Lotte reforms to strengthen long-term competitiveness

Lotte Chemical's Indonesia plants / Courtesy of Lotte Group

Lotte Group is accelerating a wide-ranging business restructuring effort aimed at optimizing its portfolio and reinforcing financial stability. The effort also seeks to foster growth in future-oriented sectors such as biopharmaceuticals and hydrogen energy, the group said Tuesday.

Lotte’s restructuring strategy includes refining its petrochemical operations, expanding high-value specialty materials and divesting noncore businesses to reallocate capital toward strategic growth drivers.

Of the group’s subsidiaries, Lotte Chemical is leading the effort within the petrochemical division to shift away from commoditized products toward higher-margin specialty materials as part of a broader industry overhaul.

In a bid to adapt to Korea’s rapidly changing petrochemical sector, Lotte Chemical submitted the first restructuring proposal ahead of the government’s deadline, aiming to integrate its Daesan plant with HD Hyundai Chemical.

Under the plan, the company said it aims to reduce redundant capacity and improve operational efficiency amid sluggish global demand and oversupply.

“Market observers have noted that such restructuring could lower fixed costs and establish a foundation for medium- to long-term earnings improvement, though near-term industry recovery remains uncertain,” Lotte Group said in a press release.

“The company is also advancing investments in high-performance materials. Its engineered plastics facility in the Yulchon Industrial Complex is designed to produce tailored, high-function compounds for mobility and IT industries, with commercial operations beginning later this year.”

The group is also scaling up in next-generation sectors.

It said Lotte Biologics has outlined plans to invest roughly $3 billion through 2030 to build multiple biologics manufacturing plants at its Songdo Bio Campus in Incheon, positioning itself to compete among the top global drug producers in the biopharmaceutical industry.

The company’s first plant has already started construction, with commercial production expected by 2027, and further expansion under way to support integrated biologics services and collaboration with global biotech firms.

In the energy transition space, Lotte has begun commercial operations of a 20-megawatt hydrogen fuel cell power plant in Ulsan through its joint venture Lotte-SK Eneroot, with plans to scale up additional facilities to deliver cleaner power domestically.

Lotte has also inaugurated a high-pressure hydrogen distribution center in Daesan Petrochemical Complex, underscoring its commitment to the hydrogen economy.

The group added that it has been divesting noncore assets to strengthen its balance sheet alongside business transformation.

Significant transactions include the sale of a majority stake in Lotte Rental to private equity and the divestiture of underutilized business units, such as an ATM division and a legacy food processing facility.

“The combined strategy of asset optimization and investment in high-growth sectors aims to enhance the group’s competitiveness against global peers facing structural challenges in traditional businesses,” the group said.

“Lotte’s moves reflect broader efforts by conglomerates in Asia to pivot toward sustainable and technology-led industries amid economic headwinds and evolving market demand.”