Business Recorder
Lotte Chemical Pakistan Limited (PSX: LOTCHEM) is a manufacturer and supplier of Purified Teraphthalic Acid (PTA). The company was incorporated in Pakistan in 1998. LOTCHEM is the core supplier of the domestic Polyester and PTA industries besides exporting to Asia and Middle-east region. Its parent company LOTTE is Korea’s one of the largest conglomerate with over 20 businesses in 30 countries across the globe. Pattern of Shareholding As of December 31, 2025, LOTCHEM has an outstanding share capital of 1514.207 million shares which are held by 14,259 shareholders. PTA Global Holding Limited is the largest shareholder of LOTCHEM with 75.01 percent shares followed by local general public holding 12.18 percent shares. Banks, DFIs and NBFIs account for 4.37 percent shares of LOTCHEM. The remaining shares are held by other categories of shareholders. Historical Performance (2019-2024) Except for a year-on-year drop in 2020, 2023 and 2025, LOTCHEM’s topline ascended in all the years under consideration. Its bottomline also followed the suit except that it also dwindled in 2024 despite topline growth recorded in that year. The company’s margins which registered reasonable growth in 2019 drastically fell in 2020, only to rise back in the subsequent two years to reach their optimum level in 2022. LOTCHEM’s margins followed a downward trajectory since 2023 to hit their lowest ebb in 2025. The detailed performance review of the period under consideration is given below. In 2019, LOTCHEM’s topline grew by 5.47 percent year-on-year to clock in at Rs.60,540 million. The company’s sales and production volumes dropped by 3 percent and 6 percent respectively in 2019 (see the graph of production & sales volume). US-China trade war resulted in constricted demand of PTA in the global market. Domestically, the demand showed improvement during the 1HCY19; however the introduction of tax reforms in the budget resulted in lackluster economic activity in the country and the overall industry volumes declined by 12 percent year-on-year to clock in at 690 KT. Moreover, Pak Rupee depreciation also resulted in depressed economic activity. The company’s gross profit improved by 8.81 percent year-on-year in 2019 with GP margin picking up from 12.86 percent in 2018 to 13.27 percent in 2019 on account of increased prices. Distribution and administrative expense inched up by 1.96 percent and 9 percent respectively in 2019 mainly on account of increased payroll expense. Higher profit related provisioning resulted in 15.86 percent taller other expense in 2019. However, it was offset by 138.64 percent year-on-year increase in other income primarily on account of higher interest income. Operating profit improved by 18 percent year-on-year in 2019 with OP margin climbing up from 11.94 percent in 2018 to 13.36 percent in 2019. Finance cost registered 12.28 percent rise in 2019 due to higher discount rate and higher interest on lease liability. Net profit progressed by 20.94 percent year-on-year in 2019 to clock in at Rs.5360.37 million with EPS of Rs.3.54 versus EPS of Rs.2.93 recorded in 2018. NP margin also picked up from 7.72 percent in 2018 to 8.85 percent in 2019. The decelerated economic activity due to lockdown imposed on account of the outbreak of COVID-19 across the globe took its toll on the PTA demand which followed a downward trajectory throughout 2020. International prices fell to a 20-year low level in 2020. Same was the case in the domestic market where demand arrest caused the company to shut down its plant for over 54 days during 2020. Production and sales volumes were also down by 14 percent and 12 percent lesser respectively in 2019. The overall domestic demand also eroded by 10 percent in 2020 to clock in at 621 KT. LOTCHEM’s net sales deteriorated by 35.64 percent to clock in at Rs. 38,965 million in 2020. Gross profit fell by 67.10 percent year-on-year in 2020 with GP margin clocking in at 6.78 percent as against GP margin of 13 percent recorded in the previous year. Administrative and distribution expense grew by 35.22 percent and 2.88 percent respectively in 2020 in line with inflation. Other expense fell by 63.30 percent in 2020 owing to lower provisioning done for workers’ profit participation fund on account of low profitability. Other income grew by 15.70 percent in 2020 on the back of discounting of GIDC provision. The company’s operating profit declined by 61 percent year-on-year in 2020 with OP margin marching down to 8.08 percent. Finance cost significantly dropped during 2020 on the back of net exchange gain recognized during the year. The bottomline of LOTCHEM plunged by 60.35 percent year-on-year in 2020 to clock in at Rs. 2125 million with NP margin of 5.45 percent and EPS of Rs.1.4. The company made a massive topline growth of 72.37 percent year-on-year in 2021. Net sales clocked in at Rs. 67,165 million in 2021. During the year, PTA demand considerably improved as major global economies witnessed resurgence post COVID-19. Global PTA prices also improved at the start of the year, however stagnated as COVID-19 cases reappeared in South East Asia and Indian continent. The prices also fell due to the set up of new PTA capacity in China which led to ample supply in the region. The domestic polymer industry posted robust 25 percent rise in demand to clock in at 776 KT. The production and sales volume of 520,047 tons 519,079 tons respectively achieved by the company in 2021 were the highest since the commencement of its operations in 1998. Production and sales volume boasted a year-on-year growth of 25 percent and 21 percent respectively in 2021. Resurgence in demand coupled with better prices in the domestic PTA market enabled the company to achieve GP margin of 11.29 percent with gross profit multiplying by 186.94 percent in 2021. Distribution expense escalated by 12.15 percent in 2021 on account of higher payroll expense as well as increased outward freight and handling charges. Conversely, administrative expense fell by 14.16 percent in 2021 as the company didn’t make any charitable contributions during the year. Other expenses massively grew during the year owing to higher provisioning done for workers’ profit participation and workers’ welfare fund on account of higher profitability. Other income shrank by 30.38 percent in 2021 on account of unwinding of GIDC provision during the year. Despite low discount rate during the year, finance cost of LOTCHEM grew by 549.33 percent in 2021 due to exorbitant foreign exchange loss incurred during the year. This somehow diluted the bottomline growth which otherwise would’ve grown by a much greater percentage. LOTCHEM’s net profit enlarged by 118.45 percent in 2021 to clock in at Rs.4642 million with EPS of Rs.3.07 and NP margin of 6.91 percent. LOTCHEM witnessed another year of favorable outcomes as its topline boasted year-on-year growth of 49.28 percent to clock in at Rs.100,265.56 million in 2022. Topline growth came on the heels of upward revisions in prices while its production and sales volume dropped by 9 percent and 10 percent respectively in 2022. Internationally, the demand grew initially; however, continual lockdowns imposed in China on account of COVID-19 squeezed the demand later on. Domestic market also witnessed robust growth in the 1HCY22 on account of post pandemic demand recovery and anti-dumping duty imposed on PSF imports from Taiwan, Thailand and Indonesia. However, the demand eroded in the latter half of the year due to curtailed utility supply, inland logistics disrupted due to devastating floods and high inflation. Overall domestic demand contracted by 6 percent in 2022 to clock in at 729 KT. Improved pricing culminated into GP margin of 17.78 percent in 2022, never witnessed by the company before. Gross profit also registered 135.12 percent rise in 2022. Distribution and administrative expense followed an overall inflationary trend; however other expense grew extraordinarily on the back of greater provisioning done for workers’ profit participation and welfare fund owing to high profit registered during the year. Other income grew by 85.93 percent year-on-year in 2022 on the back of higher interest income on financial assets as high discount rate helped LOTCHEM mint its financial assets during the year. LOTCHEM’s operating profit mounted by 137 percent in 2022 with OP margin reaching its optimum level of 17.66 percent. Finance cost presented an ugly picture and grew by over 100 percent during 2022 on the back of significant exchange losses incurred by the company during the year. Then imposition of super tax also nibbled away some of the gains. Yet, the company was able to post net profit of Rs.10,118.47 million in 2022, up 117.98 percent year-on-year. EPS clocked in at Rs.6.68 while NP margin stood at 10 percent in 2022. 2023 was a challenging year for LOTCHEM as its topline eroded by 18.6 percent year-on-year to clock in at Rs.81,619.405 million. Due to weaker demand and unavailability of raw materials on account of import restrictions, the company had to shut down its plant twice during the year. Its production and sales volume plummeted by 30 percent and 34 percent respectively in 2024 (see the graph of production and sales volume). During the year, high energy cost, soaring inflation, elevated cost of borrowing as well as bleak politico-economic backdrop dented the industrial activity, resulting in low PTA demand even in the 2HCY23 which is considered to be the peak season for the textile industry. This resulted in 42.52 percent thinner gross profit recorded by the company during 2023 with GP margin falling down to 12.55 percent. Distribution and administrative expense spiraled by 15.40 percent and 8.61 percent respectively during 2023 due to hiking inflation. The company booked lower provisioning for WWF and WPPF which curbed other expense by 22.31 percent during 2023. Higher interest income on bank deposits drove up other income by 39.46 percent in 2023. Operating profit slipped by 37.62 percent year-on-year in 2023 with OP margin marching down to 13.54 percent. Finance cost fell by 21.20 percent year-on-year in 2023 due to lower exchange loss as local currency gained some stability. Net profit diminished by 49.82 percent year-on-year in 2023 to clock in at Rs.5077.654 million with EPS of Rs.3.35 and NP margin of 6.22 percent. In 2024, net sales of LOTCHEM grew by a staggering 33.91 percent year-on-year to clock in at Rs.109,299.177 million. This was on account of 46 percent higher sales volume to the tune of 453,000 tons achieved by the company in 2024. The company also made export sales of 3024 tons to Oman during the year. Persistent high energy cost which dented the economic activity and the availability of cheaper imported alternatives didn’t allow the company to match its prices with the cost pressure. LOTCHEM also had to shut down its plant twice during the year to manage its high inventories. These factors resulted in 49.37 percent dent in gross profit in 2024 with GP margin drastically falling down to 4.75 percent. Higher production and sales volume coupled with inflationary pressure resulted in 21.31 percent and 17.93 percent hike in distribution expense and administrative expense respectively in 2024. The company also incurred increased handling charges during the period due to higher export sales. Lower provisioning for WWF and WPPF resulted in 64 percent lower other expense in 2024. Other income also slid by 53.28 percent in 2024 primarily due to lower income on TDRs. This was because the company significantly curtailed its short-term investments during the year to save up on finance cost by making lesser borrowings. Operating profit shrank by 54.21 percent in 2024 with OP margin falling down to 4.63 percent. Lower exchange loss and lesser borrowings resulted in 52.53 percent thinner finance cost in 2024. LOTCHEM’s net profit dived by 47.96 percent to clock in at Rs.2642.473 million in 2024. This translated into EPS of Rs. 1.75 and NP margin of 2.42 percent in 2024. Recent Performance (2025) In 2025, LOTCHEM posted 25.98 percent thinner net sales to the tune of Rs.80,906.921 million. This came on the back of 16 percent decline in its sales volume which clocked in at 380,000 tons in 2025. This was due to thinner downstream demand on account of cheaper imported products available in the market. The company also scaled down its production during the year in line with thinner demand. Gross profit descended by 40.70 percent in 2025 with GP margin falling down to its lowest level of 3.80 percent. Lower sales volume culminated into 10.29 percent decline in distribution expense in 2025. Conversely, administrative expense surged by 10.14 percent in 2025 due to higher payroll expense and rent expense. Legal, professional and consultancy charges also surged as during the year; LOTCHEM was acquired by PTA Global Holding Limited, a joint venture between Montage Commodities FZCO and Asia Pak Investments. Lower provisioning done for WWF and WPPF translated into 19.13 percent decline in other expense in 2025. Other income also weakened by 47 percent in 2025 due to considerably lower profit on TDRs on account of monetary easing. LOTCHEM’s operating profit went down by 52.70 percent in 2025 with OP margin diminishing to 2.96 percent. Finance cost plunged by 24.11 percent in 2025 due to monetary easing. The company recorded net profit of Rs.1118.932 million in 2025, down 57.66 percent year-on-year. This translated into EPS of Rs.0.74 and NP margin of 1.38 percent in 2025. Future Outlook Lower international PTA prices due to superfluous supply will constrict the margins of the industry. LOTCHEM operates on non-cost model and its prices are linked to the international market, hence it can’t transfer the impact of gas price hike to its customers .This will likely suppress the bottomline and margins of LOTCHEM. On March 09, 2026, LOTCHEM made an announcement via PSX notice to make a non-binding offer to acquire 56.19 percent share and management control of Engro Polymer & Chemical Limited, the leading producer of PVC, caustic soda and Hydrogen peroxide in Pakistan. This offer, if materializes, will be a significant development in the domestic chemical and polyester industry by boosting investor confidence and increasing the export potential of the industry.
Go to News Site