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PETALING JAYA: Petronas Chemicals Group Bhd’s (PetChem) net profit contracted 14.8% to RM471 million for the third quarter ended Sept 30, from RM553 million reported in the same quarter of the previous year, on a foreign exchange loss on revaluation of shareholder loan to a joint operation company as well as lower interest income which was offset by lower tax expense.
Revenue for the quarter came in at RM3.46 billion, a 5.8% reduction from RM3.67 billion reported previously.
According to the group’s Bursa disclosure, its olefins and derivatives reported a RM26 million increase in profit after tax in Q3’20 at RM258 million, while its fertilisers and methanol business saw a comparable profit after tax of RM323 million for the quarter from RM315 million recorded previously.
For the cumulative three quarters of 2020, PetChem’s net profits tumbled 53% to RM1.16 billion from RM2.47 billion reported in the same period of last year.
Revenue, for the period declined 13.3% to RM10.53 billion from RM12.14 billion registered previously.
In regard to its outlook, Petchem stated that its result is expected to be primarily influenced by global economic conditions, as petrochemical products prices which have a high correlation to crude oil price, utilisation rate of its production facilities and foreign exchange rate movements.
It stated that it has not been spared from the adverse impact from the Covid-19 pandemic that continues to affect the global economy.
Moving forward, the group said it will continue with its operational excellence programme and supplier relationship management to sustain plant utilisation level at above industry benchmark.
It anticipates product prices will be stable in line with current quarter product prices.
In a separate filing, the group announced that its board has approved the cessation of the Butanediol Complex by BASF Petronas Chemicals Sdn Bhd (BPC), a joint venture between Petchem and BASF Nederland BV, as part of a portfolio realignment.
The Butanediol plant will cease operations in March 2021, however, the other plants in the facility will not be impacted.
BASF Intermediates Asia Pacific’s senior vice president, Vasilios Galanos commented that the measure is part of its strategy to improve its competitiveness in the markets and to add long-term value to both its customers’ businesses and to BASF, as well as BPC.
PetChem’s managing director and CEO Datuk Sazali Hamzah explained that the decision will have long strategic benefits to BPC and its stakeholders, given the shift in business landscape as well as its unfavourable long term prospect.
“In line with PetChem’s own expansion plans which include developing a specialty chemicals segment, we are looking forward to producing new high value products using advanced technologies,” he said in a statement.
“This would enable us to access to new markets and customers, thus further enhancing our growth for business sustainability.”
BPC’s managing director Marko Murtonen explained that the closure is the result of significant overcapacities in the region due to recent investments into new coal-based BDO production sites.
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