Lotte's Financial Defense Works, But Its Biotech Roadmap Must Now Win Over the Market

Lotte Group's financial-defense playbook is starting to show results, but a persistently weak share price is turning the group's biotech ambitions into a make-or-break test. The strategy, led by Lotte Holdings finance chief and president Ko Jeong-wook, has produced measurable gains through asset sales, business restructuring and stronger shareholder returns. Even so, analysts say the market needs a credible reason to keep waiting until the payoff from biotech arrives.

The efficiency drive is visible in the numbers. Lotte Holdings posted first-quarter consolidated revenue of about 3.62 trillion won, up 1% from a year earlier, while operating profit surged 156.1% to 46.1 billion won. Equity-method earnings swung to a positive 66 billion won and net profit returned to the black at 14.5 billion won, helped by the sale of Lotte Rental, the reshaping of Lotte Chemical and the disposal of non-core assets.

Several affiliates reinforced the turnaround. Lotte Wellfood extended overseas growth on the back of its India expansion, Lotte Chilsung Beverage benefited from improved profitability at its Philippine unit, Korea Seven narrowed operating losses by closing inefficient stores, and Lotte GRS lifted revenue 12.4% by strengthening its Lotteria brand and expanding abroad. SK Securities estimates second-quarter operating profit rose 7.8% year on year to 153.3 billion won, with analyst Choi Kwan-soon projecting full-year 2026 operating profit up 56.8% despite a modest revenue decline.

For Ko, the moves were less a choice than a necessity. Prolonged weakness at core affiliates such as Lotte Chemical drained cash generation while net debt and financing costs climbed. At the same time, Lotte Biologics—the future growth engine championed by Chairman Shin Dong-bin and overseen directly by future-growth chief Shin Yu-yeol—required continued heavy investment that could not easily be slowed.

The funding environment has also changed. Debate over commercial-law revisions has narrowed the room to use treasury shares, while tighter rules on dual listings have added uncertainty to a future Lotte Biologics IPO. With familiar financing levers harder to pull, deciding where to allocate limited capital has become the central question of group strategy.

Yet the stock has not followed the operational recovery. Shares slid from around 30,000 won in late March to the 23,000-won range, roughly 40% below their 52-week high, with a price-to-book ratio of just 0.27 to 0.29. SK Securities notes that while net asset value rose about 18% since the start of the year, the share price fell 14.3%, pushing the NAV discount to 38.3%—far above the average since 2024.

That widening gap between asset value and market price leaves Ko with a clear remaining task: persuading investors that the capital-allocation plan will eventually pay off. Lotte has laid out a two-track biotech strategy anchored by its Syracuse plant in the United States and its 120,000-liter Songdo plant in Korea, and has begun expanding into antibody-drug conjugates. Having already invested more than 720 billion won in the Songdo facility, the group now needs the biotech roadmap to give the market a reason to wait.