PetChem's 3Q earnings fall to RM424mil amid low demand

KUALA LUMPUR: Shrinking sales volumes and margins stemming from weak demand in the global manufacturing sector took a bite out of Petronas Chemicals Group Bhd's revenue in the third quarter of 2023.

In a statement, the petrochemicals producer said its specialities segment, which contributed 22% to the group's revenue, saw continued destocking activities in the face of fierce competition, particularly in Europe.

"The specialities segment continues to be affected by ongoing macroeconomic uncertainties, with some recovery in the automotive and transport sectors underpinned by travel and tourism industry rebound," said managing director and CEO Mohd Yusri Mohamed Yusof.

According to him, the coming year-end has also seen the brief rally in selected chemical product prices levelling off.

"A seasonal slowdown is anticipated for olefins and derivatives with most buyers managing their term commitments.

"Fertilisers might see some support from the expected Indian urea tender shipment in December, in conjunction with the winter crop season in South Asia," he said.

In 3QFY23, PETRONAS Chemicals' net profit was RM424mil, far below RM1.9bil recorded in the same quarter in 2022.

The group's basic earnings per share slumped to five sen as compared to 24 sen in the comparative quarter.

Revenue, meanwhile, was down to RM6.78bil from RM7.03bil in 3QFY22.

Over the nine months period to Sept 30, 2023, the group's net profit slumped to RM1.58bil from RM5.84bil in the same period in 2022.

Revenue rose to RM21.45bil in the year-to-date period from RM20.25bil in 9MFY22.

Mohd Yusri noted that the group's plant utilisation rate was 77% as compared to 82% in 2QFY23 due to unscheduled plant shutdown as well as planned plant turnaround and maintenance works.

During the quarter under review, PETRONAS Chemicals undertook a scheduled plant turnaround at its ammonia plant in Kerteh as well as a planned shutdown at its fertiliser plant in Bintulu.

There was also an unscheduled shutdown at the methanol plant in Labuan and its methyl tert-butyl ether (MTBE) and propane dehydrogenation (PDH) plants in Gebeng.

Following the completion of these activities, the group is now operating normally at above 85% utilisation, said Mohd Yusri.