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Lotte Chemical expects record profit in 2016 on low oil prices, merger

Collected: 2016.10.22

Distributed: 2016.10.24

Source: Go Direct

South Korea’s Lotte Chemical Corp. that produces basic petrochemical materials is expected to earn record profit this year and overtake industry leader LG Chem Ltd. in terms of profitability. The company is projected to raise 2 trillion won ($1.76 billion) or more in operating income in 2016 on improved product market conditions and low oil prices.

According to market data provider FnGuide on Thursday, Lotte Chemical is projected to have raised 649.6 billion won in operating profit in the third quarter ended in September. The estimated figure is lower than 693.9 billion won posted in the previous quarter but the company would nevertheless have fared better than its local rivals amid subdued economic activity at home and abroad.

The company’s operating income from January to June amounted to 1.17 trillion won including record quarterly earnings posted in the April-June period.

An unnamed industry official said that Lotte Chemical is likely to beat last year’s annual operating income of 1.61 trillion won this year and earn more than 2 trillion won for full 2016 to record its best-ever year. The company is expected to announce third quarter earnings later this month.

Lotte remains true to traditional petrochemicals. It also benefited from economy of scale after it merged with Samsung Group’s chemical units.

Lee Ji-young, an analyst at LIG Investment Co. said that Lotte Chemical’s fundamentals have improved on low oil prices as it uses naphtha as its main raw material. Its subsidiaries Lotte Chemical Titan in Malaysia and Lotte Advanced Materials Co. have also contributed to the overall profit gain, she said.

By Chung Wook

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