KUALA LUMPUR (April 28): Lotte Chemical Titan Holding Bhd reported on Thursday (April 28) a 76% drop in first quarter net profit to RM104 million from RM440 million a year earlier as the petrochemicals manufacturer contended with a 64% increase in feedstock cost that is highly correlated with crude oil prices, which have climbed past US$100 a barrel due to Russia-Ukraine conflict.

In a Bursa Malaysia filing, Lotte Chemical Titan said revenue, however, rose to RM2.76 billion in the first quarter ended March 31, 2022 (1QFY22) from RM2.37 billion a year ago mainly due to the increase in the company's average product selling price.

"The business environment is expected to be challenging in the immediate term," Lotte Chemical Titan said.

Lotte Chemical Titan did not declare any dividend for 1QFY22.

The company said its average plant utilisation rate was recorded at 85% in 1QFY22 compared to 88% a year earlier.

"Profit before tax [was] reduced to RM105.8 million from RM567.1 million mainly due to the drop in gross profit margin resulting from [the] 64% increase in feedstock costs and the lower foreign exchange differences of RM1.1 million from RM21.7 million," Lotte Chemical Titan said.

In quarterly terms, Lotte Chemical Titan said 1QFY22 profit before tax decreased to RM105.8 million from RM129 million in 4QFY21 mainly due to firmer feedstock costs.

"The group's revenue increased by 3% to RM2.76 billion from RM2.68 billion in the preceding quarter mainly due to higher average product selling price," the company said.

Looking ahead, Lotte Chemical Titan said the results of its operations for FY22 are expected to be primarily influenced by the Russia-Ukraine conflict which has caused high volatility in crude oil prices besides the progress of Covid-19 policy relaxation in Malaysia and across the Southeast Asia region.

The company said its FY22 operating results are also expected to be primarily influenced by "the demand and supply balance of petrochemical products in the market and our (Lotte Chemical Titan) ability to optimise production output and economic efficiencies".

At 3:11pm on Thursday, Lotte Chemical Titan's share price fell five sen or 2.21% to RM2.21, which gives the company a market capitalisation of about RM5.04 billion.

Lotte Chemical Titan has 2.28 billion outstanding shares, according to its latest quarterly financial report.