LOTCHEM earnings preview: profit expected to fall as sales slow down

Lotte Chemical Pakistan Limited (LOTCHEM) is likely to see a drop in profits in the second quarter of 2025 (April–June). The company is expected to post a profit of Rs518 million in this quarter, which equals Rs0.34 per share, down from Rs662 million (Rs0.44/sh) in the previous quarter and 59% lower than the same period last year.

Why is profit going down?

There are a few key reasons:

– Sales are falling
The company’s total sales (revenue) are expected to be Rs20.3 billion, which is 37% lower than last year and 6% lower than last quarter. This drop is mainly because they sold less product.

– Global prices are weak
The prices of PTA and PX, two key chemicals, have dropped in the international market:

• PTA: down ~19% YoY
• PX: down ~22% YoY
  This has hurt the company’s profitability.

– Gas prices are still high
LOTCHEM relies heavily on gas for production. Despite lower sales, gas costs have remained high, putting pressure on profit margins.

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What’s happening to margins?

Margins show how much money the company keeps after paying for raw materials and production costs. LOTCHEM’s gross margin is expected to drop to 4.7% in this quarter from 6.2% last quarter and 7.2% last year.

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Other key numbers:

• Other income (like interest on bank deposits): Rs243 million (up 17% from last quarter)
• Financial charges (interest on loans): down 28% QoQ
• Admin expenses: down 19% QoQ
• Profit before tax: Rs849 million
• Tax: Rs331 million

In Short:

• Sales and profits are down
• Global prices and high gas costs are squeezing profits
• Some relief from lower admin and finance costs
• EPS expected at Rs0.34 vs Rs0.44 in the last quarter

While LOTCHEM faces tough conditions due to falling chemical prices and high gas costs, its cost control measures are helping cushion the impact slightly. Investors may want to watch future changes in global PTA/PX prices and domestic energy costs to see when earnings might bounce back.

Source: Insight Securities (Private) Limited

⚠️ This post reflects the author’s personal opinion and is for informational purposes only. It does not constitute financial advice. Investing involves risk and should be done independently. Read full disclaimer →