Lotte Chem is about to record an annual profit for the third straight year, along with a strong three-year increase in stock prices.The success has been attributed to high chemical product prices in recent years and the additional production facilities kicking off just in time when product prices have risen.
The prices of crude oil have also played a part in the company’s improved sales, staying in the range of $40 to $50 per barrel, boosting operating profit by 20 percent.
According to Fnguide, Lotte Chemical is expected to log 763.2 billion won in third quarter operating profit this year, up 18.7 percent YoY, which is far better than rival LG Chem’s 734.2 billion won, keeping Lotte Chem atop the chemical industry in terms of profit.
The two rival chemical companies have exchanged powitions depending on the price of certain chemical products, with Lotte Chem taking over as the top firm when the prices of petrochemical goods stayed at high levels for the past three years.
Lotte Chem benefitted from the situation for the past three years with its operating profit climbing steadily from 142.2 billion won in the third quarter of 2014, to log more than a five-fold increase to the third quarter this year.
The chemical giant is expected to record a 20 percent increase in its operating profit this year, an eye-popping record that is double most of its rivals’ operating profits rises of around 10 percent.
Lotte Chemical Corp. is engaged in the manufacture of petrochemicals. It operates through the following businesses: Resin products, Basic petrochemicals and Chemicals. The Resin products business provides polyethylene, polypropylene, polycarbonate and functional resin and polyethylene terephthalate. The Basic petrochemicals business includes ethylene oxide, mono ethylene, di ethylene and tri ethylene glycol, methyl methacrylate, ethanolamine, butadiene and samarium. The Chemicals business offers benzene, toluene and mixed xylene. The company was founded on March 16, 1976 and is headquartered in Seoul. Lotte Chemical is a core unit of Lotte group, the fifth-largest conglomerate in South Korea.
In terms of sales, Lotte Chemical ranks behind only LG Chem in the domestic chemical industry. It is one of the world's largest producers of chemical products such as polyethylene and ethylene.
Lotte Chemical began as Honam Petrochemical, which was established in 1976 through technological collaboration between companies including Japan's Mitsui group. Lotte group acquired the business in 1979. Honam became Lotte Chemical in 2012, when its management was integrated with Kp Chemical.
In South Korea, Lotte Chemical has the world's biggest ethylene capacity. Its plants in Yeosu, South Jeolla Province, and Seosan, South Chungcheong Province, each have 1 million-ton production systems. The company is also expanding its international presence.
In 2018, it plans to open a joint plant with U.S. company Axiall in the state of Louisiana.
The facility is to produce ethylene from shale gas. This stands to boost Lotte Chemical's ethylene capacity to 3.7 million tons. In 2010, the South Korean company acquired Malaysia's Titan Chemicals, now called Lotte Chemical Titan Holding.
Seeking to reduce its heavy reliance on commodity chemicals, Lotte Chemical intends to reinforce its water treatment business. In addition, it has research-and-development programs focused on large-scale battery products, such as energy storage systems.