Malaysia’s Lotte Chemical Titan incurs record Q4 loss; ’25 outlook downbeat

SINGAPORE (ICIS)–Lotte Chemical Titan (LCT) incurred its largest-ever quarterly loss, with analysts expecting the Malaysian producer to remain in the red in 2025 amid weak economic conditions and an oversupply of petrochemical products.

• Indonesia LINE project start-up may be delayed
• 2025 plant utilization rate projected to drop to 50-55%
• Market volatility continues amid geopolitical uncertainties, US tariffs

in Malaysian ringgit (M$) thousands	Q4 2024	Q4 2023	% Change	2024	2023	% Change
Revenue	1,793,286	1,855,771	-3.4	7,435,031	7,646,170	-2.8
EBITDA	-506,605	-84,409		-816,443	-357,098
Net income	-510,074	-186,477		-1,183,406	-702,286

On 7 February, LCT shares on Bursa Malaysia had slumped by 7% to close at a record low of ringgit (M$) 0.535, after the company reported a wider Q4 2024 net loss of M$510 million ($114 million).

At 06:02 GMT on Monday, its shares recovered slightly, rising by 0.93% to M$0.540.

“LCT is expected to remain loss-making in the coming quarters, as product spreads are unlikely to see meaningful improvement due to persistent supply overhang from significant capacity expansions – primarily in China – outpacing demand growth,” Malaysia-based brokerage TA Securities said in a note.

While construction of its petrochemical project in Indonesia is expected to be completed in the first half of this year, commercial operations may be deferred as product spreads may remain unfavorable, the brokerage said.

The project called LOTTE Chemical Indonesia’s New Ethylene (LINE) project in Merak, Indonesia is nearing completion and is expected to be fully completed by 2025.

It is expected to produce 1 million tonnes/year of ethylene and 520,000 tonnes/year of propylene.

In Malaysia, LCT shut in December last year its cracker in Pasir Gudang to “mitigate losses by loading down its operations”.

In a statement on 6 February, LCT said that it expects ongoing volatility in the global business environment due to geopolitical factors, including the Russia-Ukraine War, Middle East tensions, and US President Donald Trump’s policies.

“The sluggish economic performance and oversupply of petrochemical products in China have impacted supply and demand balances,” the company said.

Malaysia, Indonesia, and the rest of ASEAN region will remain LCT’s key markets in the foreseeable future due to their strong economic growth.

For 2025, Indonesia’s growth is expected to reach 5.1%, up from 5.0% in 2024, while ASEAN’s growth is projected at 4.7%, up from 4.6% in 2024. Malaysia’s GDP growth, however, is forecast to slow to 4.4%, from 4.8% in 2024, LCT said, citing projections from the International Monetary Fund (IMF).

LCT’s plant operating rate for the whole of 2025 is expected to range from 50% to 55%, down from 57% in 2024, subject to periodic adjustments.

HIGH PRODUCTION COST WEIGHS ON EARNINGS
Q4 group revenue fell due to the depreciation of the US dollar against the ringgit, but was partially mitigated by higher sales volumes, Lotte Chemical Titan said in a filing on Bursa Malaysia on 6 February.

A stronger ringgit makes Malaysian exports more expensive for international buyers, particularly those paying in US dollars.

In 2024, the ringgit had appreciated by 2.7% against the US dollar, supported by a stronger-than-expected economic growth.

Olefins and derivative products’ revenue increased by 2.0% to M$373.5 million on higher sales volume, but the segment’s loss before taxation and impairment widened to M$72.1 million from M$49.2 million in the same period of the previous year.

In contrast, the polyolefin products’ revenue declined by 4.7% year on year to M$1.42 billion in Q4 2024, but the segment’s loss to narrow to M$74.3 million from M$148.5 million in the same period last year on improved margins and a reversal of an inventory write-down.

Focus article by Nurluqman Suratman

($1 = M$4.47)