KUALA LUMPUR: Lotte Chemical Titan (LCT) Holding Bhd declared a dividend of 3.27 sen per share for financial year ended Dec 31,2020 (FY20) and remained upbeat for this year as product prices are on an upward trend.
It said on Thursday the dividend will amount to a total payout of about RM74.3mi or a 50% payout ratio on its profit after tax and minority interests for FY2020. It did not declare a dividend then when it announced the results on Jan 27.
LCT also said it was implementing the dividend reinvestment scheme for this final dividend to allow its shareholders an option to reinvest their dividend in new LCT shares.
In FY20, LCT posted net profit of RM148.6mil in spite that it recorded significant net loss during the 1st quarter of FY2020
This was amid plunging product average selling prices (ASP) at the onset of the Covid-19 pandemic, which led to severe profit margin compression during the period.
However, LCT staged a turnaround for FY20 notably, with its strong net profit of RM151.2mil in 4Q.
“Moving into 2021, the company is expecting improved overall outlook for the petrochemical industry as its key polymer products have seen surging prices since 4Q last year and into first two months in 2021, after it hit a trough in 2Q during the height of the global pandemic.
Market polymer ASPs fell to around US$800 a tonne in 2Q but rebounded to US$1,100 in 4Q.
“The upward trend is continuing with ASPs reaching above US1,200 for the first two months of 2021, ” it said.
LCT pointed out two of its key products, namely the low-density polyethylene (LDPE) and polypropylene (PP), are currently fetching significantly higher ASP of around US$1,550, as at end February 2021.
The strong prices are expected to hold or increase further in the 1st half of 2021 buoyed by the brightening economic recovery prospect with global vaccination rollouts, complemented with the sudden polymer supply shortages in the SEA region resulting from the on-going shipping container issues which curtailed imported polymer supplies from other regions.
At the same time, the deep freeze storm in the US in February has affected operations in the key production hub in Texas which significantly reduced US supplies, which is one of the key petrochemical producers.
LCT also said Southeast Asia may also experience further supply disruption due to outages and expected plant turnarounds in Asia and key Middle East producers in 1H of 2021.