Photo credit: Lotte Chemical

 

[Alpha Biz= Reporter Kim Jisun] Lotte Group has executed a major reshuffling of its leadership, replacing 10 out of 13 CEOs within its chemical division in a bold move to restructure and address ongoing performance issues. The sweeping changes come as the group faces heightened concerns over its overall business health, driven by underperformance in its chemical sector.

On November 28, Lotte Group announced that it will replace 10 of the CEOs in its chemical division as part of its 2025 regular executive appointments. This excludes the heads of Lotte Aluminium, Lotte Energy Materials, and LC USA, who were appointed in the previous year. The departure rate for chemical executives stands at a significant 30%, the highest within the group. Notably, 80% of executives aged 60 and older will be stepping down, marking a substantial leadership overhaul.

The decision follows prolonged challenges within the chemical division, especially at Lotte Chemical. The sector has been battered by a downturn in the petrochemical market and excess supply from China, leading to Lotte Chemical recording a cumulative loss of approximately 1.77 trillion won (about $1.3 billion) from 2022 to the third quarter of this year.

In the third quarter alone, the company posted an operating loss of 413.5 billion won, significantly missing market expectations. As a result, CEO Lee Hoon-ki, who took charge of the chemical division in March, is reported to have offered his resignation in response to the disappointing results.

The ongoing financial struggles of Lotte Chemical also led to concerns over liquidity, with the company failing to meet certain bond covenants, resulting in the loss of certain privileges on its debt obligations. This was primarily due to a failure to meet the three-year cumulative EBITDA requirement of five times.

Lotte Chemical’s poor performance, a key cash generator for the group, has intensified concerns across the entire Lotte conglomerate. In an effort to ease liquidity fears, Lotte Group has pledged the Lotte World Tower, a flagship asset, as collateral to banks.

Looking ahead, Lee Young-jun, who has been appointed the new head of the chemical division, is expected to lead a swift transition from a base chemicals-focused business model to a high-value specialty chemicals strategy. Lee will also continue to serve as the CEO of Lotte Chemical’s Basic Materials division.

Additionally, this reshuffle sees significant promotions within the chemical division. Hwang Min-jae, the former head of the Technology Strategy Division, will be promoted to vice president and take over as the CEO of Lotte Chemical Advanced Materials. Jeong Seung-won, the CEO of Lotte Inoace Chemical, has been elevated to vice president and will take on the role of CEO at Lotte Fine Chemical.

 

 

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