Lotte Chemicals has continued its strong trajectory of rising sales and profits and reported an increase in profits for the year ended December 31, 2018.
Lotte posted a profit of Rs. 4.43 billion, which is up by 11 times against a profit of Rs412 million in the corresponding period last year. The major surge in earnings is primarily due to higher sales, the robust demand for PTA (Purified Terephthalic Acid) and higher international PTA-PX margins. PTA is the primary raw material for producing Polyester fiber, Polyester filament yarn (PFY), Polyester film and Polyethylene Terephthalate (PET). Lotte Group is one of South Korea’s largest conglomerates.
LOTTECHEM profits have been driven by a higher PX-PTA spread.
The company reported net sales of Rs. 57.40 billion, up by 55% from Rs 37.03 billion in the corresponding period last year. Gross profit was reported at Rs. 7.38 billion from just Rs. 1.19 billion in the same period last year. The sales increased on the back of improved volumetric sales and increase in PTA prices by 30% YoY.
Lotte’s distribution and selling expenses were noted at Rs. 102 million against Rs. 93 million and other expenses were noted at Rs. 555 million against Rs. 54 million. While expenses were controlled by management, other expenses registered the biggest jump.
The finance cost of the company increased to Rs. 505 million against Rs. 52 million. As bank and other charges make up the bulk of finance costs, an increase in interest rates may have led to the rise in finance costs.
Moreover, the taxation expense had also increased substantially to Rs. 1.91 billion, however, Lotte still managed to perform extraordinarily during 2018.
LOTTE’S script at the bourse closed at Rs. 16.65, down by Rs. 0.33 or -1.94%, with a turnover of 25.63 million shares on Thursday.