This article first appeared in The Edge Financial Daily, on May 10, 2016.

KUALA LUMPUR: Higher tax expense pulled down Petronas Chemicals Group Bhd’s (PetChem) net profit by 2.1% to RM592 million or seven sen per share for the first quarter ended March 31, 2016 (1QFY16), from RM605 million or eight sen per share a year ago.

In a filing with Bursa Malaysia yesterday, PetChem said tax expense in 1QFY15 was lower due to the higher recognition of deferred tax asset, mainly on pre-operating expenses pertaining to the Sabah ammonia and urea project.

Revenue rose by a marginal 0.22% to RM3.15 billion from RM3.14 billion on higher sales volume and stronger US dollar, which offset the impact of lower average product prices.

“Crude oil prices touched a 12-year low in January this year. To-date, while there has been some recovery in crude oil price, it remains lower compared to 2015,” said PetChem managing director and chief executive officer Datuk Sazali Hamzah in a statement yesterday.

He noted that Brent crude oil price averaged at US$34 (RM136.68) per barrel for 1QFY16, compared with the yearly average of US$52 per barrel in 2015. “This has an impact on petrochemical product prices.”

Moving forward, Sazali said the outlook for 2016 remains soft.

“PetChem will maintain its focus on operational and commercial efficiencies, as well as effective delivery of growth projects in order to continue bringing value to our customers and shareholders,” he added.

PetChem shares closed 30 sen or 4.68% lower at RM6.11 yesterday, for a market capitalisation of RM48.88 million. The counter was the sixth top loser on Bursa.