Highlight Petronas Chemicals 1Q profit falls 32% y-o-y to RM749m on lower sales

by **Cals** Thu 08 May 2014, 19:24

Highlight Petronas Chemicals 1Q profit falls 32% y-o-y to RM749m on lower sales

Business & Markets 2014

Written by Ahmad Naqib Idris Adzman Shah of theedgemalaysia.com

Thursday, 08 May 2014 14:33

KUALA LUMPUR (May 8): Petronas Chemicals Group Bhd reported lower net profit of RM749 million for its first quarter ended March 31, 2014, falling 32% from RM1.11 billion in the previous year’s same quarter.

Revenue was also down at RM3.81 billion in 1QFY14, compared to RM4.46 billion in 1QFY13.

The group, in its filing with Bursa Malaysia, attributed the lower revenue to lower volumes and softening prices for two business segments, which translated into lower profit for the quarter.

“Production was mainly affected by methane gas limitation in the first half of the quarter at the group’s methanol facilities. The group also undertook statutory turnaround activities at its urea plant in Bintulu,” said the major group in its filing with the stock exchange.

On the olefins and derivatives segment, Petronas Chemicals said this segment recorded plant utilisation of 97% compared to the corresponding quarter of 99% due to slightly higher level of maintenance activities, thus affecting sales volume.

Coupled with softer prices, revenue for the olefins and derivatives segment fell by 10% to RM2.9 billion while profit was reduced by 28% to RM589 million.

On the fertilisers and methanol segment, the company said the segment’s performance was affected by gas supply constraints as a result of extended upstream facilities shutdown to conduct offshore technical works in securing additional future gas supply.

In addition, the segment undertook statutory turnaround activities at its urea plant in Bintulu. Plant utilisation was 67% compared to 88% a year ago.

With softer prices for fertilisers and lower volumes for methanol, revenue for the segment decreased by 25% to RM1.0 billion and profit declined by 38% to RM242 million.

Petronas Chemicals said its heavy statutory turnaround and maintenance activities at its various plants, which started in the third quarter of 2013, are expected to be substantially completed in the second quarter this year.

Going forward, the group said its operations will be mainly affected by fluctuations in international petrochemical product prices, global economic conditions and utilisation rate of its production facilities.

For its olefins and derivatives segment, the group said that its products will be influenced by the GDP growth in Asia-Pacific and economic recovery in the US and Europe, while steady global demand should support its fertilisers and methanol segment.

The company expects to achieve improved plant utilisation and better financial performance from this year onwards after the turnaround maintenance activities, said Sazali Hamzah, President/ Chief Executive Officer, in a separate statement.

Petronas Chemicals is a leading integrated chemicals producer in Malaysia and one of the largest in South East Asia. It operates a number of world class production sites, which are fully vertically integrated from feedstock to downstream end-products.

It is involved primarily in manufacturing, marketing and selling a diversified range of chemical products, including olefins, polymers, fertilisers, methanol and other basic chemicals and derivative products.