This article first appeared in The Edge Financial Daily on August 16, 2018

KUAlA LUMPUR: Petronas Chemicals Group Bhd’s (PetChem) net profit jumped 42.3% to RM1.37 billion in the second quarter ended June 30, 2018 (2QFY18) from RM964 million a year ago, on higher interest income and lower tax expenses. This resulted in higher earnings per share of 17 sen for 2QFY18 compared with 12 sen for 2QFY17.

Quarterly revenue rose 19.6% to RM4.73 billion from RM3.96 billion in 2QFY17, mainly driven by higher product prices and sales volumes, partially offset by a strengthening ringgit against the US dollar. The group also declared an interim dividend of 14 sen per share for the financial year ending Dec 31, 2018 (FY18), payable on Sept 20.

In a filing with Bursa Malaysia yesterday, PetChem said the group recorded plant utilisation of 95% in 2QFY18, up from 90% in 2QFY17, thanks to lower level of maintenance activities at its ammonia and urea plants, as well as lower statutory turnaround days.

“Correspondingly, production and sales volumes increased. Overall, average product prices were higher compared with that in the corresponding quarter, contributed by a higher crude oil price,” it added.

For the cumulative six months (1HFY18), the group posted a 7.9% increase in net profit to RM2.44 billion from RM2.26 billion a year ago. Revenue grew 11.9% to RM9.68 billion from RM8.65 billion in 1HFY17.

PetChem said the results of the group’s operations are expected to be primarily influenced by global economic conditions, foreign exchange rate movements, utilisation rate of its production facilities and prices of petrochemical products, with a high correlation to crude oil prices, 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. The group will continue with its operational excellence programme and supplier relationship management to sustain plant utilisation level at above industry benchmark,” it added.