Lotte Chemical Corporation (011170) Q2 2024 earnings summary

Executive summary

• Q2 2024 sales reached KRW 5.25 trillion, up 3.2% QoQ and 3.4% YoY, with operating loss narrowing to KRW 111.2 billion, driven by improved downstream demand, higher sales in advanced materials, and positive FX effects.

• EBITDA was KRW 208 billion, up KRW 36.4 billion QoQ, with net income at KRW 107 billion (2.0% margin), both improving YoY.

• Consolidated H1 2024 sales were KRW 10.33 trillion, with basic chemicals (68%), advanced materials (26%), fine chemicals (7.9%), and battery materials (4.9%) as core segments.

Financial highlights

• Assets at end-Q2 were KRW 35.71 trillion, up KRW 579.7 billion QoQ; liabilities rose to KRW 15.34 trillion, up KRW 629.3 billion QoQ; cash and equivalents decreased by KRW 186.7 billion QoQ.

• Debt-to-equity ratio stood at 75.3% as of June 2024; net debt ratio at 33.8%.

• Operating loss for H1 2024 was KRW 246.4 billion, compared to a loss of KRW 347.7 billion in H1 2023.

• Dividend payout for FY2023 was KRW 3,500 per share (72% payout ratio), with an interim dividend of KRW 1,000 per share in July/August 2024.

• Stock buybacks totaling KRW 100 billion completed to date.

Outlook and guidance

• Q3 is expected to see gradual supply-demand improvement, but profitability may remain flat due to delayed demand recovery and higher freight costs.

• Advanced materials anticipate stable sales but stagnant profitability due to new Chinese capacity and rising freight costs.

• LOTTE Fine Chemical expects continued revenue growth in Q3, driven by higher international prices and green material sales.

• LOTTE Energy Materials projects slower revenue growth in Q3 amid broad industry demand declines and policy volatility.

• Ongoing investments in hydrogen, battery materials, and chemical recycling to drive future growth.