Lotte Chemical Titan posts record quarterly net profit of RM440mil

KUALA LUMPUR: Lotte Chemical Titan Holding Bhd posted its highest-ever quarterly net profit of RM440mil for the first quarter ended March 31, 2021.

The performance was significantly improved from a net loss of RM170.1mil in 1Q2020, owing to substantially stronger product margin spreads seen from a year ago, it said in a statement.

Ebitda jumped twelve-fold to RM647mil from an Ebitda loss of RM56mil in the previous comparative quarter.

For the quarter under review, revenue was RM2.37bil, a 62% jump over the same quarter last year, underpinned by higher production and sales performance.

According to the group, the record profitability was mainly owing to much higher product average selling prices (ASP) with lower naphtha feedstock costs in line with global Brent crude oil prices.

During the quarter, the overall plant operating rate improved to 88% from 66% in the same quarter last year as the company undertook a major statutory plant turnaround for 10 of its Malaysian plants.

Statutory plant turnarounds are scheduled for the remaining two plants in Malaysia in the second half of 2021.

For 2021, the group targets an operating rate of 85% to 90%, which is higher than the 82% operating rate recorded last year.

Moving forward, Lotte Chemical Titan expects product ASPs to remain supported by the improving economic prospects due to the global vaccinations.

Meanwhile, there is a polymer supply shortage in Southeast Asia due to ongoing shipping container issues, while supply may be further disrupted due to outages and expected plant turnaround in Asia and key Middle East producers in the first half of 2021.

At the same time, the winter storm in the US in February affected operations in the key production hub in Texas, which significantly reduced US supplies.

"For the full year outlook, we are cautiously optimistic as new additional global capacities may be expected in the second half of the year which may have a downward pressure on the polymer ASPs.

"Nevertheless, we are seeing renewed relevance and higher demand for usage of plastic materials given the importance of hygiene and clean food packaging, and higher demand for PPEs as well as e-commerce packaging during the pandemic period," said Lotte Chemical Titan president and CEO Park Hyun Chul.
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