Friday 29 Mar 2024
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KUALA LUMPUR (Jan 27): Lotte Chemical Titan Bhd’s (LCT) net profit for the fourth quarter ended Dec 31, 2021 (4QFY21) surged 283% to RM186.84 million quarter-on-quarter (q-o-q) from RM48.84 million, mainly due to tax income arising from reversal of tax expenses.

Earnings per share (EPS) increased to 8.2 sen compared with 2.14 sen in the immediate preceding quarter, according to its filing with Bursa Malaysia.

LCT’s quarterly revenue grew 20.03% to RM2.7 billion from RM2.24 billion in 3QFY21, mainly due to higher sales volume in its olefins, derivative and polyolefin products.

“Profit from operation decreased by 65% to RM35.6 million from RM102.2 million in 3QFY21, mainly due to higher feedstock costs and margin squeeze. However, this impact was offset by the one-off gain on disposal of investment of RM101 million from LC USA. As such, profit before tax in 4QFY21 has remained comparable with 3QFY21 at RM147 million,” said the group.

On a year-on-year basis, the company’s net profit rose 23.6% from RM151.16 million, while revenue climbed 39.63% from RM1.92 billion a year ago.

For the full financial year ended Dec 31, 2021 (FY21), the group’s cumulative net profit stood at RM1.06 billion, surging by 612% from RM148.59 million.

Full-year revenue grew 42.45% to RM9.83 billion from RM6.9 billion in the previous year, while EPS grew to 46.49 sen from 6.54 sen.

The improvement is chiefly due to the much higher key products margin spread observed in 2021, on the back of significantly higher average product selling prices, noted the group in a statement.

This was due to higher overall market demand supported by global reopening and post-pandemic economic recovery, as well as supply disruptions to the region due to shipment constraints. In addition, the company’s performance is further supported by a performance turnaround in its US associate’s operations on the back of improved operating performance with better product margin spread.

Its earnings before interest, tax, depreciation and amortisation rose to RM1.65 billion, an almost 100% increase from RM830 million booked during the same period last year.

Meanwhile, operating profit expanded four-fold to RM1.1 billion from RM272 million on better revenue.

“At the same time, the company also generated strong operating cash flows amounting to approximately RM1.2 billion for the financial year,” it said.

The company has said it will review the final dividend payable for FY21 at a later date. On top of its regular dividend schedule, LCT had earlier declared and paid the first-ever special dividend of 18 sen per ordinary share in November 2021.

Following the successful completion of statutory turnaround activities involving a cracker plant and a polyethylene plant in Malaysia, the group’s operating rate for its complex has improved to 88% in 4Q, from 76% in the previous quarter. Meanwhile, 2021’s operating rate rose to 84% from 82% a year ago.

Looking ahead, LCT’s president and CEO Park Hyun Chul said the company is cautiously optimistic on the petrochemical market outlook with some balancing factors weighing on the sector.

Given that its naphtha feedstock correlates with the crude oil outlook, rising global crude oil price will notably be an area of concern, Park said.

“In addition, there are new additional domestic capacity expected to come online this year, which potentially have downward pressure on the product prices. On the other hand, stable demand with the easing of lockdown measures, coupled with freight constraints and regional supply disruptions would lead to firm footing for the overall product prices.”

“As the petrochemical sector moves in tandem with economic growth, it would likely be supported by the continued global economic recovery projected for 2022. Nonetheless, recent flaring up of the new Omicron variant which is spreading across the world will need to be monitored closely. As such, we would expect elements of volatility to remain for the petrochemical sector moving into 2022,” he explained.

Park also noted that its LOTTE Chemical Indonesia New Ethylene (LINE) project in Merak, Cilegon, and Banten Province, Indonesia, is slated to commence construction by this year and be completed by 2025.

LINE is a joint venture between LCT and its parent company Lotte Chemical Corp.

The company will continue to focus on operational and financial performance optimisation initiatives to brace for the volatile and ever-changing external environment, added Park.

“We will continue to be vigilant and explore value-accretive opportunities to further drive our growth, while at the same time remain steadfast to focus on our key growth strategies as we seek to become a top-tier petrochemical company in the Southeast Asia region,” according to him.

At the time of writing on Thursday (Jan 27), LCT shares went down three sen or 1.33% to RM2.22. The company has a market capitalisation of RM5.13 billion.

Edited ByLam Jian Wyn
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