Lotte Chemical Precision, 2Q Operating Profit 53.9 Billion KRW... Up 59.0% YoY

Establishment of 'ESG Committee' Under the Board of Directors

[Asia Economy Reporter Hwang Yoon-joo] Lotte Fine Chemical announced on the 2nd that its consolidated operating profit for the second quarter of this year reached 53.9 billion KRW, a 59.0% increase compared to the same period last year. During the same period, sales were preliminarily estimated at 421.7 billion KRW, up 43.8%. Compared to the previous quarter, sales increased by 22.6% and operating profit by 51.8%.

Lotte Fine Chemical explained that compared to the same period last year when the economy was contracted due to COVID-19, sales and operating profit increased due to rising sales volume and prices of major products driven by increased demand from upstream industries. Compared to the previous quarter, sales and operating profit increased due to the rise in international prices entering the peak season of the second quarter.

By division, the Chemical Business Division recorded sales of 325.8 billion KRW, a 55.4% increase compared to the same period last year. Sales volume increased due to expanded demand for ammonia and caustic soda used across industries, as well as ECH (a raw material for epoxy coatings) used in upstream industries such as construction and shipbuilding. The price increase was influenced by supply shortages caused by equipment issues and regular maintenance of major manufacturers.

The Green Materials Business Division recorded sales of 95.8 billion KRW, a 14.6% increase compared to the same period last year. This was due to the recovery of the global construction market, growth in plant-based food, and pharmaceutical markets, which are upstream industries for cellulose-based products. However, external factors affecting the highly export-dependent cellulose products negatively impacted profitability. These external factors include raw material price increases and an unusual surge in shipping freight rates.

Lotte Fine Chemical has announced plans to invest a total of 180 billion KRW in eco-friendly cellulose-based businesses. In the second quarter, it completed 140 billion KRW of this investment as scheduled. Specifically, this includes 115 billion KRW for expanding the Mescellose (cement additive) plant and 23.9 billion KRW for expanding the Anycoat (plant-based pharmaceutical capsule raw material) plant. By the first half of next year, it plans to complete a 37 billion KRW expansion of the food and pharmaceutical plant.

Additionally, Lotte Fine Chemical announced on the 2nd that it has established an 'ESG Committee' under the board of directors. The ESG Committee is responsible for establishing basic policies and strategies related to ESG and plays a central role in maximizing performance. This reflects the intention to actively and systematically promote ESG management through the board of directors, the highest decision-making body. The ESG Committee is composed of three outside directors and two inside directors to enhance transparency and independence in decision-making.

Lotte Fine Chemical stated, "We regard this year as the inaugural year of ESG management and have newly formed an ESG Committee under the board of directors. Based on this, we will actively promote ESG management."