'Selection and Concentration' After a Decade of Effort
Non-core Assets Sold Off Amid Profit Decline
Portfolio Restructured Around Specialty Products
Lotte Chemical is accelerating its transition to a high value-added business structure through a strategy of 'selection and concentration,' as it winds down its water treatment business, which it has been developing for over a decade. As the downturn in the petrochemical industry has become prolonged, a trend has emerged among major chemical companies to decisively divest non-core assets and focus resources on key growth pillars.
On June 20, Lotte Chemical announced that it will sell its water treatment membrane production plant, located in the Daegu National Water Industry Cluster, to Synopex Membrane, a subsidiary of Synopex. The plant has produced membranes for water purification and sewage/wastewater treatment using 'Membrane UF (Ultra Filtration)' technology. Lotte Chemical entered the business in 2015 by acquiring related technology and research personnel from Samsung SDI, and began full-scale commercial production in 2019.
The water treatment business, which has attracted attention as a future eco-friendly sector centered on advanced membrane technology capable of filtering out micro-contaminants such as E. coli and viruses, has gradually been deprioritized in the company's strategic plans. The two companies have agreed to complete the transaction next month after fulfilling key requirements following the signing of the business transfer agreement. The sale price has not been disclosed.
This decision is part of an 'asset-light' strategy aimed at streamlining non-core businesses and improving asset efficiency. A Lotte Chemical representative stated, "In line with our asset-light strategy, we are exiting areas that are not directly linked to our future core businesses," and added, "As we have consistently stated our intention to reduce the proportion of commodity products and shift toward specialty products, we will continue to thoroughly review our entire business portfolio going forward."
From last year through the first half of this year, Lotte Chemical secured approximately 1.7 trillion won in cash by selling stakes in overseas subsidiaries in Pakistan, Indonesia, and Japan, liquidating its synthetic rubber subsidiary in Malaysia, and utilizing its stake in a U.S. EG production subsidiary. The liquidity secured is expected to be reinvested in new eco-friendly growth businesses such as specialty materials and hydrogen and battery materials.
Previously, LG Chem also embarked on a major business restructuring. On June 13, LG Chem decided to sell its water treatment filter business, which holds the No. 2 global market share, to domestic private equity firm Glenwood Private Equity (PE) for approximately 1.4 trillion won. Although this business has maintained a stable revenue base by manufacturing and supplying filter materials used for water purification, seawater desalination, and industrial water treatment, LG Chem determined that it needed to concentrate its corporate resources on future industries such as battery materials, life sciences, and eco-friendly recycling.
The global petrochemical industry is currently facing profitability pressures following the end of a large-scale expansion cycle. In addition, structural changes have become inevitable due to overlapping factors such as U.S.-China tensions and the expansion of Europe's carbon tax and other geopolitical and environmental regulations. Lotte Chemical is also restructuring its portfolio with a focus on new growth areas such as specialty materials, electronic materials, and hydrogen businesses. Going forward, the company is expected to expand synergy effects with subsidiaries such as Lotte Energy Materials, Lotte Aluminium, and Lotte Fine Chemical.
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