Lotte Chemical Corporation (011170) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue was KRW 4.9018 trillion, up 0.1% sequentially but down from KRW 5.09 trillion YoY, with operating loss narrowing to KRW 126.6 billion and net loss at KRW 246.3 billion, improved from the prior quarter due to absence of one-off costs.

• Asset-light strategies, financial restructuring, and portfolio upgrades improved financial indicators, including reduced borrowings and lower debt ratios.

• All major business segments reported negative or reduced operating income, with advanced and fine chemicals improving, while basic chemicals and battery materials posted significant losses.

• The company maintained a strong cash position (KRW 3.6194 trillion) and total assets of KRW 34.76 trillion as of March 31, 2025.

• Major investments and projects are underway in Indonesia, Korea, the US, Spain, and Malaysia, focusing on hydrogen, battery materials, and chemical recycling.

Financial highlights

• EBITDA improved to KRW 173 billion, up from 74.1 billion KRW in 4Q24.

• Cash and equivalents increased to KRW 3.6194 trillion; borrowings decreased to KRW 9.9925 trillion.

• Debt ratio declined to 71.5%; net debt ratio improved to 31.4%.

• EPS was -4,525 KRW; gross margin was 3.5%.

• Inventory turnover was 6.64 times.

Outlook and guidance

• Q2 performance expected to remain flat due to external uncertainties and scheduled plant maintenance.

• Gradual year-over-year improvement anticipated as global ramp-up pressure eases and feedstock prices stabilize.

• Turnaround to positive cash flow projected for the year, with investment execution within EBITDA possible from next year.

• Basic chemicals expect stable profitability despite maintenance; advanced materials anticipate steady performance amid US tariff policy.

• Management is focused on cost control, portfolio transformation, and new growth areas.