South Korea’s Lotte Chemical Corp. with bigger capacity through mergers and acquisitions posted 460.3 billion won ($409.3 million) in net profit led by solid chemical sales and improved ethylene spread.

The company announced on Thursday in a regulatory filing that its registered 460.3 billion won in net profit for the second quarter ended June. Its operating income jumped 8.5 percent to 693.9 billion won from the same period last year. It is a record-high quarterly operating income and also exceeds that of its major rival LG Chem Ltd., which posted 615.8 billion won, for the third time after 2015 second quarter and first quarter this year. The sales for the April-June period recorded 3.4 trillion won, up 8.3 percent on year.

As of 1:25 p.m. Friday, the company shares gained 2.03 percent to 301,000 won from the previous session thanks to the surprising earnings.

Lotte Chemical recently has reorganized its business structure through mergers and acquisitions to concentrate on chemical business. The company’s average ethylene spread that is used as the barometer to forecast a chemical firm’s business outlook improved to $723 per ton in June-quarter from $640 per ton in the previous quarter. The ethylene spread refers to the price difference between ethylene and its raw material naphtha, and chemical producer’s profit goes up when price gap widens.

The company has the largest production capacity in the country with annual output capacity of 2.82 million tons including 720,000 tons from its Malaysian subsidiary Lotte Chemical Titan. The Malaysian subsidiary posted 152.5 billion won in operating income in the second quarter, up 52 percent from 100.2 billion won during the same period last year.

The sales by Lotte Advanced Materials Co. also boosted Lotte Chemical’s second-quarter performance by adding 88.6 billion won in operating income. Lotte Chemical earlier this year acquired a chemical division from Samsung SDI and changed the nameplate to Lotte Advanced Materials.

Despite the record-high operating income in the second quarter, the company is keeping itself low amid the ongoing investigation over the allegations that the company siphoned about 20 billion won offshore possibly for group owner family through its affiliate in Japan.

By Jung Wook

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