[New Year’s Address] Lotte Chemical CEO Lee Youngjun: "Cash Flow First, Exit Non-Competitive Businesses"

"Let’s Make This Year a Turning Point for Future Growth"
"Financial and Organizational Stability Comes First in Challenging Times"
Aiming to Shift 60% of the Portfolio to Specialty Materials

Lee Youngjun, President and CEO overseeing Lotte Chemical Group, emphasized a management policy for the new year focused on enhancing financial stability and rationalizing the business structure. He sent a clear message that the company will decisively exit low-competitiveness businesses and concentrate resources on promising sectors, thereby accelerating a selective growth strategy.

In his New Year’s address on January 5, Lee stated, “We will successfully complete the ongoing business transformation while maintaining management principles that prioritize cash flow above all else,” adding, “We will continuously re-examine all existing businesses.” Lotte Chemical has begun considering restructuring measures, such as the possible closure of its naphtha cracking center (NCC) in Seosan, Chungnam, with an annual ethylene production capacity of 1.1 million tons, due to deteriorating profitability in basic petrochemical lines amid global oversupply.

He also explained that the company will strengthen financial management for both new and ongoing investments and elevate cash management across the entire process, from raw material procurement to production, sales, logistics, and customer response. This signals that financial soundness will be the top management priority, especially as the industry downturn continues for an extended period.

For mid- to long-term growth, the company will shift its portfolio toward functional materials. Lee stressed that Lotte Chemical will actively explore functional materials businesses connected to future industries, such as low-carbon energy, semiconductors, artificial intelligence (AI), mobility, and biotechnology. The goal is to increase the proportion of functional compounds, semiconductor process materials, green materials, functional copper foil, and eco-friendly energy materials such as hydrogen and ammonia to over 60% of the business portfolio.

The research and development (R&D) strategy will also be revamped to support this. He said, “The competitive advantage in the materials business ultimately comes down to technology and products,” and added, “We will reorganize our mid- to long-term R&D roadmap in line with the direction of future businesses.” He continued, “We will expand collaboration with universities, private companies, and global research institutes to build an open R&D cluster.”

In terms of organizational management, Lee stressed stability and safety. He said, “It is crucial for the organization to remain steadfast, especially during challenging times,” and pledged, “I will ensure that timely investments are made in both human and material resources necessary for safety.” Furthermore, he added, “It is important to clearly share the organization’s direction and goals so that, even amid uncertainty, employees can feel secure and focus on their work. Careful communication and support are essential.”