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Lotte Chemical Headquarters (Photo = Lotte Chemical) |
[Alpha Biz= Paul Lee] Seoul, August 21, 2025 – Lotte Chemical announced that it has recognized an impairment loss of KRW 18.8 billion on its stake in Lotte Versalis Elastomers (LVE), a joint venture with Italy’s Versalis. The loss reflects the persistent underperformance of LVE, which has failed to record a single year of profit since its establishment in 2013.
According to the company’s semi-annual filing with the Financial Supervisory Service (FSS), Lotte Versalis has accumulated losses of KRW 5.29 trillion over the past decade, placing significant pressure on Lotte Chemical’s consolidated earnings. Based on its 50%+1 shareholding, Lotte Chemical has absorbed over KRW 2.6 trillion in equity-method losses.
Continuous Capital Outflows
In addition to accounting losses, Lotte Chemical has provided ongoing capital injections to sustain the joint venture. In July 2025, the company injected KRW 20 billion, following a KRW 25 billion capital increase in January. Since 2013, total capital contributions to LVE have reached KRW 395.9 billion, equivalent to an average annual outflow of KRW 33 billion.
This double burden of equity-method losses and cash outflows has raised concerns over Lotte Chemical’s financial resilience, especially amid a prolonged downturn in the global petrochemical sector.
Struggles in Core Business
Lotte Chemical’s own profitability has been hit by weak petrochemical demand and oversupply pressures. The company’s EBITDA for H1 2025 stood at KRW 217.6 billion, down 39.5% from KRW 359.4 billion in the same period last year. The EBITDA margin also fell from 3.6% to 2.4%.
Structural Challenges Ahead
Market observers highlight that while restructuring is urgently needed, Lotte Chemical faces structural constraints due to the joint venture’s governance. Major strategic decisions require approval from both partners, making it difficult for Lotte Chemical to independently drive asset restructuring or divestment.
Industry analysts caution that without decisive action, the ongoing capital drain from LVE will continue to weigh on Lotte Chemical’s financial stability, particularly as petrochemical market uncertainty persists.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
