File pic shows Lotte Chemical Titan plant in Johor,
KUALA LUMPUR: Lotte Chemical Titan Holding Bhd
experienced a 26.12% drop in net profit for the financial year ended Dec 31, 2018, to RM786.23mil from RM1.06bil previously as it suffered a margin squeeze across its product segments.
Higher sales volume however boosted revenue for the year by 18.15% to RM9.24bil from RM7.82bil in 2017.
The group proposed a final single tier divdend of 17 sen per share.
"The petrochemical industry experienced many uncertainties during the year with the highly volatile global crude oil market and coupled with the escalation of U.S-China trade conflicts in 2018.
"Despite these challenges, the company is able to ride through with record sales performance and generated net operating cash flows of RM873.5mil in the year, said Lotte president and CEO Lee Dong Woo.
In a filing with the stock exchange, the group said feedstock prices had increased in tandem with crude oil prices and average product prices were lower, contributing to the margin squeeze.
Furthermore, a provision to write down the inventory cost to net realisable value of RM45.7mil was made in Q4 due to the lower product price.
On a segmental basis, the olefins and derivatives segment posted a profit before tax of RM81.8mil versus RM232.1mil a year ago while the polyolefin products recorded a pre-tax profit of RM622mil compared to RM912.9mil in 2017.
According to the group, the plant utilisation rate improved from 73% to 83%, which was sufficient to maintain profit maximisation.
"The higher operating rate was achieved following successful commercial operation of the PP3 plant in Pasir Gudang as well as operational normalization from turnarounds in 2017," it said.
Looking towards 2019, Lotte's operations remain dependent on the demand and supply of petrochemical products in the markets, its ability to maximise outputs and efficiency, and feedstock and oil prices.
“The petrochemical market is a long-term play and our Company will be able to ride through short-term volatilities given our healthy operating fundamentals and strong technical support from LOTTE Chemical Corp, our parent company.
"More so, our Company is currently in zero-gearing position with ample liquidity and our key expansion projects are moving on schedule," said Lee.
Limited time offer:
Just RM5 per month.
