Lotte Chemical faces earnings slump

March 03, 2026 (MLN): Lotte Chemical Pakistan Limited (PSX: LOTCHEM) reported a steep 58% decline in net profit, logging Rs1.12bn for the year ended December 31, 2025, compared to Rs2.64bn in the previous year.

The company's earnings per share (EPS) shrank proportionately to Rs0.74 from Rs1.75 in the corresponding period last year.

This significant bottom-line contraction was largely driven by a substantial drop in top-line sales and shrinking gross margins. The company's net revenue from contracts with customers fell by 26% year-on-year to Rs80.91bn from Rs109.30bn.

While the company managed to reduce its cost of sales by 25% (dropping to Rs77.83bn from Rs104.11bn), the revenue decline slightly outpaced the direct cost savings.

Consequently, gross profit took a heavy 41% hit, falling to Rs3.08bn from Rs5.19bn in the prior year. The gross profit margin also narrowed to 3.8% from 4.7%.

On the operating side, Lotte Chemical saw mixed movements in overheads. Distribution and selling expenses were trimmed by 10% to Rs198.81m, and other expenses dropped by 19% to Rs269.85m.

However, administrative and general expenses rose by 10% to Rs850m.

Weighed down by the lower gross margins, operating profit plummeted 54% to Rs1.76bn from Rs3.86bn.

Below the operating line, other income nearly halved, plunging 47% to Rs635.69m from Rs1.20bn.

The company did find some relief in its finance costs, which decreased by 24% to Rs554.63m from Rs730.82m.

Profit before taxation and levies stood at Rs1.84bn, representing a 58% drop from the prior year's Rs4.33bn. Levies were virtually wiped out, falling 96% to just Rs217,000.

The company booked a taxation expense of Rs718.99m, a 57% decrease compared to the Rs1.68bn tax charge in the previous year, which was directly in line with its lower pre-tax earnings. Ultimately, the steep drop in revenue and other income suppressed the final net profit to Rs1.12bn for the year.

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