LOTCHEM: Strong PTA-PX margins elevate net income

February 17, 2022 (MLN): Lotte Chemical Pakistan Limited (LOTCHEM) reported a net profit to Rs4.64billion (EPS: Rs3.07) in the calendar year 2021, up by 2.18 times YoY when compared to a net profit of Rs2.13bn in CY20, backed by higher gross margins amid PTA-PX margins.

According to a financial statement sent to Exchange, the revenue from operations rose by nearly 72.4% YoY to Rs67bn due to higher volume sold due to robust demand from the textile sectors coupled with higher PTA-PX margins, resulting in a gross profit of Rs7.58bn, showing nearly a nearly 3-fold increase YoY in the said period. The company’s gross margins improved by 5ppt to 11% in CY21.

On the cost front, LOTCHEM’s distribution and selling expenses and other operating expenses surged by 11.6% YoY and 2.06x YoY to Rs119mn and Rs487mn, respectively in CY21.

Notably, the finance cost of the company witnessed a colossal increase of 6.5 times YoY to Rs974mn mainly due to exchange loss on dollar base lease liabilities amid PKR deprecation, limiting the bottom-line growth of the company.

On the tax front, in CY21, the company paid taxes worth Rs1.85bn, up by 2.12x YoY.

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