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Thursday, August 16, 2018

PetChem posts 42% increase in quarterly profit

Thursday, 16 Aug 2018

PETALING JAYA: Petronas Chemicals Group Bhd
image: (PetChem) registered a 42.3% year-on-year increase in net profit to RM1.37bil for the second quarter ended June 30, bringing its first half’s net profit to RM2.44bil, up 7.9% compared with the corresponding period last year.

According to its filing with Bursa Malaysia, the higher net profit during the second quarter was due to higher interest income and lower tax expenses.

PetChem recorded a plant utilisation rate of 95%, which had improved from the corresponding quarter of 90%, primarily due 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.

In addition, overall average product prices were higher compared with the corresponding quarter, contributed by higher crude oil price.

Meanwhile, PetChem attributed the increase in net profit for the first half to higher earnings before interest, tax, depreciation and amortisation (Ebitda), partially negated by the impact of foreign exchange loss on its shareholder loans pursuant to the divestment of 50% equity interest in a subsidiary.

“The results of the group’s operations are expected to be primarily influenced by global economic conditions, foreign exchange rate movements, utilisation rate of our production facilities and petrochemical products prices which have a high correlation to crude oil prices, particularly for the olefins and derivatives segment.

“The group will continue with its operational excellence programme and supplier relationship management to sustain plant utilisation level at above industry benchmark,” said PetChem.

The olefins and derivatives segment is anticipated to be stable in the near term, drawing support from healthy downstream demand and firm feedstock prices.

However, supply is expected to meet demand.

As for the fertilisers and methanol segment, PetChem expected it to be firm in view of the tight supply due to turnaround in the Middle East region and US sanctions against Iran.

Methanol prices are forecast to be firm primarily owing to short supply due to upcoming planned turnarounds in China and South-East Asia, supported by healthy demand in line with resumption of methanol-to-olefins plants.

PetChem closed 2.2% higher at RM9.30, and was traded on a volume of 12.17 million shares yesterday.


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