Lotte Group's core business axis is shifting. The portfolio, once centered on petrochemicals, is being reshaped into materials for bio and AI (artificial intelligence) and hydrogen, and the work has begun to yield results this year. In bio, a 120,000-liter antibody drug plant in Songdo, Incheon, has been completed and is preparing for commercial production, and the battery materials unit has expanded into circuit foil for AI data centers, raising its utilization rate to 67%. The Korea-Japan food companies consolidated their Asia operations into a single Singapore joint venture.
◇ Approval granted for Songdo Bio Plant 1 use… speeding into CDMO
Lotte Biologics completed major construction at Songdo Bio Campus Plant 1 in Incheon and received approval for use. It comes about two years after construction began in 2024. The 120,000-liter antibody drug manufacturing facility is equipped with eight 15,000-liter bioreactors and will serve as a key base for the contract development and manufacturing organization (CDMO) business that develops and produces other pharmaceutical companies' drugs on contract. With a dual-site setup, the Syracuse campus in the United States can handle early clinical and small-scale production while Songdo takes on large-scale commercial manufacturing. For new drug developers, this reduces the burden of technology transfer when moving from clinical to commercialization.
Chairman Shin Dong-bin visited the Songdo campus on the 3rd and said, "Bio is a core industry group that will lead the group's new leap." The company aims to complete GMP (good manufacturing practice) certification within the year, six months earlier than planned, after test runs and system validation in the second half. The certification is essential for drug manufacturing and is required to win actual commercial orders.
◇ Reshaping the chemical portfolio with battery materials and hydrogen
Lotte Energy Materials(020150) is responding to surging demand for HVLP (high-volume low profile) copper foil driven by the spread of AI data centers. It is a high-value product used in high-layer-count substrates for AI servers. As sales of AI circuit foil and ESS (energy storage system) battery foil increased, companywide utilization rebounded from 45% in the fourth quarter of last year to 67% in the first quarter this year. At the Iksan plant, Korea's only circuit foil production base, about 50 billion won will be invested to expand capacity from 3,700 tons to 16,000 tons by 2027. The Malaysia plant will take over Iksan's battery foil volumes and focus on ESS use.
Hydrogen is handled by LotteSK Eneroot, established by Lotte Chemical, SK Gas and Air Liquide Korea. Following the 20MW Ulsan Hydrogen Power No. 2 last June, No. 1 of the same scale began commercial operation in April. It supplies byproduct hydrogen from affiliates and feeds petrochemical byproducts back as power generation fuel. LotteSK Eneroot aims to complete a total of 80MW by December this year.
◇ Korea-Japan food companies' joint venture… "third-generation Lotte" Shin Yoo-yeol steps to the fore
Lotte Wellfood(280360) and Lotte Confectionery in Japan set up a joint venture in Singapore. It will oversee the Asia operations of the Korea-Japan food companies and unify decision-making that had been split by business. Shin Yoo-yeol, the eldest son of Chairman Shin, head of future growth at Lotte Corporation, became chair of the board. With growth slowing in the domestic markets of both countries, the plan is to cultivate overseas as a growth engine.
Lotte Wellfood's overseas sales last year rose 14.4% from a year earlier to 1.2205 trillion won, while Lotte in Japan booked about 900 billion won, centered on Vietnam and Indonesia. Sales of Pepero, the joint Korea-Japan Lotte brand, grew 24% last year and 33% in the first quarter this year. The joint venture will use this as a springboard to build mega brands and enter new markets.