Despite supply disruptions, Lotte Chemical profits rise on improving margins

Lotte Chemical Pakistan Limited began 2026 with a sharp recovery in profitability, as inventory gains, better PTA spreads and improving domestic demand helped the company more than double its quarterly earnings despite raw material supply disruptions from Kuwait.

The company posted revenue of Rs20.9 billion in the first quarter of calendar year 2026, slightly lower than Rs21.5 billion in the same period last year, according to AKD Securities. But profit after tax rose 123% year-on-year to Rs1.5 billion, while earnings per share increased to Rs1.0 from Rs0.4 in the first quarter of 2025.

The recovery was driven by margins rather than topline growth. Gross profit rose 120% year-on-year to Rs2.9 billion, compared with Rs1.3 billion in the same period last year, while gross margin expanded to 14.0% from 6.2%. AKD attributed the improvement to inventory gains amid an upstream price rally.

The results are notable because they came at a time when the company’s feedstock arrangement with Kuwait remained under force majeure. Lotte Chemical Pakistan has been sourcing alternate paraxylene from Oman on a spot basis to bridge the gap, while management indicated that capacity utilisation in 2026 is likely to be constrained more by paraxylene availability than demand. In 2025, total PTA demand was around 750,000 tonnes, including Export Facilitation Scheme re-export demand, of which Lotte supplied 380,000 tonnes and the remainder was imported.