Lotte Chemical Titan Profit Surges From RM4 Million To RM873 Million In 2021

LOTTE Chemical Titan Holding Berhad had an astonishing profit surge after tax of RM 873 million for the nine-month financial period ended September 2021, a multiple-fold surge from just RM 4 million recorded during the corresponding period in 2020.

At the same time, its EBITDA also more than tripled to RM 1.5 billion, from RM 485 million booked during the same period last year. The remarkable improvement in its business performance is primarily attributable to the much higher key products margin spread observed in 2021, on the back of markedly higher average product selling prices.

The key products ASP improved this year following the higher overall market demand supported by global reopening and post-pandemic economic recovery, as well as supply disruptions to the region due to shipment constraints. In addition, the Company’s performance is further supported by performance turnaround in its US associate’s operations on the back of improved operating performance driven by higher ASP for MEG products.

Operationally, the Company stated that it had undergone statutory turnaround activities during the quarter for two plants in Malaysia, namely a Cracker plant and a Polyethylene plant. The turnaround activities had since been successfully completed within schedule and the said plants have resumed normal operations. Consequently, the overall operating rate for its complex was lower in the quarter at 76%, from 86% recorded in the previous quarter, which also led to lower production volume. Notwithstanding the turnaround, the Group operating rate to-date stood at a stable 83%, which is relatively higher than the 81% recorded during the corresponding period in 2020.

However, the quarter-on-quarter, profit before tax was lower at RM 148 million, from RM 489 million recorded in the preceding quarter. The Company has noted that quarterly earnings declined primarily due to significant operating margin compression observed, amid the higher increase in feedstock costs relative to product ASPs in the third quarter, as well as the statutory plant turnaround activities undertaken during the quarter. At the same time, tighter lockdown measures implemented in Malaysia also softened product demand during the period. For the third quarter, PAT was lower at RM 48 million, as the Company made a one-off tax adjustment of RM 66 million arising from underprovision of deferred tax in prior years.

President & CEO, Mr. Park Hyun Chul said, “We are cautiously optimistic on the petrochemical sector outlook amidst some balancing market factors weighing in. As the sector moves in tandem with economic growth, it would likely be supported by the post-pandemic economic recovery expected for the remaining of the year and continuing in 2022.

According to Park, there are new domestic capacities expected to come online this year, which may have some downward pressure on the polymer ASPs. He added that the positive outlook would be very much dependent on the continuation and effectiveness of vaccination as well as the pace of economic re-opening, globally and domestically. As such, we expect certain elements of volatility to remain for the petrochemical sector moving ahead.

On a separate note, the Company has announced that it is commencing construction of the largescale expansion project, known as the Lotte Chemical Indonesia New Ethylene (“LINE”) Project in Merak, Cilegon, and Banten Province, Indonesia. The LINE Project, which is a joint venture (“JV”) with its parent company, LOTTE Chemical Corporation, will serve as the key expansion drive for the Company with the aim to further solidify its position as one of the largest petrochemical companies in the Southeast Asia region upon its completion

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