Lotte Group said on the 31st that it is accelerating efforts to secure mid- to long-term competitiveness as it reshapes the groupwide business structure. The petrochemical business is moving away from a commodity-centered model and expanding the share of high-value specialty products. It is also focusing on nurturing new businesses such as bio and hydrogen.
LOTTE Chemical is pushing ahead with integration and restructuring of its naphtha cracking center (NCC) operations and upgrading its business portfolio as Korea's petrochemical industry enters a phase of structural transition. With structural pressures persisting, including a global demand slowdown and supply glut from China, the strategy is to strengthen capabilities in high-value specialty materials and secure mid- to long-term business stability.
LOTTE Chemical was the first in the industry to begin restructuring in line with the government's policy to revamp Korea's NCC structure. In November, one month ahead of the government's submission deadline, it became the first in the industry to submit a restructuring plan that integrates the Daesan plant and HD Hyundai Chemical. The plan calls for a physical split-off of LOTTE Chemical's Daesan plant, followed by a merger with HD Hyundai Chemical, and a rational adjustment of overlapping facilities between the two companies.
Then, on Dec. 19, together with Hanwha Solutions and DL Chemical, it additionally submitted a restructuring plan focused on integrated operation of overlapping facilities in the Yeosu industrial complex and cutting output. Under a clear policy of scaling back the commodity business, LOTTE Chemical plans to contribute significantly to achieving the nation's largest NCC reduction target of 3.7 million tons, and will faithfully cooperate with creditor due diligence going forward.
Alongside restructuring of the petrochemical industry, LOTTE Chemical is concentrating its capabilities on shifting its portfolio toward high-value and eco-friendly businesses. To bolster competitiveness in high-value specialty materials, it invested about 300 billion won in the Yulchon Industrial Complex in South Jeolla Province to build a "LOTTE Engineering Plastics" plant. Some lines began commercial production in October this year. The plant is slated for completion in the second half of next year and will be the nation's largest single compounding facility with an annual capacity of 500,000 tons (t). It plans to supply customized high-performance materials to key industries such as mobility and information technology (IT).
In parallel, Lotte is reorganizing its business portfolio by shedding noncore businesses with low relevance to the group strategy and reinvesting the funds secured into strengthening fundamental competitiveness and future growth areas. In March, it signed a deal to sell a 56.2% equity stake in LOTTE Rental to private equity firm Affinity Equity Partners for about 1.6 trillion won. Earlier in February, it signed agreements to sell Korea Seven's ATM division and the LOTTE Wellfood Jeungpyeong plant, whose operations had been halted, speeding up efforts to improve financial soundness.
Lotte is also pursuing a merger of Lotte Cultureworks and Megabox JoongAng to respond to the rapidly changing content industry environment. In May, the two companies signed a memorandum of understanding (MOU) for the merger, with plans to strengthen customer-centric service competitiveness and build a sustainable growth foundation for the film business.
Lotte is fostering bio as a mid- to long-term growth engine for the group in parallel with restructuring its business structure. Related investment is also being expanded step by step. Established in 2022, Lotte Biologics aims to leap into a global contract development and manufacturing organization (CDMO) through a two-track strategy of plant acquisitions and new construction. In 2023, it acquired Bristol Myers Squibb's (BMS) Syracuse plant, making a full-fledged entry into the CDMO market, and by inheriting most of the existing BMS workforce, it built a global CDMO business foundation in a short period.
Subsequently, in March this year, Lotte Biologics completed an antibody-drug conjugate (ADC) production facility at the Syracuse Bio Campus in the United States. It invested about $100 million to establish an integrated production and purification line, including a conjugation reactor with capacity of up to 1,000 liters (L). It secured capabilities to provide in-house quality control (QC) testing and characterization services, enabling flexible responses to diverse development and production needs of client companies.