Lotte Chemical Titan Holdings Bhd (LCT) achieved a pre-tax profit of RM105.804 million on the back of a turnover of RM2.759 billion for the first quarter ended 31 March 2022 from a pre-tax profit of RM567.108 million on the back of a turnover of RM2.367 billion previously
In a Bursa filing, it said that Profit before tax reduced to RM 105.8 million from RM 567.1 million mainly due to the drop in gross profit margin resulting from 64% increase in feedstock costs and the lower foreign exchange differences of RM 1.1 million from RM 21.7 million
In a statement, LCT said that given that the naphtha feedstock costs of the company correlate with the crude oil prices, rising global crude oil prices have negatively impacted the financial performance of the company.
“LCT is operating in a challenging business environment amid the geopolitical crisis in Ukraine. Tension over Ukraine is not abating and the prospect of sanctioning Russian crude oil has escalated the crude oil prices. Brent crude price recorded a high of USD127/barrel in early March 2022 from USD78/barrel as of the end of December 2021.
The increase in crude oil prices poses a significant pressure on our operating costs as our primary feedstock, naphtha, is highly correlated with crude oil prices,” said Mr Park Hyun Chul, President & CEO of LCT.
“Despite the challenges, the management has put in place a robust framework to manage feedstock pricing volatility and to mitigate its impacts on our operations. We constantly and vigorously review our operational economics and take swift actions to optimize our operational and economic efficiencies,” added Mr Park.
