PetChem sees RM1.3b profit on better sales

PetChem is well positioned to address market challenges, according to CEO

By DASHVEENJIT KAUR / Pic Source petronaschemicals.com

Petronas Chemicals Group Bhd (PetChem) posted a 27.9% jump in its net profit for the fourth quarter ended Dec 31, 2018 (4Q18), to RM1.28 billion — largely driven by higher product prices, improved sales for ethane-based products and the weakening of the ringgit against the US dollar.

Earnings per share in 4Q18 stood at 16 sen per share, compared to 13 sen per share in 4Q17 via a net profit of RM1 billion.

Revenue for the three-month period also rose 7% to RM5.06 billion from RM4.74 billion previously, the petrochemical arm of Petroliam Nasional Bhd (Petronas) reported to Bursa Malaysia yesterday.

PetChem also enjoyed lower tax expenses and a higher share of profits from joint ventures and associates in 4Q18.

“Average product prices were higher during most of 2018, lifted by the buoyant crude oil prices then,” PetChem said in a statement.

The company has also proposed a dividend payout of 18 sen per share for 4Q18, bringing the whole-year dividend payout to 32 sen per share.

For the full-year 2018, net profit grew by 19.2% to RM4.98 billion or 62 sen per share from RM4.18 billion (52 sen per share) in 2017, while revenue increased 12.5% to RM19.57 billion from RM17.4 billion.

PetChem noted that plant utilisation improved from 79% to 94%, primarily due to a lower level of statutory turnaround activities in 4Q18.

Production and sales volumes also increased on the back of better plant utilisation, it added.

“Operations are expected to be primarily influenced by global economic conditions, foreign-exchange rate movements, the utilisation rate of its production facilities and prices of petrochemical products which have a high correlation to crude oil price, particularly for the olefins and derivatives segment.

“The utilisation of its production facilities is dependent on plant maintenance activities and sufficient availability of feedstock.”

MD and CEO Datuk Sazali Hamzah said PetChem’s petrochemical plants at the Pengerang Integrated Complex (PIC) are progressing well at 96% project completion to date, and are expected to commence commercial operations by the second half of 2019.

Sazali said although petrochemical product prices are softening, the demand outlook of the products remains strong in the Asia-Pacific region.

“With our strong operational performance, combined with new product offerings from PIC, PetChem is well-positioned to address market challenges,” he said.