Lotte Chemical Corp. ranked first in the chemical industry in terms of operating profit last year for two years in a row. Previously, LG Chem Ltd. slightly surpassed Lotte Chemical in terms of operating profit according to tentative performance results but the result was upended according to final performance results in three weeks.
According to the Financial Supervisory Service (FSS) on March 7, Lotte Chemical officially announced that it posted 2.9297 trillion won (US$2.7444 billion) in operating profit last year. According to earlier tentative results, Lotte Chemical recorded 2.9276 trillion won (US$2.7425) of annual operating profits but the figure increased 2.1 billion won (US$1.97 million) according to confirmed results.
As Lotte Chemical showed a slight increase in annual operating profits from the tentative estimate, the leader in the chemical industry has also changed. LG Chem’s operating profit amounted to 2.9284 trillion won (US$2.74 billion), nearly 800 million won (US$749,415) higher than that of Lotte Chemical according to the tentative estimate, but the figure was 1.3 billion won (US$1.22 million) lower according to the confirmed results.
Accordingly, the chemical industry is paying attention to this year’s results. LG Chem and Lotte Chemical were back and forth battling in performance and both companies are expected to record some 3 trillion won (US$2.81 billion) of operating profits, hitting a record high.
Moreover, LG Chem and Lotte Chemical show a stark contrast in growth strategy. LG Chem focuses more on new businesses such as secondary cell and biotechnology rather than conventional petrochemical basic materials. The company expects that its electric vehicle (EV) battery business will reach the break-even point in the second half of this year and aims to become the world’s biggest EV battery producer by 2020 with sales of 7 trillion won (US$6.56 billion).
Lotte Chemical concentrates on strengthening the competitiveness in the petrochemical basic material sector further. The company is believed to be seeking expand its market power by improving the price competitiveness through the economy of scale. Lotte Chemical is planning to increase its annual ethylene production to 4.5 million ton by expanding its facilities in the ethane cracking center (ECC) in the U.S. to be completed this year and Yeosu plant. It is the largest ethylene production in Asia and seventh largest in the world.