KUALA LUMPUR: Petronas Chemicals Group Bhd (PCG) recorded revenue of RM28.7 billion for the full year ended December 31, 2023 (FY23), a marginal decline against RM29.0 billion posted in FY22 amidst a challenging year for the global chemical industry.
In a statement, the company said the moderating economic growth and slower-than-anticipated recovery in China weighed in on the industry, leading to lower product demand and softening prices.
Concurrently, geopolitical tensions kept energy prices high, resulting in higher feedstock costs and margin compression.
PCG registered a net profit of RM1.8 billion, declining against RM6.3 billion in FY22.
Plant utilisation was recorded at 85 per cent compared to the previous year’s 89 per cent in the face of operational challenges, as well as several statutory turnarounds and maintenance activities undertaken during the year.
In the fourth quarter (Q4) of FY23, revenue improved by 6 per cent quarter-to-quarter (QoQ) to RM7.2 billion on higher production and sales volumes.
However, net profit for Q4 declined to RM142 million on lower product spreads and higher energy and utilities costs.
PCG announced a second interim dividend payout of 5 sen per share, amounting to RM400 million.
The total dividend declared in FY23 amounts to RM1.0 billion, representing 61.3 per cent of the net profit.
PCG managing director and chief executive officer Mazuin Ismail said FY23 was a challenging year for the company, both on the market and operational fronts.
“As we navigated a very volatile chemicals market throughout the year, internally, we faced interruptions at a few of our plants, which led to a weaker performance in our olefins and derivatives (O&D) and fertilisers and methanol (F&M) segments.
“Simultaneously, the specialties segment continued to be impacted by prolonged destocking and intensified competition from Chinese producers.
“Despite the persistent low spreads and operational challenges, we remain resilient with a healthy financial position, enabling us to exceed our commitment to our shareholders,” Mazuin said in a statement.
On the chemicals market outlook, he said, the challenges seen in 2023 are expected to continue into 2024 as economic recovery is expected to remain sluggish but with pockets of opportunities in various sectors.
“Ethylene prices should see some support later in the year as consumption improves and drives the demand for polyethylene in packaging applications.
“On the F&M side, urea prices are expected to be stable, supported by planting season in India and the continued ban on urea exports from China.
“Methanol prices may ease as downstream demand is expected to remain soft, likewise for specialty chemicals,” Mazuin said.
He said the chemicals industry is cyclical, and PCG expects the current downcycle will turn around as demand catches up with supply.
“We have successfully resolved most of our operational challenges and are strategically positioning ourselves to seize opportunities as the market rebounds,” he said further.
On growth projects, Mazuin stated that performance test runs are ongoing at the petrochemical facilities in Pengerang.
“We are also looking forward to achieving commercial operations at other new plants this year, namely the melamine plant in Gurun, Kedah, the specialty chemicals plant in Sayakha, India, for the production of pentaerythritol and calcium formate, as well as the expansion of the 2-Ethylhexanoic Acid (2-EHA) plant in Gebeng, Pahang, through our joint venture (JV) company, BASF Petronas Chemicals.
“These three facilities, with a combined annual capacity of about 130,000 metric tonnes per annum, mark several milestones in our 2-pronged strategy towards achieving sustainable growth,” he said.
