billion, due to lower average product selling prices and sales volume.

For FY2022 as a whole, LCT registered a net loss of RM714.64 million against a net profit of RM1.04 billion in FY2021, despite revenue increasing 1.91% to RM10.02 billion from RM9.83 billion on higher product selling prices.

The group said its outlook is expected to remain challenging in the near term in view of the market situation, and has implemented an optimisation plan to better balance production costs and economic efficiencies, president and chief executive officer Park Hyun Chul commented.

“We have also conducted rigorous cost management and financial liquidity to ensure the financial positions of the group remain healthy.

“As at Dec 31, 2022, LCT has cash and bank balances of RM1.32 billion. To reward our shareholders for their continued and unwavering support, LCT declared a special dividend of 13.98 sen per share, which amounted to a dividend payout of RM318.4 million, on Nov 24, 2022,” he said.

In addition, the Lotte Chemical Indonesia Ethylene (LINE) project that will be completed in 2025 will strengthen LCT’s market presence in the petrochemical industry with a 65% increase in total production capacity, said Park.

“Indonesia is a net importer of petrochemical products. The project will enable us to capitalise on the anticipated increase in demand for our products in the country,” he added.

LCT holds an effective equity interest of 51% in PT Lotte Chemical Indonesia (LCI), the owner of the LINE Project, while Lotte Chemical Corp (LCC) holds the remaining 49%. As of Jan 6, 2023, LCT and LCC had completed their portion of equity injection of US$1.6 billion into LCI.

At Tuesday’s (Jan 31) market close, LCT was down one sen or 0.63% at RM1.57, giving the group a market capitalisation of RM3.63 billion.