KUALA LUMPUR (June 15): Chemical Company of Malaysia Bhd (CCM) expects heightened disposition towards personal hygiene and use of personal protective equipment (PPE) such as gloves to continue to fuel demand for its chemical and polymer products during the current Covid-19 pandemic.
Demand for key chemical products used in the manufacture of personal hygiene products, disinfectants and water treatment as well as polymers for glove-making is expected to last beyond the easing of restrictions in Malaysia and globally, the group said in a statement today.
“This is expected to benefit CCM while offsetting the impact of softer prices of key chlor-alkali products,” it added.
CCM group managing director Nik Fazila Nik Mohamed Shihabuddin said the group was cautiously optimistic amid uncertainties in a post-Covid-19 economic environment on the domestic and global fronts.
According to her, CCM will execute a three-pronged strategy encompassing the prioritisation of capital expenditure, heightened monitoring of its working capital requirements, and ensuring availability of cash and liquidity at all times to manage the impact of the Covid-19 pandemic.
“Our efforts to enhance our production capacities have started paying dividends and can be seen with the availability of an additional 50% capacity of our chlor-alkali production with the reactivation of our Pasir Gudang Plant 1 in late February, while the calcium nitrate plant will progressively be increasing its production capacity from 1,000 to 1,900 tonnes per month.
“Besides optimising our existing resources, we are expanding our capacity for Kleeners, a cleaning solution for ceramic formers supplied to glove manufacturers, which will see our Kleeners facility at a new site in Bangi doubling output from 9,000 to 18,000 tonnes per annum when it is fully commissioned in the first quarter of 2021,” she said.
“We will continue to improve operational, financial and cost efficiency and prioritise R&D (research and development). Among the key cost-efficiency initiatives are a RM27.9 million cogeneration plant, which will enable the simultaneous production of electricity and usable thermal energy from a single fuel source, supporting the national agenda of achieving 8% savings from energy efficiency by 2025, and the introduction of solar energy solutions,” she added.
According to Nik Fazila, CCM will resume supply of caustic soda to Petroliam Nasional Bhd (Petronas) when the latter resumes operations towards the end of 2020, following a disruption due to a fire at Petronas’ Refinery and Petrochemical Integrated Development (Rapid) site in April 2019.
In May 2019, CCM was awarded a three-year contract with a one-year extension option by the national oil company to supply caustic soda to Petronas Refinery and Petrochemical Corp Sdn Bhd.
“Additionally, we will relentlessly pursue growth opportunities via the diversification of our portfolio, including derivatives and other non-glove applications, and deepen and widen our footprint regionally,” said Nik Fazila.
CCM’s net profit declined by 65.17% to RM2.18 million for the first quarter ended March 31, 2020 (1QFY20) from RM6.25 million a year earlier. Quarterly revenue also dropped marginally to RM96.6 million from RM96.9 million due to a 4.9% dip in contributions from the chemical division. The decline was cushioned by a 14.9% increase in revenue by the polymer division.
In spite of the improved performance of the polymer division arising from a surge in demand for gloves, CCM said its first-quarter results were weighed down by its share of losses on its associate company Orica-CCM Energy Systems Sdn Bhd, and continued margin squeeze arising from lower average selling prices of its chlor-alkali products and lower volume sold by the chemical division during the movement control order (MCO) as its customers deemed non-essential were closed.
CCM, established in 1963, has over 50 years of expertise in the development of the chemical and polymer industries of Malaysia.