PETALING JAYA: Petronas Chemicals Group Bhd (PCG) recorded profit after tax (PAT) of RM633 million in the second quarter of 2023 (Q2’23), sustaining its financial resilience amid a challenging market environment.
The group’s revenue declined 6% quarter-on-quarter to RM7.1 billion compared with RM7.6 billion in Q1’23 due to lower consumer and manufacturing demand as well as inflationary cost pressures.
Average product prices and spreads continued to decline in Q2’23 in line with lower crude oil prices. Additionally, plant utilisation declined following feedstock supply disruption in methanol and urea plants in Labuan and Sabah respectively, resulting in lower production and sales volumes.
For the first half of 2023, PCG posted revenue of RM14.7 billion and profit after tax of RM1.2 billion.
The company declared an interim dividend of 8 sen per share for the financial year ending Dec 31, 2023. The dividend amounting to RM640 million is payable in September.
PCG said Q2’23 revenue declined 6% to RM7.1 billion (Q1’23: RM7.6 billion) due to lower sales volume coupled with lower average product prices; PAT increased 18% to RM633 million (Q1’23: RM536 million) from an unrealised foreign exchange gain; and earnings before interest, taxation, depreciation and amortisation (Ebitda) and Ebitda margin were relatively comparable at RM1.1 billion (Q1’23: RM1.1 billion) and 15% (Q1’23: 14%) respectively.
It said plant utilisation rate declined to 82% (Q1’23: 96%) due to gas supply limitation that disrupted the production of methanol and urea, resulting in lower production and sales volume.
Managing director/CEO Mohd Yusri Mohamed Yusof commented: “In Q2 2023, we faced extreme external challenges. Our plants in Labuan and Sabah had unplanned shutdowns following a temporary disruption of gas feedstock supply which reduced our production and sales volume. This added further pressure to the margin compression we have been experiencing since December 2022 caused by lower prices and spreads for most products.”
As a result of the reduction in crude oil prices and lacklustre demand recovery in China, average prices of polymers declined by about 7% quarter-on-quarter while other olefins and derivatives showed a similar trend. Ammonia and urea prices, which have been undergoing price correction since H2’22, continued to decline in 2023 on oversupply concerns.
Compared to the first quarter of 2023, ammonia prices declined 56%, while urea declined 15% due to lack of buying interest.
Commenting on the outlook for H2’23, Yusri said, “In recent weeks, product prices showed improvement with the upward trend in crude oil prices and restocking activities. Despite this, we anticipate margins to remain under pressure. We still have to contend with higher operating costs, slowing global economic growth and increased competition from new capacities coming on stream, particularly in China and the US. The specialties segment is expected to remain soft, in view of slower global industrial production growth impacting demand across end-markets.”
