KUALA LUMPUR – Petronas Chemicals Group Bhd’s (PCG) net profit fell 77.6% to RM424 million in the third quarter (3Q) ended September 30, 2023, from RM1.90 billion in the year-ago period.
The chemicals producer said this was in line with the 49% (RM960 million) decline in earnings before interest, taxes, depreciation, and amortisation to RM1.0 billion, mainly due to lower product spreads and higher energy and utility costs.
Meanwhile, revenue fell to RM6.78 billion from RM7.03 billion previously, largely due to lower product prices and sales volumes, it said in a filing with Bursa Malaysia today.
PCG said the group recorded a lower plant utilisation rate of 77% – down from 97% in the corresponding quarter of last year – mainly due to higher statutory turnaround and plant maintenance activities, resulting in lower production and sales volumes.
It said the results were mainly influenced by global economic conditions, petrochemical product prices, which have a high correlation to crude oil prices, particularly for the olefins and derivatives segment, the utilisation rate of its production facilities, and foreign exchange rate movements.
“The utilisation of our production facilities is dependent on plant maintenance activities and sufficient availability of feedstock as well as utility supply. The group will continue with its operational excellence programme and supplier relationship management to sustain plant utilisation levels above industry benchmarks,” it said.
The group said product prices for olefins and derivatives are expected to soften on lower downstream demand towards the year-end.
“Fertiliser and methanol product prices are forecast to stabilise amid short supply in the region. For specialties, the group expects weaker sales and earnings in view of slower industrial growth impacting demand,” PCG said.
In a media statement, managing director and chief executive officer Mohd Yusri Mohamed Yusof said in 3Q 2023, the group undertook a scheduled plant turnaround at its ammonia plant in Kerteh, Terengganu, and a planned shutdown at the fertiliser plant in Bintulu, Sarawak.
“In addition, we faced an unscheduled shutdown at the methanol plant in Labuan as well as the methyl tert-butyl ether and propane dehydrogenation plants in Gebeng, Pahang. These activities have since been completed and the group is now operating normally at above 85% utilisation.
“On the market side, we observed a slight demand recovery in several chemicals, but overall margins are still compressed,” he said.
For the nine-month period ended September 30, 2023, PCG’s net profit dropped to RM1.58 billion from the RM5.84 billion recorded in the same period last year, although revenue rose 6% to RM21.45 billion. – November 28, 2023