KUALA LUMPUR, 1 August 2022 - LOTTE Chemical Titan Holding Berhad (LCT), a subsidiary of LOTTE Chemical Corporation under the LOTTE Group, announced its second quarter financial results ended 30 June 2022 (2Q FY2022). LCT Group’s revenue increased by 11 % (or RM274.3 million), from RM2.54 billion to RM2.82 billion. The revenue of the Group’s two principal product categories: - Olefins & derivatives and polyolefins, increased by 29% and 6% respectively. Nonetheless, the Group registered a loss after tax of RM149.4 million in 2Q FY2022 due to the following factors:
∙ Higher naphtha feedstock costs2increased by 64% YoY.
∙ The decline in market prices of LCT's products caused a write-down of inventories of RM96.5 million to the net realisable value.
∙ Workforce shortage in the plastic fabrication industry hampered the demand for petrochemical products.
∙ The impact of China's lockdown due to the Covid-19 pandemic has weakened the country’s economic activities and disrupted the demand and supply balance of petrochemical products in the region.
∙ A decrease in profit share from the associate company, LOTTE Chemical USA Corporation3 due to rising ethane cost.
In the first half of the financial period ended 30 June 2022 (1H FY2022), the Group’s revenue increased by 14% (or RM666.7 million) from RM4.91 billion to RM5.58 billion, with Olefins & derivative products, and Polyolefins products increased by 31% and 9% respectively. In 1H FY2022, the Group recorded a loss after tax of RM46.5 million that was mainly affected by higher feedstock costs and other external factors as mentioned above.
Mr. Park Hyun Chul, President & Chief Executive Officer of LCT said, ‘The challenging business landscape and pandemic-triggered uncertainties have impacted our financial performance. With this, LCT rigorously executes the operational and business optimisation aligned to customers’ demands, resulting in a lower overall plant utilisation rate of 81%. Our operations are swiftly adaptable to the market movements to ensure the Group stays on course to become the top-tier petrochemical company in Southeast Asia (SEA).’
‘In view of the International Monetary Fund (IMF)’s forecast of 5.1% economic growth4for the Southeast Asian countries in 2022 and the international borders reopening, the demand for petrochemical products is expected to remain resilient. LCT has established a robust business framework with a healthy balance sheet and cash position. As of 30 June 2022, LCT has zero borrowings and cash & bank balances and other investments of RM3.2 billion. After deducting the fund to be earmarked for LOTTE Chemical Indonesia New Ethylene (LINE) Project, LCT’s cash balances stand at around RM0.9 billion. Despite the market volatility, our business fundamentals remain strong and we will continue to exercise effective financial and operational management to ride through the challenging economic situation.’ added Mr Park.
In line with its purpose of strengthening LCT’s market presence as the top-tier petrochemical company in SEA, LCT is heating the race through the construction of Indonesia expansion project, the LINE Project. With an investment value of USD 3.95 Billion (approximately RM17 Billion), it commenced construction in the first quarter of this year and is slated for completion by 2025. Upon completion, the LINE project aims to enlarge LCT’s regional footprint with a 65% increase in LCT’s total plant capacity. This will cater to the Indonesian market’s needs as the net importer of polymer and petrochemical products.
As a leading petrochemical company with over 30 years of history in the region, sustainability is always at the company’s core. LCT's Environmental, Social, and Governance (EGS) strategies encompass climate response & minimising environmental impact, health and safety of the people, and maintaining a sustainable governance structure to stay in line with LOTTE Chemical's corporate
vision 'Every Step in Green'.
