{"id":6099,"date":"2024-08-22T10:34:07","date_gmt":"2024-08-22T05:34:07","guid":{"rendered":"https:\/\/ksestocks.com\/blog\/?p=6099"},"modified":"2024-11-23T20:05:09","modified_gmt":"2024-11-23T15:05:09","slug":"lotchem-reports-higher-volumetric-sales-but-struggles-with-margins-other-income","status":"publish","type":"post","link":"https:\/\/ksestocks.com\/blog\/lotchem-reports-higher-volumetric-sales-but-struggles-with-margins-other-income\/","title":{"rendered":"Lotchem reports higher volumetric sales but struggles with margins, other income"},"content":{"rendered":"\n

Lotte Chemical Pakistan Limited (LOTCHEM<\/a>) recently released its financial results for 2QCY24 and the numbers have sparked interest.<\/p>\n\n\n\n

The company reported earnings of Rs0.84 per share<\/strong>, which is a significant increase of 4.1 times <\/strong>year-on-year (YoY) and 42% <\/strong>quarter-on-quarter (QoQ). <\/p>\n\n\n\n

This brings the total earnings for the first half of 2024 to Rs1.43 per share<\/strong>, although this is down 24% <\/strong>compared to the same period last year.<\/p>\n\n\n\n

The jump in earnings is primarily due to higher volumetric sales<\/strong> during the quarter. <\/p>\n\n\n\n

Despite a challenging economic environment, LOTCHEM managed to increase its revenue by 95% <\/strong>YoY to Rs32.1 billion<\/strong> in 2QCY24. <\/p>\n\n\n\n

This growth was driven by increased sales volumes and a higher sales premium, even though the average price of purified terephthalic acid (PTA) declined by 1%<\/strong> YoY to US$802 per ton during the quarter.<\/p>\n\n\n\n

Challenges with margins and costs<\/h2>\n\n\n\n

The company’s gross margins took a hit, declining by 5 percentage points YoY to 7.2% <\/strong>in 2QCY24. <\/p>\n\n\n\n

Several factors contributed to this decline, including higher gas prices, a 9%<\/strong> YoY drop in PTA-paraxylene (PX) margins, and a 3%<\/strong> YoY appreciation of the Pakistani Rupee against the US Dollar. <\/p>\n\n\n\n

These challenges highlight the ongoing pressures on the company’s cost structure.<\/p>\n\n\n\n

Additionally, other income for LOTCHEM fell by 39%<\/strong> YoY in 2QCY24, mainly due to a 26% YoY reduction in cash and short-term investments. <\/p>\n\n\n\n

The finance cost also saw a significant increase of 48%<\/strong> YoY, further impacting the bottom line. <\/p>\n\n\n\n

The company’s effective tax rate clocked in at 38.8%<\/strong>, which, while lower than the previous year, still represents a substantial burden on profitability.<\/p>\n\n\n\n

Indicator<\/strong><\/th>2QCY24<\/strong><\/th>2QCY23<\/strong><\/th><\/tr><\/thead><\/table><\/figure>\n\n\n\n
Gross Margin<\/strong><\/td>7.2%<\/td>12.2%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
Net Profit Margin<\/strong><\/td>4.0%<\/td>1.9%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
Effective Tax Rate<\/strong><\/td>38.8%<\/td>85.1%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
Earnings Per Share (EPS)<\/strong><\/td>Rs0.84<\/td>Rs0.21<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

What\u2019s the outlook for LOTCHEM?<\/h2>\n\n\n\n

Looking ahead, analysts at Foundation Securities remain cautiously optimistic about LOTCHEM\u2019s future performance. <\/p>\n\n\n\n

The company has been given an “Outperform<\/strong>” rating, with a target price of Rs27.8 per share<\/strong> by December 2024. <\/p>\n\n\n\n

This suggests that despite the challenges, LOTCHEM still holds potential for growth, particularly if it can navigate the cost pressures more effectively.<\/p>\n\n\n\n

Source: Foundation Securities<\/em><\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Lotte Chemical Pakistan Limited (LOTCHEM) recently released its financial results for 2QCY24 and the numbers have sparked interest.<\/p>\n","protected":false},"author":4890,"featured_media":6558,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[138,2],"tags":[57],"class_list":["post-6099","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financials","category-psx-blog","tag-lotchem"],"featured_image_src":{"landsacpe":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2024\/08\/LOTCHEM-STOCK-PSX-1140x445.png",1140,445,true],"list":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2024\/08\/LOTCHEM-STOCK-PSX-463x348.png",463,348,true],"medium":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2024\/08\/LOTCHEM-STOCK-PSX-300x188.png",300,188,true],"full":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2024\/08\/LOTCHEM-STOCK-PSX.png",1920,1200,false]},"_links":{"self":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts\/6099","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/users\/4890"}],"replies":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/comments?post=6099"}],"version-history":[{"count":0,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts\/6099\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/media\/6558"}],"wp:attachment":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/media?parent=6099"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/categories?post=6099"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/tags?post=6099"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}