KUALA LUMPUR (Aug 19): Petronas Chemicals Group Bhd's (PetChem) net profit for the second quarter ended June 30, 2020 fell 63% quarter-on-quarter to RM186 million from RM506 million.

Revenue was lower at RM3.18 billion versus RM3.89 billion in the preceding quarter.

Reviewing its performance, PetChem said plant utilisation rate was at 94%, higher than 89% in the preceding quarter, mainly due to better plant performance resulting in higher production volume.

However, it said sales volumes were lower following deferred shipment in the current quarter due to tighter control at ports as a result of the Covid-19 movement control order.

Meanwhile, on a year-on-year basis, PetChem’s net profit slumped 83.33% to RM186 million from RM1.12 billion, due to lower product prices and sales volume, and compressed margin.

In a bourse filing today, PetChem said revenue fell to RM3.18 billion from RM4.34 billion in the previous year, on lower product prices and sales volume.

Earnings per share slumped to 2 sen from 14 sen previously.

PetChem declared an interim single-tier dividend of 5 sen per share, amounting to RM400 million in respect of the financial year ending Dec 31, 2020.

For the six months ended June 30, PetChem’s net profit fell to RM692 million from RM1.92 billion a year ago on the back of revenue of RM7.07 billion against RM8.47 billion previously.

Commenting on its prospects, PetChem said the results of the group’s operations are expected to be primarily influenced by global economic conditions, petrochemical product prices, which have a high correlation to crude oil price, particularly for the olefins and derivatives segment, utilisation rate of production facilities and foreign exchange rate movements.

It said the Covid-19 pandemic continues to adversely affect the global economy and that it was also not spared.

“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 said.

In a separate statement, PetChem managing director/chief executive officer Datuk Sazali Hamzah said overall, the group delivered a resilient performance despite operating in an extremely challenging environment.

“The domino effect of Covid-19 brought down petrochemical prices to historical lows, particularly in April and May. We mitigated the impact by focusing on operational efficiency and capitalising on our strong market presence in this region.

“Coupled with our close collaboration with customers, we were able to maximise production to meet sales and delivery commitments with minimal disruption even during these tough times,” he said.

Sazali said PetChem was cautiously optimistic as the market is showing signs of improvement with the reopening of economies, but a meaningful recovery is only expected to occur gradually towards end-2020 into 2021.

“We are committed towards enhancing our operational and commercial capabilities, as well as cost reduction efforts, towards softening the impact of persistent low product prices.

“Our team continues to be vigilant of potential risks or disruptions and simultaneously responsive to market changes,” he said.

At the midday break today, PetChem was unchanged at RM6.15, for a market capitalisation of RM49.20 billion.