PetChem declares 25 sen dividend after solid 2Q, sees prices stabilising in 2H

KUALA LUMPUR (Aug 22): Petronas Chemicals Group Bhd (PetChem), which saw net profit inch higher in the quarter ended June 30 despite lower sales volume on plant turnaround activities, expects prices of olefins and derivatives to stabilise with demand recovery following the easing of restrictions in China ahead of year-end restocking activities.

However, the group sees urea prices remaining high relative to the historical prices, albeit with some correction in the second half of this year (2H2022), it said in a statement on its latest quarter results on Monday (Aug 22).

“The group anticipates product prices for olefins and derivatives to remain stable amidst balanced supply with demand recovery.

“Fertiliser and methanol product prices are expected to be moderate supported by high crude oil prices,” it said.

PetChem's net profit rose 0.48% to RM1.87 billion in the second quarter ended June 30, 2022 (2QFY22) from RM1.86 billion a year ago as higher product prices more than offset the impact of plant turnaround activities in the quarter.

Earnings per share was unchanged at 23 sen. PetChem declared single tier interim dividend of 25 sen per share or RM2 billion, up from 23 sen per share or RM1.84 billion last year.

Plant utilisation rate fell to 72% from 97% last year on statutory turnaround and maintenance activities in its fertiliser plants in Sipitang, Sabah and its methanol plant in Labuan.

The low utilisation rate in 2QFY22 brought the half-year average down to 79% in the six months ended June 30, 2022 (6MFY22) from 94%. The group expects utilisation rate to exceed 90% in 2H2022.

Nonetheless, 6MFY22 net profit rose 18.79% to RM3.95 billion or 49 sen per share, from RM3.32 billion or 42 sen per share a year ago, with revenue rising 28.53% to RM13.22 billion from RM10.28 billion in line with higher product prices.

Bloomberg consensus forecast put PetChem’s FY22 earnings target at 95.05 sen per share at the time of writing.

Commenting on prospects, PetChem chief executive officer Mohd Yusri Mohamed Yusof stated that the start-up of Pengerang International Complex petrochemical facilities has commenced in phases in July.

“On other growth projects, the construction of our nitrile butadiene latex plant in Pengerang and the specialty ethoxylates and polyols [plant] in Kerteh are also progressing well, ahead of [the scheduled] operation date in 2H2023,” he said.

On the proposed acquisition of Perstorp Holdings AB, Yusri stated that the group expects to complete the transaction in early 4Q2022.

Shares of PetChem slipped three sen or 0.34% to RM8.71 at noon market break, valuing the group at RM69.68 billion.