Lotte Chemical Corporation (011170) Q1 2026 earnings summary

Executive summary

• Q1 2026 consolidated revenue was KRW 4.99 trillion (49,905억원), up 6.0% sequentially and 1.8% year-over-year, with operating profit turning positive at KRW 73.5 billion, driven by improved Basic Chemicals performance and positive raw material lagging effects amid Middle East geopolitical risks.

• Net income attributable to owners was KRW 49.6 billion, a turnaround from prior year losses, while gross margin improved to 7.6% from 3.5% in Q1 2025.

• The company is advancing mid- to long-term strategies, including business restructuring, expansion into high value-added and future growth businesses, and global expansion in battery materials.

• Revenue composition: Basic Chemicals 67.7%, Advanced Materials 25.3%, Fine Chemicals 10.2%, Battery Materials 3.2%.

• Net loss for the period was KRW 15,950억원, narrowing from the previous quarter.

Financial highlights

• EBITDA for Q1 2026 was KRW 412.8 billion (4,128억원), pre-tax income was a loss of KRW 17,160억원, and basic earnings per share was KRW 1,176.

• Consolidated assets at Q1-end were KRW 31.9 trillion, liabilities KRW 13.8 trillion, and shareholders' equity KRW 18.1 trillion.

• Debt ratio at Q1 2026 was 76.03%, with net debt ratio improving to 34.9%.

• Inventory valuation reversal contributed KRW 50 billion to Q1 profit; positive feedstock lagging effects amounted to KRW 250 billion.

• ROE was 11.6%, and ROA was 5.0%.

Outlook and guidance

• External uncertainties, especially from Middle East geopolitical risks and raw material price volatility, are expected to persist.

• The company will maintain stable operations through proactive feedstock procurement and flexible operational strategies.

• Performance improvement may continue in Q2 due to tight feedstock supply, but higher naphtha costs could increase production costs.

• Focus remains on high-value specialty products, global expansion in battery materials, and investments in PET recycling and hydrogen fuel cell power.

• Longer-term outlook (2027-2028) remains challenging due to ongoing capacity additions in China and industry headwinds.