PetChem 3Q18 net profit up 38.5%

Its revenue for 3Q rises 20.5% on the back of higher product prices, partially offset by lower sales volumes and stronger ringgit

By FARA AISYAH / Pic By MUHD AMIN NAHARUL

PETRONAS Chemicals Group Bhd’s (PetChem) net profit for the third quarter ended Sept 30, 2018 (3Q18), rose 38.46% year-on-year (YoY) to RM1.26 billion on higher revenue, supported by lower tax expenses and higher interest income.

In an exchange filing last week, the company said earnings before interest, taxes, depreciation and amortisation (Ebitda) for the quarter were 14% higher at RM1.6 billion.

The chemical producer’s revenue for the three months increased by 20.45% YoY to RM4.83 billion, on the back of higher product prices, partially offset by lower sales volumes and the strengthening of ringgit against the US dollar.

PetChem MD and CEO Datuk Sazali Hamzah (picture) said all of the company’s operational and commercial plans for the year are progressing well.

“We have successfully completed the statutory turnaround work at five plants so far this year, with minimal disruptions.

“The average group plant utilisation for the first nine months of 2018 (91%) is comparable to the rate in 2017,” he said in a statement.

The company’s olefins and derivatives segment recorded a higher plant utilisation of 96% compared to 82% in 3Q17, primarily contributed by lower statutory turnaround at its cracker and related downstream facilities.

Production and sales volumes for the segment increased in line with the higher plant utilisation, while average product prices for the segment had improved attributable to the strengthening of crude oil price.

The segment’s revenue increased by 20% to RM3.2 billion, mainly driven by higher product prices and volumes, and partially negated by the strengthening of the ringgit.

Correspondingly, the segment achieved higher Ebitda by 13% at RM965 million, while profit after tax (PAT) increased by 27% to RM743 million.

Meanwhile, the fertilisers and methanol segment’s plant utilisation was lower at 69% compared to 3Q17, mainly due to a higher level of statutory turnaround activities undertaken at its urea and methanol plants.

As such, the segment recorded lower production and sales volumes, while average product prices strengthened across all products as crude oil price increased.

The fertilisers and methanol segment also recorded higher revenue by 20% at RM1.7 billion, largely due to higher product prices, despite lower sales volumes and the strengthening of the ringgit.

Following higher revenue, its Ebitda increased by 15% to RM688 million, while PAT also increased by 34% to RM496 million.

Sazali expects the market to remain stable with methanol and urea showing strong demand, while the demand for certain olefins derivative products is expected to soften.

He also said construction of the petrochemical projects in Pengerang Integrated Complex, Johor, is 91% complete as at the end of last month.

“We are on the right track to start commercial operation in the second half of 2019,” he added.