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Lotte Chemical Titan Holding Bhd (KL) reported its ninth consecutive quarterly loss with a narrower net loss of RM248.9 million for the second quarter ended June 30, 2024 (2QFY2024), compared to RM313.5 million in the same period last year (2QFY2023).
Key Points:
Ninth Consecutive Loss: The company continues to struggle, posting another quarterly loss, though the deficit has narrowed from the previous year.
Financial Performance:
- Net Loss: RM248.9 million, down from RM313.5 million in 2QFY2023.
- Loss Per Share: Dropped to 10.93 sen from 13.76 sen.
- Revenue: Decreased by 4.3% to RM1.78 billion from RM1.86 billion due to lower sales volume from scheduled statutory maintenance, partially offset by the appreciation of the US dollar and higher average selling prices.
- LBITDA: Loss before interest, taxes, depreciation, and amortization fell 41% to RM155.6 million from RM261.8 million.
Six-Month Performance (6MFY2024):
- Net Loss: Reduced to RM426.9 million from RM538.2 million in 6MFY2023.
- Revenue: Declined 3.5% to RM3.7 billion from RM3.83 billion.
Challenges and Mitigations:
- The company's losses were somewhat mitigated by a lower gross negative margin and a reduced write-down of inventories.
- Losses were further impacted by an increase in share of losses from an associate, Lotte Chemical USA Corp.
Operational Updates:
- Plant Utilisation: Sales volume and plant utilisation rates dropped year-on-year due to a comprehensive safety plan and statutory maintenance at Pasir Gudang and Tanjung Langsat plants, reducing utilisation from 66% to 47%.
- Future Outlook: The statutory turnaround has been completed, and the company expects to optimize its utilisation rate moving forward. Focus remains on optimizing production output and managing cash flow effectively.
- Expansion Plans: The construction of the LOTTE Chemical Indonesia New Ethylene (LINE) project in Merak, Indonesia, is on schedule for completion by 2025, expected to increase the group’s total production capacity by 65%.
Market Reaction:
- LC Titan shares declined by three sen or 2.73% to RM1.07 at Wednesday’s market close, with over one million shares traded, giving the company a market capitalisation of RM2.47 billion.
Conclusion: Lotte Chemical Titan continues to face financial challenges, marking its ninth straight quarterly loss. However, with strategic efforts in place, including optimization of production and ongoing expansion projects, the company aims to improve its financial health and operational efficiency in the future.
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