1. What Happened at Lotte Chemical?
Lotte Chemical’s H1 2025 performance was poor across the board. Sales declined significantly year-over-year, and both operating and net income plunged into the red. The operating loss, in particular, deepened compared to the previous year and fell far short of market expectations. This continues the trend of losses that began in Q2 2024.
2. Why is Lotte Chemical Struggling?
The reasons behind this poor performance are multifaceted.
- External Factors: Declining oil prices, a global economic slowdown, and escalating geopolitical risks have led to weaker petrochemical prices and shrinking demand.
- Internal Factors: Struggles in the advanced materials business, increasing burdens from new business investments, and volatile raw material prices have exacerbated the decline in profitability. Large-scale investments in future growth engines, such as battery materials and hydrogen energy, have weighed on short-term profitability.
3. What’s the Outlook for Lotte Chemical?
If current conditions persist, Lotte Chemical’s recovery appears challenging. Continued operating losses and a widening net loss could further deteriorate its financial health. Rising debt-to-equity ratios and declining current ratios raise concerns about financial stability.
4. What Should Investors Do?
Investors should approach Lotte Chemical with extreme caution. A short-term recovery seems unlikely, and further deterioration in performance is possible. Investors should closely monitor upcoming earnings releases and any changes in management strategy. They should also pay close attention to external factors such as global economic recovery, easing of geopolitical risks, and stabilization of raw material prices.