Lotte Chemical 1QCY26 Profit Jumps 123%, Engro Polymer Returns to Profit as Chemical Margins Recover

Pakistan's listed chemical makers showed a clearer recovery in early 2026. Lotte Chemical Pakistan more than doubled its first quarter profit as margins improved, and Engro Polymer swung back from a loss to a small profit. After a stretch of weak pricing in the polyester and PVC chains, both results point to the cycle turning more favourable, even with some supply disruptions still in the mix.

What the chemical results showed

Lotte Chemical, which makes PTA, a raw material used in polyester and packaging, posted revenue of Rs20.9 billion for the first quarter of calendar 2026 and profit after tax of Rs1.5 billion, up 123 percent year on year. Earnings per share rose to Rs1.0 from Rs0.4. The company achieved this despite supply disruptions, with the improvement led by better margins rather than just higher volumes.

Engro Polymer, the main listed PVC producer, also turned the corner. It reported earnings per share of Rs0.41 for the first quarter, a clear move back into profit from a loss per share of Rs0.91 in the same quarter a year earlier. For a business that had been loss making, returning to profit is an important signal that its product margins are recovering.

Why margins matter for chemical stocks

Commodity chemical producers live and die by the spread between their product prices and feedstock costs, the margin. PTA margins depend on the gap to paraxylene and crude, while PVC margins depend on the gap to ethylene. These spreads swing with global supply, demand and energy prices, so chemical earnings can move sharply from one period to the next. When margins widen, profit can rise much faster than revenue, which is what drove Lotte Chemical's 123 percent jump and Engro Polymer's return to profit.

Which stocks, and why

Lotte Chemical is the clearer positive, with profit more than doubling on better margins. Engro Polymer is also positive, on its swing back to profit, though the absolute earnings are still modest as the recovery builds. The read on both is constructive, tempered by the fact that chemical margins are cyclical and can reverse if global supply or energy costs shift. The recovery also forms the backdrop to the separate move by Lotte Chemical to acquire Engro Corporation's controlling stake in Engro Polymer.

What to watch

The signals to track are PTA and PVC margins, which set the pace for these companies, global supply additions that can squeeze those margins, and crude and ethylene costs on the input side. Watch whether the margin recovery holds into later quarters, and follow the progress of the Lotte Chemical bid for the Engro Polymer stake, since a change of control could reshape how the two businesses are run.