This article first appeared in The Edge Financial Daily on November 14, 2019
KUALA LUMPUR: Petronas Chemicals Group Bhd’s (PetChem) third-quarter (3Q) net profit more than halved on lower earnings before interest, taxes, depreciation and amortisation (Ebitda), partially offset by lower tax expense.
Net profit for the quarter ended Sept 30, 2019 (3QFY19) fell to RM553 million from RM1.21 billion a year ago.
Ebitda declined by 44% year-on-year to RM915 million in 3QFY19 largely due to compressed margin. This resulted in a lower earnings per share of seven sen for 3QFY19 compared with 15 sen for 3QFY18.
Quarterly revenue also dropped 24% to RM3.67 billion from RM4.83 billion for 3QFY18, mainly due to lower product prices, partially offset by higher sales volume and the weakening of the ringgit against the US dollar.
The weak quarterly performance dragged the group’s net profit for the cumulative nine months ended Sept 30, 2019 down by 34.6% to RM2.47 billion from RM3.78 billion a year ago, while revenue fell 16.4% to RM12.14 billion from RM14.51 billion.
On prospects, 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 petrochemical product prices, which have a high correlation to crude oil price, particularly for the olefins and derivatives segment.
In a statement yesterday, PetChem said its plant utilisation was at 93% in 3QFY19, higher than 91% in 3QFY18, which resulted in a 2% year-on-year increase in production volume. It has a total combined production capacity of 12.8 million tonnes per year.
Meanwhile, PetChem managing director and chief executive officer Datuk Sazali Hamzah said its new plants at the Pengerang Integrated Complex in Johor remain on track to commence commercial operations by the end of the year.
“We are now in the process of stabilising the plants to deliver additional capacity of a new product range to meet our customers’ requirements,” he added.