Lotte World Tower (Image courtesy of Lotte Corporation)
SEOUL, Nov. 29 (Korea Bizwire) – Lotte Group announced a sweeping set of initiatives on November 28 to address liquidity concerns and improve financial stability. The measures include revaluing land assets, divesting underperforming properties, and scaling back investments. As part of its strategy, Lotte is also considering exiting poorly performing overseas duty-free locations.
During an investor relations (IR) meeting in Seoul, Lotte detailed plans to enhance the financial health of key subsidiaries such as Hotel Lotte, Lotte Chemical, Lotte Construction, and Lotte Shopping. The meeting drew approximately 300 attendees, including institutional investors and financial institution representatives.
Asset Revaluation and Divestments
Lotte Shopping plans to reassess its 7.6 trillion KRW worth of land holdings for the first time in 15 years, leveraging surging property values to significantly lower its debt-to-equity ratio. In 2009, a similar revaluation reduced the ratio from 102% to 87%. The company also intends to sell underperforming stores, including its Centum City branch in Busan.
Hotel Lotte is exploring liquidity options, including collaborations with Lotte REIT and potential sales of assets like its “L7” and “City” brands. Operational areas within Lotte World Tower may be reduced, accompanied by restructuring efforts to cut fixed costs.
Duty-Free and Chemical Operations Under Scrutiny
Lotte’s duty-free business is focusing on streamlining operations by potentially withdrawing from unprofitable overseas locations in countries like Japan, Vietnam, and Australia. Meanwhile, Lotte Chemical is set to divest low-performing assets and reduce its reliance on basic chemicals, aiming to decrease their revenue share from 50% to below 30% by 2030. Instead, it plans to expand its advanced materials business, targeting 8 trillion KRW in sales.
To address its 2.04 trillion KRW in corporate bonds, Lotte Chemical is using the 6 trillion KRW Lotte World Tower as collateral to enhance creditworthiness.
Construction and Debt Management
Lotte Construction aims to cut liabilities by 1 trillion KRW, targeting a debt-to-equity ratio of 187.7% by year-end. The company also plans to reduce contingent liabilities from 3.66 trillion KRW to 2.47 trillion KRW in 2024, ensuring better risk management.
Leadership Changes and Forward Strategy
Ahead of the IR meeting, Lotte announced a significant management shakeup for 2025, reducing its executive ranks by 13% and replacing 36% of its CEOs. The group also promoted Shin Yu-Yeol to Vice President of its Future Growth Division, signaling a generational shift in leadership with a focus on younger, dynamic executives.
Despite liquidity concerns, Lotte has underscored its strong financial standing, citing total assets of 139 trillion KRW, real estate holdings valued at 56 trillion KRW, and 15.4 trillion KRW in liquid reserves. The group pledged to leverage these resources if necessary to maintain stability.
With these robust measures and structural adjustments, Lotte is positioning itself to navigate challenges while preparing for sustained growth.
Ashley Song (ashley@koreabizwire.com)
