KUALA LUMPUR (Jan 29): Lotte Chemical Titan Holding Bhd (LCTitan) booked its seventh consecutive quarter in the red in the quarter ended Dec 31, 2023 (4QFY2023), which saw losses narrow year-on-year (y-o-y) amid lower feedstock costs and forex gains.
Quarterly net loss came in at RM186.48 million or 8.19 sen per share, from RM333.64 million or 14.65 sen per share in 4QFY2022.
The lower losses came despite a 10.26% decline in quarterly revenue to RM1.86 billion, from RM2.07 billion, which LCTitan attributed to lower sales volume amid slower economic activities in the region.
Nonetheless, LCTitan’s FY2023 results saw its full-year net loss widen y-o-y to RM780.29 million, from RM731.06 million, with a 23.68% drop in full-year revenue to RM7.65 billion, from RM10.19 billion.
“The weaker performance was mainly due to decline in margin spreads; share of loss from Lotte Chemical USA Corp; and partially offset by reversal of inventory write-down to its net realizable value,” LCTitan said in a statement.
LCTitan president and CEO Park Hyun Chul noted the weaker performance in 2023, citing lower economic growth in China and Europe, as well as the impact of the conflict in the Middle East on oil price volatility, which he said are highly correlated with its key feedstock naphtha.
“Against the backdrop of the market uncertainties, the group has implemented the business optimisation plan by balancing our production outputs and economic efficiencies, leading to a lower overall plant utilisation of 67% in FY2023 compared to 77% in the corresponding year,” he said.
On the construction of its new ethylene plant in Indonesia, Park said progress of the “key strategic expansion” is on schedule.
The project, slated to raise LCTitan’s production capacity by 65%, is set to complete by 2025 and help it capture the market in Indonesia, currently a petrochemical products net importer.
Weak performance among petrochemical companies is seen across the board, with other players such as Petronas Chemicals Group Bhd set to see its lowest full-year profit in three years on demand slowdown and unfavourable selling prices.
Naphtha prices currently trade at around US$640 (RM3,030) per tonne, up from around US$500 per tonne just six months ago, tracking the rise in crude oil prices in 2H2023.
Brent crude oil price currently trades at US$83 per barrel (/bbl), not far off its one-year average of US$82.79/bbl.
LCTitan shares traded down three sen or 2.01% to close at RM1.46, giving it a market capitalisation of RM3.38 billion. The counter is still up 8.15% this year.