1. Lotte Chemical’s H1 2025 Performance: What Happened?
Lotte Chemical reported consolidated revenue of KRW 41.97 trillion in Q2 2025, a decrease year-over-year, with operating and net losses of KRW -2.448 trillion and KRW -4.712 trillion, respectively. These figures fell significantly short of market consensus.
2. Reasons for the Weak Performance: Why Did This Happen?
- Petrochemical Industry Downturn: The overall industry is facing challenges due to the global economic slowdown, weak demand from China, and declining prices for major products.
- Volatility in Raw Material Prices: Despite falling crude oil prices, the volatility of naphtha and other key raw material prices continues to pressure profitability.
- Slowing Downstream Demand: Weakening demand from downstream industries such as home appliances, IT, and automobiles has led to a decrease in demand for Lotte Chemical’s products.
3. Lotte Chemical’s Future: What’s Next?
- Positive Factors: Investments in new growth engines like hydrogen energy and battery materials, along with strengthened ESG management, are expected to be long-term growth drivers.
- Negative Factors: Potential for further short-term earnings deterioration, high fixed costs, rising interest rates, and exchange rate fluctuations pose risks.
4. Action Plan for Investors: How to Invest?
Lotte Chemical is currently facing a challenging market environment. Investors should proceed with caution and closely monitor future earnings performance, progress in new growth businesses, stabilization of raw material prices and exchange rates. It’s crucial to invest with a long-term perspective, focusing on the company’s growth potential rather than short-term fluctuations.