5 November, 2024 16:33:09 IST 
South Korea’s Lotte Chemical Corp. plans to liquidate its synthetic rubber joint venture (JV) in Malaysia to scale back its basic chemicals business while selling stakes in its overseas units to raise nearly $1-bn to cut debt.
Lotte Chemical said it has decided to liquidate Lotte Ube Synthetic Rubber Sdn. Bhd. (LUSR) as the 50-50 JV with Japan’s Ube Elastomer Co., based in Johor, is a non-core business with low profits.
LUSR, which has capacity to produce up to 50-ktpa of polybutadiene rubber, has been in the red since the plant launched commercial operation in 2015, except for 2021.
“The dissolution of LUSR is a part of restoration of financial soundness and change of business portfolio,” commented Lotte Chemical’s President & CEO, Mr. Lee Hun Ki. “We will continue to proactively respond to the ever-changing market according to the directions of management strategies,” he added.
Lotte Chemical aims to halve its basic chemicals business by 2030 amid growing competition from Chinese rivals in order to upgrade its portfolios and focus on new growth sectors. The company, which is expected to report a third straight year of losses since 2022, has been trying to dump unproductive assets to enhance its financial conditions. The petrochemical unit of Korea’s sixth-largest conglomerate, Lotte Group, already sold its entire stake in JVs with Chinese partners last year and is looking to sell units in Pakistan and Malaysia.
Stake sale in US, Indonesian units
Separately, Lotte Chemical said it plans to raise nearly $1-bn by selling stakes in its overseas units. The company said it will sell a 40% stake in Lotte Chemical Louisiana LLC, its ethylene glycol production unit in the US, for 660-bn won ($432-mn) this year.
Lotte Chemical also plans to raise some 700-bn won ($508-mn) by selling a stake in PT Lotte Chemical Indonesia, which is scheduled to launch commercial operation of an ethylene plant with a 1-mtpq capacity next year.
Lotte Chemical’s debt to equity ratio rose to 75.3% on a consolidated basis as of the end of first half 2024, from 55.1% at the end of 2023. It is expected to further unload ineffective assets as part of a corporate restructuring exercise since Mr. Lee took office in April 2023.
On the other hand, Lotte Chemical is expanding businesses such as acrylonitrile butadiene styrene, polycarbonates and other materials as they are more competitive than those of their Chinese rivals. The company invested 300-bn won in Lotte Engineering Plastics, its subsidiary that manufactures materials for vehicles and other products.
