Petronas Chemicals’ 4Q net profit dives 66%


PETRONAS Chemicals Group Bhd’s (PetChem) net profit plunged 66.34% year-on-year (YoY) in the final three months of last year dragged by lower prices, muted demands and stiff competition.

The subsidiary of Malaysia’s oil giant Petroliam Nasional Bhd (Petronas) like the whole petrochemical industry is feeling the heat of the US-China trade war which had dampened demands.

For the fourth quarter ended Dec 31, 2019 (4Q19), PetChem’s profit stood at RM340 million, a far cry from RM1.01 billion recorded in the same quarter of 2018.

Its earnings per share were also lower at four sen against 13 sen in 2018.

Revenue for the quarter fell 16.36% to RM4.23 billion from RM5.06 billion a year ago, mainly due to lower pro-duct prices and the strengthening of the ringgit against US dollar, the company told Bursa Malaysia yesterday.

For the financial year of 2019 (FY19), PetChem’s net profit dropped 41.29% YoY to RM2.81 billion from RM4.79 billion a year earlier, while revenue was 16.38% lower at RM16.37 billion against RM19.58 billion in 2018.

The company declared a second interim dividend for the year of seven sen per ordinary share amounting to RM560 million, which will be payable on March 27, 2020, in addition to the first interim dividend of 11 sen per share, which was paid to investors in September 2019.

For FY19, the total dividend amounted to 18 sen or RM1.4 million, translating into a dividend payout ratio of 51.2% of profit after tax and non-controlling interests (PATANCI).

PetChem said its plant utilisation was at 92% which was comparable to the corresponding year. Consequently, production and sales volumes were comparable against the corresponding year.

“Overall average product prices were lower than the corresponding year in tandem with lower crude oil price and softer market demand,” it said.

The company said the results of its operations were expected to be primarily influenced by global economic conditions, foreign-exchange rate movements, utilisation rate of its production facilities and petrochemical product prices which have a high correlation to crude oil price, particularly for the olefins and derivatives segment.

“The utilisation of our production facilities is dependent on plant maintenance activities and sufficient availability of feedstock as well as utilities supply,” it said.

PetChem will continue with its operational excellence programme and supplier relationship management to sustain plant utilisation level at above industry benchmark.

MD and CEO Datuk Sazali Hamzah (picture) said the company aims to increase the commercialisation of its chemical plants within the Pengerang Integrated Complex (PIC), which are currently undergoing performance test runs.

“To date, we have achieved significant milestones with the first production of polyethylene, polypropylene and ethylene glycols,” he said in a statement.

He said the petrochemical pro-duct prices are expected to stabilise in the near term, but will remain cautious amid market uncertainties in view of the ongoing US-China trade disputes, slowing GDP growth and the Covid-19 outbreak.

“We expect to navigate through the current business environment given our strong operational and commercial excellence,” he added.