by DayakDaily Team
KUCHING, Feb 21: Petronas Chemicals Group Bhd’s (PCG) financial year 2024 (FY24) came under pressure due to challenging market conditions.
In a press release today, it said, its profitability came under pressure with its earnings before interest, tax, depreciation, and amortisation (EBITDA) down seven per cent year-on-year (y-o-y) to RM3.5 billion due to lower spreads and higher operating cost.
It also reported that its profit after tax (PAT) was 26 per cent lower at RM1.3 billion in line with lower EBITDA and share of loss from associates and joint ventures.
On a quarterly basis (q-o-q), compared against the preceding quarter (3Q24), revenue in 4Q24 declined by seven per cent to RM7.5 billion primarily due to lower average product prices and strengthening of the Malaysian ringgit against the US dollar.
However, the group recorded profit after tax of RM539 million on q-o-q basis, reversing the loss after tax of RM762 million recorded in the previous quarter.
It explained that the chemicals sector downcycle has extended longer than initially anticipated, owing to stagnant global demand amid capacity oversupply.
Market recovery also varied across regions with geopolitical events, international trade tensions, energy cost fluctuations and climate impact contributing to the mix of economic uncertainty.
Additionally, the effects of a significant rise in newly built capacities, especially in Northeast Asia, which surpassed demand growth, kept pressure on prices and margins.
To navigate through headwinds in the chemicals sector, Petronas Chemicals said it offers diverse product and leverages on its fertiliser & methanol (F&M) segment which has relatively stable levels of demand and prices for urea and methanol within the Asia Pacific region throughout 2024.
The group also benefitted from plant efficiency improvements and reduction in downtimes, despite undertaking turnaround activities at four of its manufacturing plants.
This resulted in average plant utilisation rate of 91 per cent, against 85 per cent in 2023, which boosted production and sales volume of commodities chemical products within the olefins & derivatives (O&D) and F&M segments.
The O&D segment also saw production volume growth contributed by Pengerang Petrochemical Company Sdn Bhd (PPC), which had commenced commercial operations on Nov 30, 2024. The volume and revenue growth for the segment was, nevertheless, negated by lower product spreads, higher plant operating cost and unfavourable foreign exchange impact.
The specialties segment recorded a marked improvement almost doubling its EBITDA mainly driven by higher sales volume and lower feedstock cost.
Commenting on the year, Petronas Chemicals managing director and chief executive officer Mazuin Ismail said, “We met our operational targets, with plant utilisation for the O&D and F&M segments returning to above the 90 per cent mark, despite the challenges faced earlier in the year. The specialties segment also saw improved sales on supply constraints and improved demand for oxo and polyols.
The group said, market conditions are expected to remain unchanged in 2025 in view of uncertainties posed by changing geoeconomic policies and potential retaliatory actions by affected countries, in addition to ongoing geopolitical events.
“We still must contend with oversupply in global petrochemical products, even as demand recovers given that capacity additions are expected to exceed demand growth by approximately 50 per cent this year.
“From late 2024 and into 2025, we have observed a decline in prices and spreads in O&D, with signs that Southeast Asia integrated spreads is anticipated to remain in a trough,” Mazuin added.
“For Petronas Chemicals, resilience and agility are key to navigate the challenging environment. We remain focused on ensuring safe and efficient operations, keeping a close eye on the market and strengthening our financial discipline,” he said.
Petronas Chemicals announced a second interim dividend payout of three sen per share amounting to RM240 million. The total dividend declared in FY24 amounts to RM1.0 billion, representing 89 per cent of Profit After Tax and Non-Controlling Interests (PATANCI). – DayakDaily
