Petronas Chemicals: Down but not out yet as Bintulu, Labuan plants to turnaround

KUCHING (Feb 24): Petronas Chemicals Bhd (PetChem) suffered losses of RM237 million for its fourth quarter ending financial year 2025 (4QFY25), bringing its FY25 core loss to RM534 million.

Analysts said this FY25 core loss was below it and consensus forecasts due to sustained losses from its Pengerang Petrochemical Company Sdn Bhd (PPC) and unfavourable foreign exchange impact.

Year on year (y-o-y), its FY25 results posted a loss against a profit a year ago as PPC overhead costs were fully recognised coupled with weak polyolefin prices albeit partially offset by higher fertilisers and methanol (F&M) product prices.

The team with Kenanga Investment Bank Bhd (Kenanga Research) said near-term earnings outlook remains weak as polyolefin prices remained depressed, but it still believed that the global plant closures and higher-than-expected plant turnarounds will lift prices in the coming quarters.

“PetChem is scheduled to begin a plant turn-around of Asean Bintulu Fertiliser (ABF) in April 2026 and a major Kertih Complex plant turnaround will also commence in April 2026, indicating a weaker plant utilisation outlook in 2QFY26.

“In 3Q26, PC Fertiliser Kedah and Methanol Labuan will undergo plant turnaround, affecting the F&M division utilisation.”

Kenanga Research noted that its specialty division continued to be dragged by the weakening product margins due to strong Asian competition in personal care and coating solution with product prices under pressure.

That aside, silicone selling prices were also weaker in the quarter which was further weakened by lower sales volume.

“Hence, we believe the recovery in specialty division profitability will take a longer time than earlier expected,” it explained.

“We cut FY26 forecast earnings by 62 per cent after adjusting for lower US dollar-ringgit as well as similar losses y-o-y for specialty chemicals.”

Meanwhile, the team at MBSB Investment Bank Bhd (MBSB Research) said PetChemís FY25 performance was a testament to its close ties to the global economic conditions.

“Certain petrochemical companies had been plagued with oversupply and demand uncertainty, painting a continuously challenging environment for the group.

“Nevertheless, PetChem had remained focused on maintaining its high plant utilisation rate to mitigate the external pressures and continues to engage with its clients to ensure a consistent supply of products and services.”

PetChemís FY25 performance underscored the difficult operating environment for the global chemicals industry, marked by persistent oversupply, subdued downstream demand and weaker product spreads.

“We believe PetChem will continue to lean on its operational efficiency to weather the challenges of soft prices and demand uncertainties.”