Malaysia’s PCG Q2 net profit rises 0.5%; warns of waning demand

SINGAPORE (ICIS)–PETRONAS Chemicals Group (PCG) on Monday reported a marginal year-on-year increase in its second-quarter net profit thanks to higher product prices, but the Malaysian producer warned of weaker demand in the second half of 2022.

Malaysian ringgit (M$) m	Q2 2022	Q2 2021	% change	H1 2022	H1 2021	% change
Revenue	6,583	5,608	17.4%	13,217	10,283	28.5%
Operating profit	1,876	1,816	3.3%	3,974	3,259	21.9%
Net profit	1,869	1,860	0.5%	3,945	3,321	18.8%

Second-quarter product prices were driven higher by the increase in crude oil and natural gas prices following the Russia-Ukraine crisis, the company said in a statement.

The company’s plant utilisation rate in April-June 2002, however, declined to 72% from 97% in the same period of 2021 due to major scheduled plant turnarounds at its fertilizer plant in Sipitang, Sabah and methanol plant in Labuan.

PCG’s plant utilisation rate is expected to be above 90% in the second half of this year, PCG managing director and CEO Mohd Yusri Mohamed Yusof said.

“Although product prices continue to be driven by the high energy prices, we observe the rising feedstock and operational costs coupled with China lockdowns have weakened demand, particularly for downstream chemical products,” he said.

“The prices of olefins & derivatives are expected to stabilise with demand recovery following the easing of restrictions in China, ahead of year-end restocking activities,” Mohd Yusri said.

PCG’s commissioning activities at the Pengerang Integrated Complex (PIC) in southern Malaysia has “progressed since May and the start-up of petrochemical facilities have commenced in phases since July”, he said.

The company’s plants at the PIC – under the Pengerang Refining and Petrochemical (PRefChem) joint venture with Saudi Aramco – include a 350,000 tonne/year linear low density polyethylene (LLDPE) unit, which is also capable of producing metallocene LLDPE (MLLDPE) grades; a 400,000 tonne/year high density PE (HDPE) plant; and a 900,000 tonne/year polypropylene (PP) unit.

The site also houses an ethylene glycol plant, which will be able to produce 800,000 tonnes/year of monoethylene glycol (MEG), as well as a 250,000 tonne/year isononanol (INA) unit.

“The construction of our nitrile butadiene latex plant in Pengerang and the specialty ethoxylates and polyols in Kerteh are also progressing well, ahead of schedule operation date in H2 2023,” Mohd Yusri said.

PCG’s proposed acquisition of Sweden-based firm Perstorp is expected to be completed in early Q4 2022, he said.

Focus article by Nurluqman Suratman

($1 = M$4.48)

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