Seoul: Lotte Chemical Corp., a leading chemical company under South Korea's Lotte Group, announced a return to profitability in the first quarter, attributing the positive shift to increased margins as a result of the lagging effect of feedstock costs amidst ongoing conflict in the Middle East.

According to Yonhap News Agency, the company reported a net profit of 33.5 billion won (US$22.7 million) for the first three months of the year. This marks a significant turnaround from a loss of 246.3 billion won in the same period the previous year. The company's operating income also rebounded, recording 73.5 billion won compared to a loss of 126.6 billion won a year ago. During this period, revenue saw a 1.8 percent increase, reaching 4.99 trillion won.

Lotte Chemical's return to profitability was largely supported by improved margins, which benefited from the lagging effect-the delay between shifts in crude oil prices and their subsequent impact on production costs. This improved spread between raw material costs and product selling prices helped the company counteract risks arising from global supply chain disruptions and escalating feedstock prices linked to tensions in the Middle East.

The company's operations span the production of basic materials like polyethylene and ethylene, which are essential in plastics and industrial chemicals used across various sectors such as construction and automotive. The basic chemicals division reported sales of 3.45 trillion won, while the advanced materials division achieved sales of 1.02 trillion won in the first quarter.

Looking forward, Lotte Chemical has outlined plans to optimize operations further, restructure its petrochemical business, and enhance its portfolio mix to boost profitability. Since early 2025, the company has been actively restructuring its loss-making petrochemical division to improve facility utilization and strengthen its financial standing through the sale of non-core assets.