FocusPETRONAS Chemicals seen to post better Q4 results after weak Q3

08 November 2013 09:19  [Source: ICIS news]

By Nurluqman Suratman

SINGAPORE (ICIS)--Malaysia’s PETRONAS Chemicals Group (PCG) will likely post better earning in the fourth quarter on the back of improved demand and higher product prices, analysts said on Friday.

“The fourth quarter is a seasonally strong period and the current market demand outlook is robust and product prices are firming up nicely,” Maybank Research said in a note.

PCG is not expected to conduct maintenance at its production facilities for the rest of the year, it said.

Higher olefin production volumes accompanied by rising margins can be expected in the December quarter, according to Malaysia-based CIMB Research in a separate note.

In the third quarter, heavy maintenance activities at plants, including PCG’s main cracker and related downstream facilities in Kerteh, Terengganu, weighed down on its financial performance.

“This resulted in lower operational performance and volumes, particularly ethane-based products, which affected the financial results for the quarter,” Maybank said.

PCG’s third-quarter net profit declined 10% year on year to Malaysian ringgit (M$) 635m ($199m), with revenues falling 10% at M$3.5bn and earnings before interest, tax, depreciation and amortisation (EBITDA) down 17% at M$1bn, PCG announced on 7 November.

The Malaysia petrochemical firm traditionally conducts its heavy maintenance activities in the third quarter to coincide with the lull in demand, according to Maybank Research.

“There was a planned shutdown of the main cracker in third quarter, and this could have consumed more than the guided 2-4 weeks shutdown. This would explain the fact that revenues have fallen by 10.4%,” the brokerage said.

In its third-quarter financial results, PCG said that its olefins and derivative product prices were generally on an uptrend in the second half of the year on the back of healthier demand, with methanol prices remaining  strong because of limited supply.

For the nine months ended 30 September, PCG’s net profit rose by 3% year on year to M$2.69bn, despite a 3% dip in revenue at M$11.9bn.

($1 = M$3.19)

By: Nurluqman Suratman

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