People.
Progress.
Profit.
QUARTERLY REPORT
JAN - MAR 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 13 April 2023
Board of Directors | |||
Sang Hyeon Lee | Chairman | ||
Young Dae Kim | Chief Executive | ||
IL Kyu Kim | Non-Executive | ||
Jae Sun Park | Non-Executive | ||
Pervaiz Akhtar | Independent | ||
Adnan Afridi | Independent | ||
Mohammad Zubair | Independent | ||
Tariq Nazir Virk | Executive | ||
Audit Committee | |||
Pervaiz Akhtar | Chairman | ||
IL Kyu Kim | Member | ||
Adnan Afridi | Member | ||
Faisal Abid | Secretary | ||
HR & Remuneration Committee | |||
Pervaiz Akhtar | Chairman | ||
Sang Hyeon Lee | Member | ||
Young Dae Kim | Member | ||
Waheed U Khan | Secretary | ||
Shares Sub Committee | |||
Young Dae Kim | Chairman | ||
Sang Hyeon Lee | Member | ||
Mohammad Zubair | 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 | |||
Askari Bank Limited | |||
Citibank NA | Legal Advisor | ||
Deutsche Bank AG | |||
Faysal Bank Limited | Naz Toosy | ||
Habib Bank Limited | 148, 18th East Street, | ||
Industrial and Commercial Bank of China | Phase 1, DHA, Karachi | ||
MCB Bank Limited | |||
Meezan Bank Limited | Registered Office | ||
National Bank of Pakistan | EZ/I/P-4, Eastern Industrial Zone, | ||
Standard Chartered Bank (Pakistan) Limited | Port Qasim, Karachi | ||
United Bank Limited | |||
Habib Metropolitan Bank Ltd | Shares Registrar | ||
Famco Associates (Pvt) Limited | |||
External Auditors | 8-F, Near Hotel Faran, Nursery, | ||
A. F. Ferguson & Co., | Block 6, P.E.C.H.S., | ||
Chartered Accountants | Shahrah-e-Faisal, Karachi | ||
Quarterly Report Jan - Mar 2023 | 03 |
Directors' Review
For the first quarter ended 31 March 2023
The Directors are pleased to present their review report for the first quarter ended 31 March 2023 together with the un-audited condensed interim financial information of the Company as at and for the first quarter ended 31 March 2023.
BUSINESS OVERVIEW
The current state of the economy is worrisome as it is facing multiple challenges such as low foreign reserves, a weakening currency, and soaring inflation. Moreover, the CAD (Current Account Deficit) has narrowed more than previously expected, primarily due to significant import curtailment measures. Although progress has been made towards completing the 9th review under the IMF's EFF program, recent strains in the global banking system have further tightened global liquidity and financial conditions. Dwindling foreign reserves, import restrictions, flood impacts, high fuel costs, policy uncertainty, and the slowdown in domestic and global demand have affected industry and service sector activity in the Country.
The year commenced with Crude Oil (WTI) prices rebounding due to an optimistic demand outlook from OPEC and the International Energy Agency (IEA) amidst Chinese economic recovery. Prices were also supported by elevated consumption on account of holiday mobility in the U.S. and Europe. However, the remainder of the quarter saw bearishness in prices as intractable inflation led to further increments in interest rates which raised concerns of global economic deceleration. Furthermore, supply remained ample as indicated by consecutive inventory builds in the U.S, while Russian production also remained more resilient than expected despite various sanctions. The Crude Oil prices plummeted towards the quarter-end following the default of two western banks exacerbating recession concerns which may reduce fuel demand. Nevertheless, the prices eventually stabilized due to prompt and effective interventions by the governments to avoid a contagion. The average price for the quarter was US$ 76.34 per barrel, down by 8.3% from the previous quarter.
Paraxylene (PX) prices exhibited bullishness at the start of the quarter in-line with the Crude Oil market, however, as the quarter progressed, the PX market maintained the uptrend in contrast to the upstream Oil prices. Uptick in demand ahead of the Lunar New Year Holiday coinciding with removal of COVID-19 restrictions in mainland China ignited the market sentiment, boosting prices for prompt supply. However, as the quarter progressed, demand from downstream PTA market declined as lack of recovery in the downstream polyester sector resulted in weak market fundamentals. Plant shutdowns in the region as well as diversion of feedstock to produce gasoline blends kept spot PX availability tight, elevating the PX-Naphtha spread to above US$ 400 per tonne mark. The average PX price for the quarter was US$ 1,033.64 per metric tonne while the PX-Naptha spread averaged at US$ 344 per tonne.
The PTA prices tracked the movement of the upstream PX prices but were unable to match the gains as polyester demand failed to recover to seasonal high levels due to depressed consumerism and poor export-related demand. Additionally, inventory pressure, and inability to pass down costs to downstream buyers resulted in PTA-PX spread to remain below US$ 100 per tonne for most of quarter, thereby forcing producers to rationalize operations. However, the PTA prices rallied towards the end of the quarter following the price hike in the feedstock PX market, spurt in polyester demand due to peak summer season, and unexpected shutdowns, thereby supporting the PTA-PX spread. The average PTA price for the quarter was US$ 775.14 per metric tonne, whereas the average PTA margin over PX for the quarter was US$ 93 per metric tonne.
The domestic polyester market operated at the rate of 63% during the first quarter of 2023. Producers were forced to curtail operations due to reduced availability of major Raw Material PTA through domestic as well as imported supply due to operational constraints caused by limited availability of Foreign Exchange for establishing Letter of Credits. However, demand remained relatively resilient as the market geared up for the peak season demand ahead of the holy month of Ramadan.
OPERATIONS
Due to the current economic situation prevalent in the country in relation to the foreign exchange reserves and its impact on the ability of banks to open letter of credit for import of raw materials, the Company had to temporarily suspend its Plant operations for 17 days in March 2023.
As a result, Production volume during the quarter at 82,874 tonnes was 25% lower than the corresponding period last year while Sales volume, comprising of domestic sales only, at 91,372 tonnes was 18% lower than the corresponding quarter last year.
04
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Lotte Chemical Pakistan Ltd. published this content on 19 April 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 April 2023 08:39:09 UTC.