[Edaily Marketin, Reporter LEE GEON-EOM ] Lotte Construction has completely cleared its “long-standing debt” by receiving full payment for construction work on the 5 trillion won “ LOTTE CHEMICAL CORPORATION(011170) ” “LINE” project in Indonesia. This move stands in stark contrast to the nearly 20% increase in debt from other affiliate companies during the same period. Amid growing liquidity concerns across the construction industry, Lotte Construction’s successful completion of full payment for this massive overseas plant project is widely seen as having played a pivotal role in alleviating the company’s financial uncertainty.

According to the Financial Supervisory Service’s electronic disclosure system on the 19th, Lotte Construction’s outstanding construction receivables from LOTTE CHEMICAL CORPORATION (PT Lotte Chemical Indonesia, hereinafter “LCI”) stood at 0 won as of the end of the first half of this year. With only 3 million won remaining in “other receivables,” the balance has effectively been eliminated. Accounts receivable from LCI stood at 72.8 billion won at the end of 2024 but plummeted to 1.8 billion won by the end of 2025, before being fully resolved by the end of the first half of this year.

Outstanding construction receivables refer to amounts recognized as revenue based on the progress of contracted construction projects but for which cash has not yet been received from the client. From a construction company’s perspective, this means continuing construction using its own funds without having received payment, even after costs have already been incurred; therefore, the larger the balance, the greater the strain on cash flow. In particular, accounts receivable from affiliated companies—unlike those from general clients—often do not require the establishment of an allowance for doubtful accounts, making them an item where uncertainty increases as the balance grows.

In this context, the fact that accounts receivable from LCI—a project involving tens of billions of won in construction costs—have disappeared is seen as highly significant. Analysts note that since large-scale overseas plant projects tend to have longer settlement periods after construction is completed, Lotte Construction has effectively alleviated this burden.

LCI is the entity operating the “LINE” project—a large-scale petrochemical complex developed by LOTTE CHEMICAL CORPORATION in Cilegon, Indonesia. The LINE project—an acronym for “LOTTE CHEMICAL CORPORATION New Ethylene Complex”—is a mega-scale construction project with a total investment of $3.95 billion (approximately 5.5 trillion won).

Construction began in 2022 on a 110-hectare site, with Lotte Engineering & Construction serving as the general contractor, and commercial production commenced in May of last year, on schedule. The facility produces 1 million metric tons of ethylene annually, along with 520,000 metric tons of propylene, 350,000 metric tons of polypropylene, 140,000 metric tons of butadiene, and 400,000 metric tons of BTX (benzene, toluene, xylene).

With the final settlement of construction costs now complete, Lotte Construction is credited with achieving two major milestones: adding a major overseas plant construction project to its track record and securing liquidity. Analysts also note that the strengthened relationship of trust with the Indonesian government could have a positive impact on the company’s prospects for securing additional contracts in the future.

The LCI case stands out even more because the trend in receivables from other affiliates during the same period was exactly the opposite. At the end of the first half of this year, Lotte Construction’s total receivables from related parties (uncollected construction receivables + other receivables) amounted to 1.4315 trillion won, a 20.0% increase from 1.1925 trillion won at the end of last year.

Looking at the details, receivables from Bitgoeul Central Park Development rose from 440.7 billion won to 617.0 billion won, while those from Next V City PFV increased from 255.9 billion won to 333.3 billion won; Hotel Lotte’s receivables also jumped from 12.6 billion won to 49.2 billion won. Even considering the nature of development projects—where bonds tend to accumulate as projects are ongoing or the completion and settlement dates are still pending—cases like LCI, where the balance has been completely eliminated, stand out among the entire list of affiliates for the first half of this year.

Given that delays in recovering construction costs from group affiliates have been a consistent point of concern within the industry, the resolution of the LCI case—a major overseas project—is viewed as significant in terms of mitigating individual risks. However, given that project finance (PF) receivables related to development projects by affiliates continue to grow, there are also calls for ongoing monitoring of receivables management across all affiliated companies.