Update PetChem 2Q net profit drops 42%, declares 8 sen dividend

by **Cals** Mon 11 Aug 2014, 23:02

Update PetChem 2Q net profit drops 42%, declares 8 sen dividend

Business & Markets 2014

Written by Ahmad Naqib Idris Adzman Shah of theedgemalaysia.com

Monday, 11 August 2014 17:58

KUALA LUMPUR (Aug 11): Petronas Chemicals Group Bhd’s (PetChem) net profit dropped 42% to RM555.0 million for the second quarter ended June 30, 2014, from RM958.0 million for the previous year’s same quarter.

Revenue fell 14% to RM3.34 billion, from RM3.87 billion.

PetChem declared an interim single-tier dividend payment of 8 sen per share for the year ending Dec 31, 2014.

The group attributed its lower revenue to lower prices and volumes, due to lower utilisation during the quarter.

“During the quarter, the group undertook heavy maintenance which included several statutory turnarounds at a few of its plants, whereas there was only one statutory turnaround conducted in the corresponding quarter.

“As a result, group plant utilisation was at 76%, compared to 83% in the corresponding quarter. Consequently, both production and sales volumes were lower,” PetChem said in a statement to Bursa Malaysia.

Meanwhile, the lower net profit was attributed to lower volumes of ethane-based products, challenging market conditions and lower prices for fertilisers and methanol.

For the six months ended June 30, 2014, net profit fell 37% to RM1.30 billion from RM2.06 billion a year ago, while revenue declined 14% to RM7.15 billion from RM8.33 billion.

Going forward, PetChem expects its operations to be influenced by fluctuations in international petrochemical products prices, global economic conditions and utilisation rate of its production facilities.

“With improved plant maintenance programme and supplier relationship management, the group expects to achieve better plant utilisation for the year,” said Petronas.

For its olefins and derivatives segment, the group expects the market to remain challenging due to lower product prices in 2H2014.

Meanwhile, for its fertilisers and methanol segment, the group expects the price for urea to continue falling throughout the year, while the price of methanol is expected to stabilise.

The group said that its smaller methanol facility will be facing statutory turnaround maintenance activities, which will be the last of its heavy statutory turnaround cycle.