Lotchem: Better PTA-PX margins lift EPS by 60% YoY

April 22, 2022 (MLN): Lotte Chemical Pakistan Limited (LOTCHEM) has reported a net income of Rs2.6 billion (EPS: Rs1.73) for the quarter ended March 31, 2022, up by a significant 60% YoY on the back of better PTA-PX margins.

The company is the only manufacturer and supplier of Purified Terephthalic Acid (PTA) for domestic polyester and polyethylene terephthalate (PET) markets in Pakistan. In the same quarter last year, the company had earned net profits of Rs1.6bn with earnings per share at Rs1.08.

According to the financial results sent to Exchange, the top line witnessed an upsurge of 38% YoY to Rs20.3bn mainly led by robust demand from textile sectors and a rise in PTA prices. Accordingly, the company posted a gross profit of Rs41bn, up by 77% YoY.

The gross margins of the company were settled at 20% compared to 15% during the same quarter last year, mainly due to higher PTA-PX realized margins. To note, PTA-PX margins averaged at over $200/ton for 1QCY22 vs $131/ton for 1QCY21.

Among other lined items, the Other income of the company increased by 53% YoY over higher yield offering and increase in investment.

Moreover, the company incurred financial charges of Rs276.9mn during the quarter compared to the finance income of Rs98mn in 1QCY21 due to exchange gains incurred over local currency appreciation as the company has lease liability denominated in foreign currency, a note by Insight Securities said.

To note, PKR devalued by around 3.85% against the USD during the quarter.

On the taxation front, the effective tax rate for the quarter remained stable at 28.7%during the review period.

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