1Q Sales 5.0861 Trillion KRW · Operating Loss 135.3 Billion KRW
Basic Materials Business and LC Titan Under Review
Lotte Chemical announced that it will rapidly reduce the business proportion of its commodity petrochemical sector. It is considering asset lightening for downstream assets held not only in Korea but also in Southeast Asia and the United States.
On the 9th, Kim Min-woo, Head of Strategy Planning at Lotte Chemical, said at the Q1 earnings briefing, "The biggest concern Lotte Chemical has is that the high proportion of commodity petrochemicals causes significant performance volatility depending on market conditions," adding, "In the past, we tried to complement this by incorporating businesses with different cycles, but the proportion of commodity petrochemicals remains large."
He continued, "We are internally considering asset lightening in various downstream sectors in Korea, Southeast Asia, and the United States, and related to this, we will quickly reduce the proportion of the commodity petrochemical portfolio."
However, Kim refrained from sharing specific progress, saying, "There are some advances among various options, but it is not yet at a stage to share," but in the industry, the basic materials business division, LC Titan, and LC USA are being mentioned as targets for asset lightening.
Additionally, Lotte Chemical revealed plans to divide its business groups into five strategic business units: basic chemicals, advanced materials, fine chemicals, battery materials, and hydrogen energy, and to manage each unit strategically.
Lee Hoon-ki, CEO of Lotte Chemical, explained, "We will strengthen the role of the cash cow in basic chemicals through asset lightening and maximizing operational efficiency, grow advanced materials as the core of a healthy portfolio by maintaining a profit-generating structure while expanding volume, establish a leading position in battery materials focusing on anode and cathode foil businesses and seek additional business expansion opportunities, and in hydrogen energy, build a business foundation by utilizing by-product hydrogen and expand the business by securing overseas clean ammonia."
Lotte Chemical explained that accelerating the business portfolio transition means prioritizing corporate value over sales. Kim added, "We have created a business strategy team, and decision-making to improve operations or efficiency is delegated to each business unit," further explaining, "You can understand that new investments or portfolio adjustments are discussed between the business units and the entire company."
Meanwhile, Lotte Chemical recorded provisional Q1 consolidated results with sales of KRW 5.0861 trillion and an operating loss of KRW 135.3 billion. Sales slightly increased compared to the same period last year, but the operating loss increased by KRW 130 billion. Profitability improved compared to the previous quarter (-KRW 315.8 billion).
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