PETALING JAYA: Petronas Chemicals Group Bhd
’s (PetChem) performance in the third quarter ended Sept 30, 2024 (3Q24), was “severely affected” by foreign- exchange (forex) losses, mainly for its investment in Pengerang Petrochemical Co Sdn Bhd (PPC).
During the quarter under review, the US dollar weakened against the ringgit to 4.107 on Sept 30, 2024, from 4.721 on June 30, 2024, which negatively impacted the group’s bottom line.
The group’s net profit swung to a net loss of RM789mil in 3Q24 from a net profit of RM424mil in the previous corresponding period, translating to a loss per share of 10 sen against an earnings per share of five sen previously.
It recorded a revenue of RM7.99bil in 3Q24, up from RM6.78bil a year ago.
According to PetChem, its profit after tax, excluding the forex loss, is estimated at RM352mil.
PPC is a 50:50 joint-venture (JV) company between PetChem and Saudi Aramco located within the Pengerang Integrated Complex in Johor.
It is a US dollar functional currency company, which resulted in an unrealised forex loss on revaluation of payables of RM536mil recorded by PetChem due to the recent weakening of the greenback.
Additionally, the group said it provided a US dollar-denominated shareholders loan to PPC, which was also exposed to unrealised forex loss of RM492mil.
However, PetChem said its commodities segment recorded improvement during the quarter under review with an average plant utilisation of 92%, which brought up production volumes.
“In the 3Q24, the commodities chemicals market was broadly mixed, on factors such as ongoing inflation, seasonal supply-demand shift and feedstock movement.
“Supply tightness supported prices for urea and mono-ethylene glycols, while weak downstream demand put downward pressure on prices of methanol and polyolefins,” said the company.
The specialities segment recorded a slight decrease in both production and sales as demand softened amid higher availability of products.
Over the nine-month period ended Sept 30, 2024 (9M24), PetChem recorded a net profit of RM656mil against a net profit of RM1.58bil in the previous corresponding period.
Revenue for 9M24 rose to RM23.21bil from RM21.45bil previously.
PetChem managing director and chief executive officer Mazuin Ismail said the group is gearing up for commercial operations of its petrochemical units under PPC by year-end.
However, he noted that the starting up of these large-scale, capital-intensive assets will have material impact on the group’s earnings, including currency translation effects.
“If the US dollar continues to rebound in the fourth quarter of 2024, we will see partial reversal of the unrealised forex loss,” said Mazuin.
He added that PetChem’s olefins and derivatives segments are seeing some softness on seasonal weak downstream demand amid supply addition from new North-East Asian capacities.
Meanwhile, its fertiliser and methanol segment is stabilising as key suppliers focus on fulfilling term commitments.
Mazuin highlighted that the group remains cautious on its specialities segment, given the continued macroeconomic uncertainties.
