Lotte Energy Materials Reports 46 Billion KRW Operating Loss in Q1... "Impact of Customer Battery Inventory Adjustments"

Decline in Sales Volume and Revenue
Strengthening Profitability of High-End Copper Foil

On May 9, Lotte Energy Materials announced its provisional consolidated results for the first quarter of this year, reporting sales of 158 billion KRW and an operating loss of 46 billion KRW. Sales decreased by 34.6% compared to the same period last year, and the company turned to an operating loss.

Lotte Energy Materials Malaysia Plant Exterior. Provided by Lotte Energy Materials

A representative from Lotte Energy Materials explained, "Sales decreased by approximately 15% quarter-on-quarter due to a decline in sales volume, which was mainly caused by battery inventory adjustments at major customers. As a result, key profit and loss indicators continued to show a deficit."

The representative added, "Profitability deteriorated due to expanded demand volatility stemming from uncertainties in the global external environment, such as U.S. tariff policies, as well as adjustments in operating rates in response to customer inventory adjustments. However, we plan to respond flexibly to rapidly changing market conditions based on our industry-leading stable financial structure."

As of the end of the first quarter this year, Lotte Energy Materials maintained a consolidated debt ratio of 19.9% and a borrowing ratio of 5.8%.

Regarding the outlook for the second quarter, Lotte Energy Materials stated, "Uncertainties in downstream industries remain due to the impact of U.S. tariff policies. However, the active inventory reduction initiatives we implemented since the second half of last year, along with our customers' depletion of copper foil inventories, are expected to lead to a gradual recovery in operating rates and a step-by-step improvement in profitability. In the second half of the year, we expect to return to profitability through increased sales driven by new product supplies to North American OEMs and customer joint ventures (JVs). We also plan to achieve solid growth by enhancing overall operational efficiency through conservative inventory management and other management measures tailored to market conditions."

The representative continued, "Through the execution of the 'RISE 1000' project, we plan to stably supply high-end copper foil products to customers from our Malaysia plant, which boasts world-class quality capabilities and cost competitiveness. Starting next year, we aim to increase sales volume by more than 2.5 times compared to this year by diversifying our global customer base to include North America, Europe, and China. This will enable us to secure leadership in the next-generation battery high-end copper foil market and strengthen our profitability."

Kim Yeonseop, CEO of Lotte Energy Materials, stated, "Since the second half of last year, we have been steadily achieving our goal of maintaining optimal product inventory levels. Through the 'RISE 1000 Project' at our Malaysia subsidiary, we are also making smooth progress in upgrading our manufacturing, quality, and cost competitiveness, thereby securing mid- to long-term growth potential. We will do our utmost to overcome current market uncertainties and short-term challenges, and to meet the expectations of our investors and stakeholders by ensuring sustainable mid- to long-term growth."