Malaysia’s PETRONAS Chems Q2 profit falls on lower product prices

SINGAPORE (ICIS)–PETRONAS Chemicals Group (PCG) has reported a 16.5% year-on-year decline in its second-quarter net profit to Malaysian ringgit (M$) 533m ($133m) amid a slump in petrochemical product prices.

The company’s revenue fell by 3.12% year on year to M$3.2bn in the three months to 30 June, while operating profit was down by 12% at M$743m, it said in a filing to the Malaysian bourse on 9 August.

June-quarter earnings before interest, tax, depreciation and amortisation (EBITDA) were up by 11.2% year on year at M$1.2bn, it said.

Group-wide average plant utilisation rate in the second quarter rose to 95% from 78% in the same period last year, driven by improved feedstock supplies and fewer turnarounds, resulting in higher production and sales, PCG said.

But the overall average product prices fell in tandem with plunging crude oil prices, the company said.

Revenue at its olefins and derivatives fell by 9% year on year to M$2.14bn in the second quarter because of lower product prices despite higher production volumes. The segment’s EBITDA, meanwhile, rose by 13% year on year to M$867m to higher volumes of ethane-based products.

Meanwhile, revenue at the company’s fertilisers and methanol business rose by 11% year on year to M$1.1bn in the second quarter, given higher production and sales volumes.

Urea prices declined in the second quarter due to ample supply amid softer demand in key markets, while methanol prices were affected by weaker demand for derivatives.

The fertilisers and methanol segment posted an EBITDA of M$373m in the second quarter, a 12% year-on-year drop.

For the first six months of this year, PCG’s net profit fell by 8.09% year on year to M$1.2bn, with revenues down by 1.49% at M$6.35bn.

“It will be a tougher market for the rest of the year,” said PCG managing director and CEO Sazali Hamzah.

“We also remain focused on the smooth execution and effective delivery of our growth projects, as we prepare ourselves for the commercial operations of our Sabah Ammonia Urea (SAMUR) and Integrated Aroma Ingredients Complex,” he said.

The petrochemicals projects under PETRONAS’ the Refinery and Petrochemicals Integrated Development (RAPID) are “currently progressing as planned”, Hamzah said.

PCG, which has a total combined production capacity of more than 10m tonnes/year, is part of Malaysia’s state-owned energy firm PETRONAS Group, according to the company’s website.

($1 = M$4.02)

Picture: PETRONAS towers in Kuala Lumpur, Malaysia (Alan Copson/robertharding/REX/Shutterstock)