Lotte Chemical's Losses Mount for 4th Year as Basic Chemical Unit Struggles, Plans Growth Push in Advanced Materials

[Korea Financial Times, Gwak Horyung] Lotte Chemical has recorded a loss for the fourth consecutive year. The company announced on the 4th that it posted KRW 18.483 trillion in revenue and an operating loss of KRW 943.6 billion in 2025. Revenue decreased by 7.1% year-on-year, while the operating loss expanded by KRW 29.1 billion.

Net loss widened from KRW 1.8256 trillion in 2024 to KRW 2.4901 trillion in 2025, an increase of KRW 664.5 billion. The fourth quarter of last year alone added a net loss of KRW 1.609 trillion.

Last year, Lotte Chemical responded to the restructuring of the domestic commodity petrochemical business by securing optimal facility utilization rates and pursuing operational rationalization. As a result, while revenue declined, the company explained that this laid the foundation for strengthening financial soundness and core business competitiveness. As of last year, the company's borrowings stood at KRW 9.3994 trillion, down 7.5% (KRW 759 billion) from the previous year.

Operating profit (operating margin) by specific business division was: ▲Basic Chemicals negative KRW 847.6 billion (-6.7%) ▲Advanced Materials KRW 208.5 billion (5.1%) ▲Lotte Fine Chemical KRW 74.4 billion (4.2%). While the Basic Chemicals deficit increased slightly, profits from Advanced Materials and Fine Chemicals rose 16% and 48% respectively, offsetting this. However, the operating profit of Lotte Energy Materials, a battery copper foil subsidiary, was negative KRW 145.2 billion (-21.4%), with losses more than doubling, which expanded the company-wide loss.

'Diversified Investment' Resumes

Regarding this year's management direction, Lotte Chemical stated, "We plan to implement strategies centered on two axes: reducing the proportion of commodity petrochemical business within our business portfolio and establishing a foundation for future growth," adding, "We will accelerate the expansion of functional materials and eco-friendly energy business."

The company also plans to proceed sequentially with new facility investments that were postponed during last year's business restructuring process.

In the Advanced Materials division, the company plans to complete construction of a new compounding plant at the Yulchon Industrial Complex in South Jeolla Province in the second half of this year. Approximately KRW 306.1 billion has been invested in the new plant. It will produce 500,000 tons annually of high-performance engineering plastics such as ABS and PC used for automotive materials.

The joint venture cathode foil project in the United States will also complete factory construction within this year. The company plans to expand its battery materials business to areas such as circuit boards for AI applications.

The Ulsan hydrogen fuel cell power plant, which began operation in September last year through Lotte SK Enerroot, is also scheduled for additional expansion in both the first and second halves of this year. This will expand annual power generation capacity from 20MWh to 80MWh.

Minimum Dividend Despite Large-Scale Net Loss

Lotte Chemical decided on a cash dividend of KRW 500 per common share as a year-end settlement dividend. Including the interim dividend (KRW 500 per share), the 2025 dividend is KRW 1,000 per share.

This is half of the KRW 2,000 per share paid in 2024. Compared to 2021 (KRW 8,300 per share) when the company was profitable, it is one-eighth of that level.

This is understood as paying dividends to enhance shareholder value despite having no distributable earnings capacity. Lotte Chemical applies a shareholder return policy of paying 30% of standalone net income (excluding one-time profits) as dividends. Based on standalone net income, the company has been in deficit since 2024.

Gwak Horyung (horr@fntimes.com)