Lotte Chemical has reported a shift to an operating loss in the third quarter of this year due to rising cost pressures and narrowing product spreads.
On November 6, Lotte Chemical announced that its consolidated revenue for the third quarter reached 5.3951 trillion won, with an operating loss of 281.4 billion won.
During the third quarter, geopolitical risks in the Middle East led to increased volatility in raw material and product prices, compounded by rising shipping costs, which negatively impacted profitability.
By business segment, the basic chemicals division recorded revenue of 3.7235 trillion won and an operating loss of 216.6 billion won. Factors affecting this segment included a lagging effect from falling raw material prices, reduced product spreads, and currency depreciation.
The advanced materials division reported revenue of 1.0893 trillion won and an operating loss of 15.4 billion won, with profitability declining due to reduced spreads on key products and currency depreciation. Major subsidiary Lotte Fine Chemical achieved revenue of 525.3 billion won and operating profit of 22 billion won, while Lotte Energy Materials reported revenue of 289.7 billion won and an operating loss of 21.3 billion won.
To overcome its poor performance, Lotte Chemical is accelerating its restructuring of the basic chemicals business and transitioning to a high-value product-focused business structure.
In September, the company completed the launch of H&L Advanced, a joint venture at its Daesan plant, and is pushing for restructuring at the Yeosu plant with the goal of establishing a merged entity with Yeocheon NCC in the first half of next year.
In the advanced materials division, Lotte Chemical began full operations at its Yulchon compounding plant in September, establishing an annual production capacity of 500,000 tons. The company plans to add a dedicated line for high-value products in the first quarter of next year.
A Lotte Chemical official stated, "In the face of uncertainties in the domestic and international business environment, we are proactively pursuing business restructuring to secure competitiveness against market fluctuations and establish a stable profit base through a transition to a high-value-focused business structure."
* This article has been translated by AI.
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