PetChem’s 2Q net profit jumps on higher product prices, demand

by NUR HANANI AZMAN / pic by MUHD AMIN NAHARUL

PETRONAS Chemicals Group Bhd’s (PetChem) earnings jumped 10-fold to RM1.86 billion in its second quarter ended Jun 30, 2021 (2Q21), from RM186 million in 2Q20 boosted by a significant jump in petrochemical product prices fuelled by higher crude oil prices and a strong rebound in global demand.

The group’s revenue was 76% higher year-on-year (YoY) at RM5.61 billion in 2Q21 from RM3.18 billion in 2Q20.

PetChem announced an interim dividend payout of 23 sen a share or RM1.84 billion.

“Rising crude oil prices in 2Q21, combined with the rebound in petrochemicals demand, had strengthened product prices and improved profit margins.

“Compared to the previous year, prices of polymers and urea increased by about 70% and 60% respectively, while ammonia and methanol prices had doubled,” MD and CEO Datuk Sazali Hamzah (picture) said in a statement yesterday.

For the quarter under review, the group’s plant utilisation was at 97%, lower than 100% a year earlier mainly due to the higher level of statutory turnaround activities undertaken resulting in lower production and sales volumes.

For the first half of 2021 (1H21), the group posted a net profit of RM3.32 billion versus a net profit of RM692 million in the same period in 2020, while revenue rose to 45% YoY to RM10.28 billion from RM7.07 billion in 1H20.

“Our business model, which is based on operational and commercial excellence, ensures we are able to secure market opportunities while navigating global supply chain disruptions.

“For instance, we were able to optimise production to meet customer orders even during major plant maintenance and statutory turnaround,” Sazali added.

On PetChem’s outlook for the rest of 2021, Sazali expects the price rise to moderate in 2H21.

“Given the 1H21 achievement, an overall improvement in our performance this year looks promising.

“We will continue with our initiatives, including cost optimisation measures, in order to maximise our financial performance in the current industry uptrend,” he said.

He added the new capacities, mainly the petrochemical facilities within the Pengerang Integrated Complex, are not expected to make a material contribution to the group’s bottom line this year.

“We plan to progress towards a safe and successful start-up of the integrated complex towards the end of the year,” he concluded.