The company’s net profit plunged 77% to RM112m, compared to RM481m in the year before due to slower China recovery and lower plant utilisation rate

PETRONAS Chemicals Group Bhd (PetChem) saw yet another quarterly net profit plunge as the chemical arm of the national state energy firm confronted a slower than anticipated China recovery and lower plant utilisation rate.

This was the scene that greeted Mazuin Ismail who came on board as PetChem’s new CEO effective Jan 1, 2024.

For the fourth quarter ended Dec 31, 2023, the company’s net profit plunged 77% to RM112 million, compared to RM481 million in the year before, on the back of RM7.21 billion in turnover.

For the full year, the subsidiary of Petroliam Nasional Bhd (Petronas) posted a net profit of RM1.7 billion, down 73% from the financial year 2022 (FY22), on the back of RM28.67 billion.

In a statement, Mazuin said FY23 was a ‘tough year’ for the company, both on the market and operational fronts.

“As we navigated a very volatile chemicals market throughout the year, internally, we faced interruptions at a few of our plants, which led to a weaker performance in our olefins and derivatives (o&d) and fertilisers and methanol (F&M) segments.

“At the same time, the specialties segment continued to be impacted by prolonged destocking and intensified competition from Chinese producers.

“Despite the persistent low spreads and operational challenges, we remain resilient with a healthy financial position enabling us to exceed our commitment to our shareholders,” he said.

In the last quarter of 2023, PetChem recorded a lower plant utilisation rate of 84% compared to 100% in the corresponding quarter mainly due to higher statutory turnaround and plant maintenance activities during the quarter, resulting in lower production and sales volumes, according to its exchange filing.

On growth projects, Mazuin said performance test runs were currently ongoing at the petrochemical facilities in Pengerang.

In 2024, PetChem aimed to achieve commercial operations at the melamine plant in Gurun, Kedah; the specialty chemicals plant in Sayakha, India, for the production of pentaerythritol and calcium formate and the expansion of the 2-Ethylhexanoic Acid (2-EHA) plant in Gebeng, Pahang through its joint-venture company BASF Petronas Chemicals Sdn Bhd.

“These three facilities, with a combined annual capacity of about 130,000 metric tonnes per annum, mark several milestones in our two-pronged strategy towards achieving sustainable growth,” he said.

Prior to the release of the latest quarterly results, PetChem had 11 ‘Sell’, eight ‘Hold’ and one ‘Buy’ calls from the catalysts tracked by Bloomberg, with a 52-week target price of RM6.50. The counter closed at RM6.99 today. — TMR / pic source: PetChem