Lotte Chemical Pakistan Limited (LOTCHEM) 2Q CY25 Result: Earnings Take a Hit

Lotte Chemical Pakistan Limited (LOTCHEM) announced its results for the second quarter of 2025, and the numbers were disappointing. The company reported a profit after tax (PAT) of only PKR 80 million, which translates into an EPS (earnings per share) of PKR 0.05. This is much lower than the PKR 662 million profit (EPS: PKR 0.44) it earned in the previous quarter.

Why did profits fall?

Several factors dragged earnings down:

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• Sales dropped: Revenue fell by 42% YoY and 13% QoQ, likely because of lower sales volumes.
• Weaker margins: Gross margins shrank to just 2.4%, compared to 7.2% last year. This was mainly due to a weaker “core delta” (spread between input costs and product prices) and higher gas costs.
• Rising expenses: Selling and distribution costs rose 14% YoY and 16% QoQ, while admin expenses also went up.
• Lower other income: Income from investments and interest fell by ~55% YoY, as interest rates came down and short-term investments earned less.
• Finance cost mixed: Finance charges fell 13% YoY, thanks to lower exchange losses, but rose 45% QoQ due to higher borrowings.

The bigger picture

In the first half of 2025 (1HCY25), LOTCHEM earned PKR 741 million compared to PKR 2.2 billion in the same period last year, a 66% decline.

LOTCHEM is facing tough conditions: high energy costs, weak pricing power, and shrinking profitability. While cost savings in finance helped slightly, they weren’t enough to offset the big drop in sales and margins.

What does this mean for investors?

• Earnings are well below expectations, showing that LOTCHEM’s profitability is highly sensitive to input costs and demand.
• Unless gas prices ease and product spreads improve, margins will likely stay under pressure.
• Investors will be watching closely if volumes recover in the coming quarters and whether energy costs decline.

For now, LOTCHEM looks to be in a challenging phase, and the company may continue to struggle in maintaining strong earnings.

Source: Insight Securities

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⚠️ 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 →