Amidst a challenging year for the global chemicals business, Petronas Chemicals Group Bhd (PCG) saw a decline in net profit, from RM6.32 billion to RM1.8 billion in the fiscal year that concluded on December 31, 2023 (FY2023).
According to a statement, revenue decreased marginally from RM28.95 billion to RM28.67 billion, Bernama reported.
“FY2023 was a tough year for PCG, both on the market and operational fronts.
“As we navigated a very volatile chemicals market throughout the year, internally, we faced interruptions at a few of our plants, which led to a weaker performance in our Olefins and Derivatives (O&D) and Fertilisers and Methanol (F&M) segments,” managing director/chief executive officer Mazuin Ismail said.
The extended destocking and increased competition from Chinese companies continued to hurt the Specialties category.
The association emphasized how the sector was impacted by slower-than-expected China’s recovery and slowing economic development. It resulted in decreased product demand and softer pricing.
Concurrently, energy prices remained high due to geopolitical concerns, which led to increased feedstock costs and margin compression.
After tax, the group’s profit (PAT) decreased to RM1.8 billion from RM6.3 billion in FY2022.
In the meanwhile, plant utilisation was recorded at 85%, down from 89% the year before due to operational difficulties, many required turnarounds, and year-round maintenance operations.
Net profit for the fourth quarter of FY2023 dropped to RM112 million from RM481 million. This is due to reduced sales of RM7.21 billion as opposed to RM8.70 billion in the previous quarter.
Mazuin projected that the difficulties seen in the chemicals industry in 2023 would persist into 2024. With pockets of opportunity predicted across a range of industries despite a slow and uneven economic recovery.
“Ethylene prices should see some support later in the year, as consumption improves and drive the demand for polyethylene in packaging applications.
Due in part to India’s planting season and China’s ongoing embargo on urea exports, steady F&M urea prices are anticipated.
“Methanol prices may ease as downstream demand is expected to remain soft, likewise for specialty chemicals” he noted.
According to Mazuin, the chemicals sector is cyclical, and once supply and demand catch up, the current downturn will end.
According to Mazuin, performance tests for expansion projects are presently being conducted at the Pengerang petrochemical facility.
Thus, through a joint venture with BASF PETRONAS Chemicals, PCG is looking forward to achieving commercial operations at three additional new plants this year. The melamine plant in Gurun, Kedah, the specialty chemicals plant in Sayakha, India, for the production of calcium formate and pentaerythritol, and the expansion of the 2-Ethylhexanoic Acid plant in Gebeng, Pahang.
“These three facilities, with a combined annual capacity of about 130,000 metric tonnes per annum, mark several milestones in our two-pronged strategy towards achieving sustainable growth,” he added.
Additionally, PCG declared a second interim dividend. Which would be paid on March 26, 2024, at a rate of 5.0 sen per share, or RM400 million.
The RM1.0 billion total dividend declared for FY2023 corresponds to 61.3% of PAT and Non-Controlling Interests.
