KUALA LUMPUR (Oct 31): Lotte Chemical Titan Holding Bhd's (LCT) net profit fell 58% to RM91.3 million in the third quarter ended Sept 30, 2019 (3QFY19), from RM216.89 million in the same period a year ago, as the group continued to face margin squeeze due to sliding average product selling prices of polymer products.

The lower selling prices are mainly due to the diversion of cheaper polyolefin supply from the US into Southeast Asia that pressured regional product prices — no thanks to the US-China trade war — as well as a softening of global economic growth, according to the company's stock exchange filing today.

The group's quarterly revenue decreased 10% year-on-year to RM2.17 billion from RM2.42 billion. Earnings per share declined to 4.02 sen from 9.54 sen.

For the cumulative nine months ended Sept 30, 2019, its net profit slid 68% to RM251.98 million or 11.09 sen per share, from RM776.11 million or 34.14 sen per share last year, due to the same factors that affected its latest quarterly earnings. Cumulative revenue declined 7% to RM6.46 billion from RM6.91 billion.

On prospects, LCT said new additional capacities coming on-stream by end-2019 or early 2020 are expected to create short- to medium-term supply and demand imbalances domestically, but the additional supply is expected to be gradually absorbed by Asia's high consumption growth.

"The petrochemical industry is undergoing a very challenging phase amidst the global market uncertainties. However, this industry is a long-term play and our company is expected to ride through current market down-cycle given our healthy financial position and the management continues to emphasize on long-term strategic expansion plans," said LCT president and chief executive officer Dr Lee Dong Woo in a separate statement.

Sharing on the group's large-scale expansion in Indonesia after securing the nods from minority shareholders to include its parent company, LOTTE Chemical Corporation (LCC), as a 49% joint venture partner, Lee said the project's frontend engineering design (FEED) and final feasibility study have been completed.

The group has also determined and announced the configuration and specification for the project. "Currently, work for land preparation on project site is underway and the company expects the project tendering and construction to commence in end-2019/2020," he said.

"The integrated petrochemical facility project with a nameplate capacity of one million tonne of ethylene per annum and other value-added downstream derivatives will significantly increase production capacity upon completion by 2023. Over the next five years, the advancement of our company's growth plan will result in capacity expansion, affirming our position as a Top-Tier Petrochemical Company in SEA," he added.

At 3.20pm, LCT shares were up one sen or 0.4% at RM2.49, valuing the company at RM5.68 billion. Over the past year, the counter has fallen 39% from when it was trading at RM4.09.