Operating Loss of 413.6 Billion Recorded
Deficit Expands 272% Compared to Previous Quarter
"Short-Term Recession Resolution Seems Difficult"
Lotte Chemical announced on the 7th that it recorded consolidated sales of KRW 5.2002 trillion and an operating loss of KRW 413.6 billion in the third quarter.
Sales increased by 5.6% compared to the same period last year, but the company turned to a loss. Compared to the previous quarter, the operating loss widened by 272.1%.
Lotte Chemical stated, "The deficit widened compared to the previous quarter due to delayed demand recovery and a decline in product spreads caused by exchange rate depreciation, one-time costs from partial repairs of overseas subsidiaries, and increased maritime freight costs."
Basic Chemicals recorded sales of KRW 3.6282 trillion and an operating loss of KRW 365 billion. In the fourth quarter, it is expected that one-time costs will be eliminated and gradual supply and demand improvement will be possible due to stabilization of raw material prices and maritime freight costs.
Advanced Materials posted sales of KRW 1.1217 trillion and an operating profit of KRW 38.1 billion. Profitability declined due to increased maritime freight costs and reduced product sales volume and spreads caused by weakening demand in downstream industries.
Lotte Fine Chemical recorded sales of KRW 420.4 billion and an operating profit of KRW 10.3 billion. Profitability worsened due to weak chlorine market conditions and reduced sales volume of ammonia-based products. The company expects sales to increase in the fourth quarter due to rising international prices and increased sales volume of chlorine and ammonia products, as well as expanded sales of green material products.
Lotte Energy Materials recorded sales of KRW 211.4 billion and an operating loss of KRW 31.7 billion. Production and sales volume decreased due to reduced demand in downstream industries, and the company turned to a loss due to exchange rate depreciation and increased inventory valuation losses. With the start of mass production at the new plant of the core customer North American joint venture (JV), North American sales volume is expected to increase compared to the previous quarter, while demand in the European market is expected to be volatile due to inventory adjustments by customer companies.
Lotte Chemical stated, "In the short term, the chemical industry downturn caused by geopolitical risks and demand imbalance is not expected to be easily resolved, but we will continue efforts to secure financial soundness by focusing execution on areas within the company's control."
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