According to the company’s website news release on April 27, 2023, – LOTTE Chemical Titan Holding Berhad (LCT), announced its first quarter financial results ended 31 March 2023 (1Q FY2023). Revenue of LCT Group in 1Q FY2023 declined by 29% year-on-year (YoY) from RM2.76 billion to RM1.97 billion due to lower average product selling price and sales volume. In 1Q FY2023, the Group recorded a net loss of RM231.6 million compared to a net profit of RM102.9 million in the same period last year largely due to:
- A drop in margin spread due to weakened market demand resulting from the volatile external environment, such as higher interest rates and global recession fear;
- Share of loss from LOTTE Chemical USA Corporation (LC USA); partially offset by
- A reversal of inventory write-down to its net realisable value.
Comparing 1Q FY2023 with 4Q FY2022, revenue of LCT Group declined by 5% quarter-on-quarter (QoQ) due to lower average product selling price resulting from the weakening of US Dollar against Ringgit Malaysia. However, the Group’s net loss improved from RM342.5 million in the preceding quarter to RM231.6 million in 1Q FY2023 mainly due to:
- Lower feedstock costs; and
- Higher reversal of write down of inventories to its net realisable value.
President and CEO, Mr Park Hyun Chul commented, ‘The business environment is expected to remain challenging in the near future. The petrochemical industry entered 2023 with continued external challenges such as escalating interest rates and volatile crude oil prices, resulting in our customers to remain cautious in their purchases of our products. Against the backdrop of the market uncertainties, the Group has rigorously implemented the business optimisation plan by balancing our production outputs and economic efficiencies, leading to a lower overall plant utilisation rate of 70% in 1Q FY2023.’
‘In March 2023, our subsidiary, PT LOTTE Chemical Indonesia (LCI) successfully completed the funding structure of the LOTTE Chemical New Ethylene Project (LINE Project) in Indonesia. We secured a 12-year term loan facility of USD2.4 billion after we completed the equity injection of USD1.6 billion in January 2023, together with our parent company, LOTTE Chemical Corporation (LCC). The completion of the funding structure of the LINE Project is an important milestone for the Group as the LINE Project will serve as the Group’s near term growth catalyst upon its completion in 2025. The project will enable us to capitalise on the anticipated increase in demand for our products in the country as Indonesia is a net importer of petrochemical products,’ stated Mr Park.
‘The construction of the project is on schedule. Upon completion in 2025, the LINE Project will enlarge the Group’s total plant capacity by 65% and strengthen LCT’s market presence as a Top Tier Petrochemical Company in Southeast Asia,’ he continued.
‘Despite the external volatilities, as a leading petrochemical company with more than 30 years of track record with strong business fundamentals, healthy balance sheet and solid corporate governance, we can ride through the challenges. We will continue to focus on business sustainability with an effective optimisation plan and maintain a disciplined approach to managing our costs and financial liquidity,’ added Mr Park.
About LOTTE Chemical Titan Holding Berhad
LOTTE Chemical Titan Holding Berhad (LCT or Company) is the subsidiary of LOTTE Chemical Corporation under the LOTTE Group. Established in 1991, the company is Malaysia’s first standalone polyolefins producer and one of the largest integrated olefin and polyolefin producers in Malaysia and Southeast Asia.
LCT’s production site in Malaysia consists of 12 plants located on two sites in Pasir Gudang and Tanjung Langsat, Johor, and owns a 40% stake in LOTTE Chemical USA Corporation in Houston, Texas. As the company envisions to be a Top Tier Petrochemical Company in Southeast Asia (SEA), in 2006, it expanded its regional footprint with 3 polyethylene plants in Indonesia through its subsidiary, PT LOTTE Chemical Titan Nusantara. The company has also commenced the construction of the LOTTE Chemical Indonesia New Ethylene (LINE) Project in Indonesia in first quarter of 2022, and the construction is expected to be completed in 2025.
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