LOTTE Chemical Titan Holding Berhad registered a cumulative profit after tax of RM 1.06 billion for the financial year 2021, which is close to a seven-fold surge from RM 154 million it recorded in 2020.
At the same time, its earnings before interest, tax, depreciation, and amortization rose to RM 1.65 billion, an almost 100% increase from RM 830 million booked during the same period last year.
The significant earnings improvement is on the back of notably stronger sales revenue of RM 9.8 billion achieved in from RM 6.9 billion recorded in the prior year. “This is indeed an excellent achievement despite the challenging business environment with the continuation of the pandemic throughout 2021,” remarked its President & CEO, Mr. Park Hyun Chul.
The markedly improved business performance is primarily attributable to the much higher key products margin spread observed in 2021, on the back of much higher average product selling prices (“ASP”). 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 U.S associate’s operations on the back of improved operating performance with better product margin spread.
Operationally, the Company noted that it had undergone statutory turnaround activities during the 3rd 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 in the 4th quarter. Hence, the overall operating rate for its complex improved in the last quarter to 88%, from 76% recorded in the previous quarter, which also led to higher production
volume.
Given that naphtha price trend tracks closely with Brent crude oil price, it has been staging strong upward momentum in the 4th quarter, in line with Brent crude market outlook on global demand recovery. President Park noted, “We are cautiously optimistic on the petrochemical market outlook with some balancing market factors weighing on the sector. Given that our naphtha feedstock correlates with the crude oil outlook, the rising global crude oil price will notably be an area of concern. In addition, there is new additional domestic capacity expected to come online this year, which potentially have downward pressure on the product prices. On the other hand, stable demand with the easing of lockdown measures coupled with freight constraints and regional supply disruptions would lead to firm footing for the overall product prices.”
“As the petrochemical sector moves in tandem with economic growth, it would likely be supported by the continued global economic recovery projected for 2022. Nonetheless, the recent flaring up of the new Omicron variant which is spreading across the world will need to be monitored closely. As such, we would expect elements of volatility to remain for the petrochemical sector moving into 2022,” he continued.
On a separate note, the Company had 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.
