Lotte Pakistan’s profits dive 81%

Shrinking margins, lower finance income negate austerity measures.

KARACHI:

Lotte Pakistan PTA reported a profit of Rs0.795 billion for 2012 against Rs4.178 billion in 2011, according to the results copy sent to the Karachi Stock Exchange on Monday. The result announcement was in sharp contrast to market estimates.

Lotte Pakistan PTA is a supplier of purified terephthalic acid (PTA), an essential raw material used in the polyester industry. Over 30% of PTA is sold to the Polyethylene Terephthalate (PET) sector while the rest goes to polyester staple fibre and other sectors. PET is used in the plastics industry for the production of bottles and bed sheets.

The severe hammering of the PTA-PX margins coupled with lower other income remained the primary reason behind the sluggish performance, said Muhammad Ismail of BMA Capital.

Lotte Pakistan PTA is a supplier of purified terephthalic acid (PTA), an essential raw material used in the polyester industry.

On account of looming concerns on PTA supply coupled with lacklustre downstream demand, PTA prices fell 13%. Resultantly, revenues declined 8.26% to Rs52.8 billion for the year.

Apart from weaker PTA prices, strong PX prices remained the major reason behind worsening PTA-PX margins. Margins shrank to an average $80 per ton in 2012 against $216 per ton in the same period last year. Thus, Lotte posted a gross profit of Rs206 million in 2012.

Moreover, declining financial income to Rs0.291 billion on account of lower cash balance further dented the profits.

However, cost savings, estimated at Rs0.421 billion, from the recently commissioned captive power plant provided significant cushion to the bottom-line.

Published in The Express Tribune, January 29^th, 2013.

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