IR Day Held for Institutional Investors
Second Group-Level Briefing Following Last November
Business Strategies Unveiled Centered on Five Listed Affiliates
On the afternoon of the 27th, Lotte Group held the 'Lotte Group IR Day (Investor Relations Day)' at the Conrad Hotel in Yeouido, Yeongdeungpo-gu, Seoul, targeting investors and market stakeholders. This event aimed to introduce the process of business restructuring following efforts to improve the financial structure through asset sales to dispel liquidity crisis rumors that surfaced last year, and to share the group's future growth strategies.
Lotte Tower panorama.
This event was the second organized by the group, following an IR session held for institutional investors on November 28 last year, where measures such as revaluation of land assets, sale of low-profit assets, and investment reduction were explained. About 10 executives in charge of finance, planning, and IR from Lotte Holdings and five major listed affiliates?Lotte Wellfood, Lotte Chilsung Beverage, Lotte Shopping, Lotte Chemical, and others?attended, along with approximately 150 securities analysts and institutional investors, showing strong interest.
Sales Recover to Pre-COVID-19 Levels... Streamlining Non-Core and Low-Efficiency Businesses
First, Lotte Holdings introduced the overall group performance, key financial issues, and major business strategies for this year. As of the end of last year, Lotte's total domestic and overseas assets amounted to KRW 183.3 trillion, and sales reached KRW 80.1 trillion, recovering to the 2019 level of KRW 79.9 trillion before the COVID-19 outbreak. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) was KRW 6.5 trillion, down KRW 1.9 trillion compared to 2019.
Lotte Holdings pointed out that the EBITDA of the chemical sector decreased by KRW 1.8 trillion during this period, noting that "the group's EBITDA volatility is high due to heavy reliance on profits from specific business sectors." To improve this, the group identified four key growth strategies for this year: portfolio restructuring by disposing of non-core businesses and low-profit, low-efficiency tangible assets; strengthening fundamental competitiveness by business sector; expanding global operations; and fostering new growth businesses such as bio & wellness, mobility, sustainability, and new life platforms.
Earlier, Lotte accelerated business restructuring by announcing the sale of non-core businesses in the past three months, including Lotte Rental in December last year, Lotte Wellfood's Jeungpyeong factory and Lotte Chemical's Pakistan subsidiary this month, and Korea Seven's ATM business. In the distribution sector, Lotte Mart sold its Suwon Yeongtong branch and disposed of two idle sites at Lotte Mart Gwonsun branch and Lotte Department Store Mia branch. Hotel Lotte has been considering selling assets of the 'L7' and 'City' hotel brands. They are also reviewing withdrawing from overseas underperforming duty-free stores amid sluggish market conditions. Lotte Construction plans to securitize assets worth about KRW 1 trillion, including the sale of its headquarters site in Jamwon-dong, Seocho-gu, Seoul.
Following asset revaluation conducted last year to reflect the real value of assets, Lotte Shopping and Hotel Lotte saw asset increases of KRW 8.7 trillion and KRW 8.3 trillion, respectively. Through this asset revaluation, a total capital increase of KRW 12.6 trillion was achieved for both companies, reducing the debt ratio from 190% to 129% for Lotte Shopping and from 165% to 115% for Hotel Lotte. Lotte stated, "We expect positive effects on credit ratings and investment fund procurement through asset revaluation," adding that demand forecasts for corporate bond issuance by Hotel Lotte, Lotte Wellfood, and Lotte Chilsung Beverage have been successful.
Expanding Global Presence and Discovering New Growth Engines
Four companies?Lotte Wellfood, Lotte Chilsung Beverage, Lotte Shopping, and Lotte Chemical?unveiled their blueprints centered on global expansion strategies. Lotte Wellfood aims to improve domestic profitability through high value-added businesses such as health and wellness, and to expand its global sales ratio (including exports) from 26.3% last year to over 35% by 2028, focusing on expanding the Indian market and nurturing global brands. Additionally, the integrated corporation of Lotte India (dry goods) and Havmore (ice cream) will launch in the first half of this year, and the new factory in Pune, India, will begin full operation, targeting a sales increase of over 15% compared to the previous year.
Lotte Chilsung Beverage introduced key strategies including improving profitability of its Philippine subsidiary (PCPPI), strengthening competitiveness of domestic products, and optimizing operations through Zero-Based Budgeting (ZBB). It plans to reduce its current debt ratio of about 177% to around 100% by 2028 to enhance financial soundness.
Lotte Shopping presented six core strategies: rebuilding market leadership in key department store districts, establishing Korea's number one grocery market, shifting e-commerce strategies, accelerating subsidiary turnarounds, retail tech transformation, and becoming Southeast Asia's premier premium shopping destination. The goal is to achieve KRW 20.3 trillion in sales and KRW 1.3 trillion in operating profit by 2030. Notably, this year, it will establish an international headquarters corporation in Singapore to oversee overseas operations, develop new shopping malls, activate private brand (PB) business based on global sourcing, and implement retail tech strategies such as RMN (Retail Media Network) and artificial intelligence (AI).
Additionally, Lotte Chemical outlined business transformation and financial structure improvement as its main strategic directions. It plans to continue asset-light initiatives such as selling non-core businesses and restructure its business portfolio to focus on high value-added specialty products. The company will also continue to discover future growth businesses by securing global technological leadership in battery materials and hydrogen energy sectors.
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