People.
Progress.
Profit.
REPORT FOR THE
NINE MONTHS PERIOD ENDED
30 SEPTEMBER 2023
Contents | |
Company Information | 03 |
Directors' Review | 04 |
Condensed Interim Statement of Financial Position | 06 |
Condensed Interim Statement of Profit or Loss | 07 |
Condensed Interim Statement of Comprehensive Income | 08 |
Condensed Interim Statement of Changes in Equity | 09 |
Condensed Interim Statement of Cash Flows | 10 |
Notes to the Condensed Interim Financial Statements | 11 |
02 |
Company Information
As at 12 October 2023
Board of Directors | |||
Sang Hyeon Lee | Chairman | ||
Young Dae Kim | Chief Executive | ||
IL Kyu Kim | Non-Executive | ||
Jae Sun Park | Non-Executive | ||
Shabbir Diwan | Non-Executive | ||
Rashid Ibrahim | Independent | ||
Khurram Rashid | Independent | ||
Tariq Nazir Virk | Executive | ||
Audit Committee | |||
Rashid Ibrahim | Chairman | ||
IL Kyu Kim | Member | ||
Khurram Rashid | Member | ||
Faisal Abid | Secretary | ||
HR & Remuneration Committee | |||
Rashid Ibrahim | Chairman | ||
Sang Hyeon Lee | Member | ||
Young Dae Kim | Member | ||
Waheed U Khan | Secretary | ||
Shares Sub Committee | |||
Young Dae Kim | Chairman | ||
Sang Hyeon Lee | Member | ||
Khurram Rashid | Member | ||
Executive Management Team | |||
Young Dae Kim | Chief Executive | ||
Tariq Nazir Virk | Director Manufacturing | ||
Waheed U Khan | Director Admin, HR & IT | ||
Ashiq Ali | Chief Financial Officer | ||
Muhammed Talha Khan | General Manager Commercial | ||
Chief Financial Officer | |||
Ashiq Ali | |||
Company Secretary | |||
Faisal Abid | |||
Bankers | External Auditors | ||
Allied Bank Limited | A.F. Ferguson & Co., | ||
Askari Bank Limited | Chartered Accountants | ||
Bank Alfalah Limited | |||
Citibank NA | Legal Advisor | ||
Deutsche Bank AG | Naz Toosy | ||
Faysal Bank Limited | 148, 18th East Street, | ||
Habib Bank Limited | Phase 1, DHA, Karachi | ||
Habib Metropolitan Bank Ltd | |||
Industrial and Commercial Bank of China | Registered Office | ||
MCB Bank Limited | EZ/I/P-4, Eastern Industrial Zone, | ||
Meezan Bank Limited | Port Qasim, Karachi | ||
National Bank of Pakistan | |||
Standard Chartered Bank (Pakistan) Limited | Shares Registrar | ||
United Bank Limited | Famco Associates (Pvt) Limited | ||
8-F, Near Hotel Faran, Nursery, | |||
Internal Auditors | Block 6, P.E.C.H.S., | ||
KPMG Taseer Hadi & Co., | Shahrah-e-Faisal, Karachi | ||
Chartered Accountants | |||
Report for the nine months period ended 30 September 2023 | 03 |
Directors' Review
For the third quarter ended 30 September 2023
The Directors are pleased to present their review report for the third quarter ended 30 September 2023 together with the un-audited condensed interim financial information of the Company as at and for the third quarter and nine months period ended 30 September 2023.
Business Overview
Crude Oil (WTI) prices exhibited bullishness throughout the third quarter on the back of a tight supply outlook as OPEC+ announced to extend the production cuts by 1.3 million barrels per day till the end of this year. Despite the increase in interest rates by major economies at the start of the quarter, positive economic data from U.S. and a longer than expected driving season in the west resulted in continued improvement in demand for fuels globally, helping Crude Oil prices maintain the upward trajectory. However, despite China's efforts to provide stimulus to their domestic industry, persistent weak economic data kept the upward price movement in check. The average price for the quarter was US$ 81.84 per barrel, 10.6% higher than the previous quarter.
Paraxylene (PX) market largely trended higher over the course of the quarter following the escalation in the Crude Oil prices. Demand in the downstream PTA sector remained robust throughout the quarter due to healthy operations as well as the start-up of several new PTA facilities within China. Prompt supply remained tight with premiums being charged on spot parcels as several PX units underwent maintenance turnarounds and the continued diversion of Aromatics towards the Gasoline pool. The average PX price for the quarter was US$ 1,072.41 per metric tonne, 4% higher than the previous quarter, while the PX-Naptha spread averaged at US$ 426 per tonne.
The PTA prices trended in line with the upstream PX market, with operations at record high levels in mainland China on account of resilient operations in the downstream polyester sector. However, despite high PTA operating rates, PTA-PX spread in China remained below breakeven levels which were only sustainable for vertically integrated units. Higher than expected demand prior to Golden Week holidays in China as well as winter season holiday demand helped producers maintain strong operations. However, higher feedstock costs including the rise in prices of Acetic Acid put pressure on regional margins which declined as the quarter progressed. The average PTA price for the quarter was US$ 796.17 per metric tonne, whereas the average PTA margin over PX for the quarter was US$ 88 per tonne as compared to US $ 120 per tonne for the previous quarter.
The domestic polyester industry operations remained consistent in Q3-2023; however operating rates remained at the lower end of the spectrum despite the peak season for the Textile and PET sector. Demand once again, remained below par due to high energy costs, volatility in exchange rates as well as high inflation in the country.
Operations
Sales volume, comprising of domestic sales only, for Q3 2023 at 82,427 tonnes was 35% lower than the corresponding quarter last year due to lower demand as well as additional PTA imports planned by the downstream in the previous quarter.
Production volume during the quarter at 105,395 tonnes was 17% lower than the corresponding period last year due to curtailment of plant operating rate to match sales.
04
Directors' Review
For the third quarter ended 30 September 2023
Financial Performance
Revenue for the quarter was 20% lower than the corresponding period last year mainly due to lower volume sold. This resulted in a lower gross profit of Rs 3,417 million for the quarter as compared to gross profit of Rs 4,805 million during the same period last year.
The taxation charge for the quarter is based on statutory income tax rate, tax under Final Tax Regime (FTR) and super tax as adjusted by the movement in the deferred tax account.
Earnings per share (EPS) for the quarter stood at Rs 1.31 per share as compared to Rs 1.79 per share for Q3 2022.
Future Outlook
Going forward, Crude Oil (WTI) prices are expected to trend upwards during the last quarter of 2023 as prominent global agencies; including Energy Information Agency (EIA) suggest a continuing supply deficit on account of lower production from OPEC+ as well as the export restrictions being implemented by Russia. The change in consumer spending preferences may result in persistent higher demand for fuels in the winter season as well.
International Paraxylene (PX) prices are expected to trend upwards in the next quarter supported by the upstream Crude Oil prices, however, there is a possibility of limited upside as downstream PTA production approaches the seasonal lull.
PTA prices are forecasted to follow the trend of the upstream markets; however the continued record high output from China and lower demand expected in the upcoming winter season may continue to exert pressure on PTA-PX margins.
The domestic Polyester market is expected to continue facing challenges, as overall domestic manufacturing comes under pressure due to macro-economic issues in the country. Apart from the expected lower seasonal demand, high domestic inflation and unviability in the export market which is already plagued with poor demand, pose a serious risk to operations going forward.
Sang Hyeon Lee | Young Dae Kim |
Chairman | Chief Executive |
Date: 12 October 2023
Karachi
Report for the nine months period ended 30 September 2023 | 05 |
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Lotte Chemical Pakistan Ltd. published this content on 18 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 October 2023 08:29:30 UTC.