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The Star
7 days ago
- Business
- The Star
PetChem sees loss widening on several ops factors
PETALING JAYA: Petronas Chemicals Group Bhd (PetChem) believes that its operating performance will continue to be significantly influenced by global economic conditions and petrochemical products prices, which have a high correlation to crude oil price, particularly for its olefins and derivatives segment. In addition, it said foreign exchange movements and the utilisation rate of its production facilities, which is dependent on plant maintenance activities and utilities supply, also play a factor. PetChem said it will continue with its operational excellence programme and supplier relationship management to sustain plant utilisation level at above the industry benchmark. Releasing its results for the second quarter ended June 30 (2Q25) yesterday, the group suffered a severe downturn in performance, recording a net loss of RM1.08bil, compared to a net profit of RM777mil seen in 2Q24. Revenue for 2Q25 also edged lower by 16.7% year-on-year (y-o-y) to RM6.44bil. Cumulatively for the six months ended June (1H25), PetChem saw earnings dip into the red with a net loss of RM1.1bil, compared to the RM1.45bil net profit it charted in 1H24, as turnover declined 7.4% y-o-y to RM14.1bil. Summarily, the group attributed the weaker 2Q25 performance to lower product spreads and smaller contribution from a joint operation entity due to higher unrealised foreign exchange loss on revaluation of payables, which affected earnings before interest, taxes, depreciation and amortisation (Ebitda), although this was partially offset by lower plant operation costs. Furthermore, the group said lower product prices, weaker sales volume plus strengthening of the ringgit against the US dollar, as well as remeasurement loss arising from timing adjustment for payment of trade payables, impairment of assets at Perstorp Sdn Bhd, higher unrealised foreign exchange loss on revaluation of shareholders loan to a joint operation entity and higher depreciation and finance costs from a joint operation entity, also affected revenue and profits both for 2Q25 and 1H25. For context, Perstorp is a wholly-owned subsidiary of PetChem that specialises in the producing and supplying of waste handling systems. Compared with 1Q25, revenue was lower by 15.9% from RM7.66bil, while net loss widened considerably from a loss of RM18mil. Chief executive and managing director at PetChem Mazuin Ismail commented that 2Q25 had presented several operational challenges both internal and external, that impacted PetChem's plants' performance. 'Notably, internally, we proactively shut down PC Ethylene Sdn Bhd for vessel wall rectification without significantly affecting our commitments to customers. 'We also made the decision to proactively scale back operations at PC Aromatics Sdn Bhd due to unfavourable economics,' he said. On the external front, he said the group's plant at PC Fertiliser Kedah Sdn Bhd was affected by the feedstock supply disruption following the gas pipeline incident at Putra Heights on April 1, before pointing out that the disruption has been resolved, and operation has been fully restored in June. Addressing growth, Mazuin said: 'The commodities market remains challenging amid persistent oversupply and ongoing trade as well as geopolitical tensions. Nevertheless, demand continues to grow, particularly in Asia, driven by population and urban growth. 'Our Pengerang facility, built to support this growth, is currently operating to meet the Creditors Reliability Test by year-end.' Commenting on strategy, he said in light of the increasingly dynamic market environment, PetChem is undertaking strategic portfolio review across its entire value chain. Anticipating further increase in operating costs and substantial capital requirements, the group recorded an impairment loss on assets at Perstorp. Mazuin noted: 'Although we faced market and operational challenges during the quarter, our financial position remains robust. Furthermore, our value creation and cost optimisation initiatives have led to more than RM200mil improvement in Ebitda on a year-to-date basis. 'This has enabled us to declare an interim dividend of RM240mil, which underscores our ongoing commitment to our shareholders in delivering sustainable long-term value.' Looking ahead, while market conditions remain challenging, he said PetChem remains confident that its strong fundamentals, combined with the initiatives currently underway will continue to strengthen its resilience.
The Star
13-08-2025
- Business
- The Star
PETRONAS Chemicals to undertake strategic portfolio review
KUALA LUMPUR: On the heels of a weaker performance in the second quarter of 2025 (2QFY25), Petronas Chemicals Group Bhd (PetChem) is doubling down on efforts to nagivate an increasingly challenging industry landscape. "In light of the increasingly dynamic market environment, we are undertaking a stategic portfolio review across our entire value chain. "Anticipating further increase in operating costs and substantial capital requirements, we recorded an impairment loss on assets at Perstorp," said PetChem managing director and CEO Mazuin Ismail in a statement. "Looking ahead, while market conditions remain challenging, twe are confident that our strong fundamentals combined with the initiative currenctly underway will continue to strengthen our resilience," he added. In its result review, the group said it faced both internal and external disruptions to its operations amid heightened geopolitical tensions in the Middle East and tariff announcement, which affected crude oil prices and weakened the US dollar. During the quarter under review, the group reported a net loss of RM1.08bil, wihch compared to a net profit of RM777mil in the year-ago quarter. Revenue came in at RM6.44bil, down 16% from RM7.73bil in the year-ago quarter, as sales volume contracted and average product prices fell. The board of directors declared a first interim dividend of three sen per share, with ex date on Aug 26, 2025, and payable on Sept 10, 2025. In the first half of the year, PetChem registered a total net loss of RM1.1bil, as compared to a net profit of RM1.45bil in the year-ago period, while revenue narrowed to RM14.09bil from RM15.23bil in the comparative period. According to the group, the lower revenue was largely owing to foreign currency translation following the strengthening of the ringgit against the US dollar, as well as lower average product prices. Group earnings before interest, depreciation and amortisation (Ebitda) fell 43% to RM1.3bil on lower product spreads and unrealised foreign exchange loss on revaluation of payables at Pengerang Petrochemical Company Sdn Bhd (PPCSB). The group said its net loss of RM1.1bil was on adjustment of timing of payment for trade payables of PPCSB, impariment of assets at Perstorp, unrealised foreign exchange loss on revaluation of shareholders loan to PPCSB as well as higher depreciation and finance costs at PPCSB.
