ANN/THE STAR – Petronas Chemicals Group Bhd is expecting margins to remain under pressure after a quarter of “extreme external challenges,” according to the petrochemicals firm in Malaysia.
Petronas Chemicals Managing Director and Chief Executive Officer Mohd Yusri Mohamed Yusof in a statement added; “We still have to contend with higher operating costs, slowing global economic growth and increased competition from new capacities coming on stream, particularly in China and the United States.”
The specialties area is projected to remain weak as poor global industrial output growth affects demand across end-markets.
Unplanned shutdowns in Labuan and Sabah as a result of a brief interruption in gas feedstock supply, according to Mohd Yusof, impacted the group’s output and sales volume.
Consequently, the plant utilisation rate declined to 82 per cent from 96 per cent in the first quarter of 2023.
Mohd Yusof said the shutdowns added more pressure to the margin compression the group had been experiencing since December 2022 caused by lower prices and spreads for most products. In the second quarter ended June 30 Petronas Chemicals’ net profit dropped to MYR628 million from MYR1.87 billion in the same quarter in 2022.
The group’s earnings per share contracted to eight cents from 23 cents previously. Revenue, meanwhile, was positive at MYR7.11 billion compared to MYR6.58 billion in 2QFY22.
In line with the results, the group declared a dividend of eight cents per share, amounting to MYR640million payable on September 21. For the remainder of the year, Mohd Yusof said several plants are scheduled to undergo statutory turnarounds and maintenance activities, which will result in a slight drop in production volume.
He added that the start-up of the group’s petrochemical plants in Pengerang is ongoing and is progressing towards commercialisation operations.
