Lotte Chemical swings to a net loss in third quarter on sluggish petrochemical demand

Lotte Chemical Vice President Kim Gyo-hyun talks at a press conference in May. [YONHAP]

Lotte Chemical swung to a net loss in the third quarter as petrochemical demand continued to remain sluggish.

It reported 31.1 billion won ($22.4 million) in net loss in the third quarter compared to 312.9 billion won of profit during the same period last year.

It still beat the market consensus of 122.6 billion won of net loss compiled by FnGuide.

Quarterly revenue rose 27.9 percent on year to 5.7 trillion won. It slightly fell short of the market expectation of 5.2 trillion won.

Operating loss stood at 423.8 billion won compared to 288.3 billion won of operating profit last year.

The company blamed the low demand for petrochemical products globally and the high prices of raw materials for weak performances.

The basic chemicals business, which was once the company's cash cow, logged 3.8 trillion won of sales and 277 billion won of operating loss.

"Sales increased as new facilities began operations at the Yeosu plant in South Jeolla," Lotte said, but "the prices of raw materials such as ethane increased."

The company's advanced materials division reported 1.16 trillion won in sales with 12.1 billion won of operating profit.

The company added that it estimates that profitability will be improved in the fourth quarter as the prices of raw materials will likely stabilize.

"We will continue to seek ways to expand and diversify our business to secure profitable business portfolios," the company said.

Lotte Chemical said it will acquire 53.3 percent of Iljin Materials for 2.7 trillion won, with the goal of becoming a major player in the fast-growing electric vehicle (EV) market.

KRX-listed Iljin Materials is the world's fourth-largest manufacturer of copper foil, a core component in making anodes, which are used in lithium-ion batteries for EVs.

The deal is likely to be closed by the end of February.

BY SARAH CHEA [chea.sarah@joongang.co.kr]