Lotte Chemical Corporation (011170) Q4 2024 earnings summary

Executive summary

• 2024 revenue reached KRW 20.43 trillion, up 2.4% YoY, but the company posted an operating loss of KRW 894.8 billion due to delayed recovery in the petrochemical industry, global slowdown, and overcapacity.

• Q4 2024 revenue was KRW 4.90 trillion, down 5.8% QoQ, with an operating loss of KRW 234.8 billion and a net loss of KRW 1.12 trillion, mainly due to impairment losses in Lotte Energy Materials and Basic Chemicals.

• Net income for FY2024 was a loss of KRW 1.80 trillion, a deterioration from a loss of KRW 39 billion in FY2023.

• One-off costs from Q3 were eliminated in Q4, narrowing the operating deficit QoQ and leading to a turnaround to profit in the EV Chasm segment.

Financial highlights

• Assets at end-Q4 2024 stood at KRW 34.62 trillion, up KRW 137.6 billion QoQ; cash and cash equivalents were KRW 3.48 trillion, down KRW 146.4 billion QoQ.

• Liabilities decreased by KRW 248.8 billion QoQ to KRW 14.58 trillion; borrowings fell by KRW 317.1 billion QoQ to KRW 10.41 trillion.

• Debt-to-equity ratio was 72.7% in Q4 2024, down from 75.4% in Q3 2024, maintaining a stable 70% level.

• EBITDA for FY2024 was KRW 825 billion (4.1% margin), up from KRW 396 billion (1.9%) in FY2023.

• ROE improved to 11.5% in Q4 2024 from 5.0% in Q3 2024; ROA increased to 4.9% from 2.2%.

Outlook and guidance

• Gradual improvement in corporate earnings expected in 2025 as supply-demand pressure eases.

• EV market recovery anticipated from the second half of 2025; profitability improvement efforts ongoing.

• Investment for 2025 planned at KRW 1.4 trillion, KRW 400 billion less than initially planned, with a focus on keeping investment within EBITDA.

• Borrowings targeted at KRW 10 trillion by end-2025, with a reduction of over KRW 200 billion.

• Basic Chemical division expects ongoing uncertainty but anticipates positive impacts from strong exchange rates, lower raw material costs, and stabilized shipping fees.