Lotte Chemical Corporation (011170) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was KRW 5.2002 trillion, nearly flat sequentially but up 6.0% year-over-year, with an operating loss of KRW 413.6 billion, mainly due to narrowing spreads, one-off costs, and increased losses in basic chemicals.

• Net income rose to KRW 514 billion in Q3 2024, a significant increase from KRW 107 billion in Q2 2024 and KRW 407 billion in Q3 2023.

• For the first nine months of 2024, revenue was ₩15.53 trillion, down from ₩19.95 trillion year-over-year, with an operating loss of ₩660.0 billion and net loss attributable to shareholders at ₩642.2 billion.

• Asset-light strategy advanced with the sale of Lotte Chemical USA shares and plans to divest Indonesian and Malaysian subsidiaries.

• The company maintained a diversified business portfolio and continued investments in capacity expansion and sustainability projects.

Financial highlights

• Cash and cash equivalents at KRW 3.6106 trillion at Q3 2024, down KRW 580.1 billion quarter-over-quarter.

• Liabilities decreased to KRW 14.8278 trillion, borrowings at KRW 10.7225 trillion, both lower sequentially.

• Debt-to-equity ratio at 75.4%, net debt-to-equity at 36.1%, both largely unchanged sequentially.

• EBITDA for Q3 2024 was KRW 82 billion, down from KRW 208 billion in Q2 2024 and KRW 290 billion in Q3 2023.

• R&D expenses totaled ₩113.9 billion, or 0.7% of sales for the first nine months.

Outlook and guidance

• Q4 profitability expected to improve as ocean freight costs stabilize and one-off effects subside.

• Basic Chemical division expects gradual supply-demand improvement as feedstock costs stabilize and new capacity additions slow.

• The company continues to focus on cost reduction, portfolio transformation, and expansion in high-value and eco-friendly products.

• Ongoing investments in new capacity, recycling, and battery materials are expected to support long-term growth.

• Market conditions remain uncertain due to global economic volatility, raw material price fluctuations, and geopolitical risks.