LOTTE Chemical Titan Holding Bhd (LCT) reported a return to profitability in the second quarter of its 2020 financial year ended June 30, after it recorded a loss in its first quarter.
LCT saw a net profit of RM88.7 mil for the quarter, compared to a loss of RM170 mil from 1Q20, a swing of RM258.7 mil quarter-on-quarter (qoq).
“The notable earnings improvement and v-shaped recovery are on the back of a higher sales revenue of RM1.58 bil in the quarter, from RM1.46 bil recorded in the previous quarter,” said the company.
LCT also noted that revenue for the quarter was supported by both higher production and sales performance, which “markedly improved” after the statutory turnaround of the company in the first quarter of 2020.
“Notwithstanding the challenging business environment caused by the Covid-19 pandemic lockdown which has affected much of the global manufacturing industry, the company was able to achieve the highest sales volume record since its inception 29 years ago, in May and June 2020,” said LCT.
The company also generated a positive operating cash flow for the quarter, amounting to RM242 mil. This brings the total operating cash flow for the first half of 2020 to RM512 mil.
Year-on-year (yoy), the company saw a dip in profit and revenue, from RM104.8 mil in 2Q19 to the current RM88.7 mil, and from RM2.13 bil in 2Q19 to the current RM1.58 bil.
LCT noted that the earnings were lower on the continuation of operating margin compressions as a result of lower average selling prices for the current quarter compared to 2Q19.
“The fall in product ASPs (average selling prices) was mainly due to heightened economic uncertainties following the outbreak of the Covid-19 pandemic, which has disrupted global business activities and weakened overall manufacturing demand in 2020,” said LCT.
According to LCT president Lee Dong Woo, the company will continue to push for better operational and financial performance.
“We will also be undertaking a strategic review on the timing and progress for our Indonesia LINE petrochemical project in light of the pandemic impact on the global economy,” said Lee.
The company also aims to maintain its financial resilience with its net cash of over RM3.8 bil, while optimising its operations to ride out the currently volatile business environment.
At 2.35pm, LCT’s shares were at RM2.10, down 13 sen, with 11.29 million shares traded. – July 30, 2020