KUALA LUMPUR (Aug 22): Petronas Chemicals Group Bhd's (PetChem) net profit slumped 66% to RM628 million for the second financial quarter ended June 30, 2023 (2QFY2023), from RM1.87 billion a year ago, in line with lower earnings before interest, tax, depreciation and amortisation and share of profit from joint ventures and associates.

Revenue for the quarter rose to RM7.11 billion, versus RM6.58 billion previously, largely due to higher sales volumes and inclusion of revenue from a recently acquired subsidiary.

Earnings per share dipped to eight sen per share from 23 sen.

PetChem declared a first interim dividend of eight sen per share to be paid on Sept 21.

For the cumulative six months ended June 30, 2023, net profit dropped to RM1.16 billion from RM3.95 billion a year earlier, despite posting higher revenue of RM14.67 billion from RM13.22 billion.

Reviewing its performance, the group said it recorded a higher plant utilisation rate of 89%, compared with 79% previously, as there was no statutory turnaround, and lower plant maintenance activities during the period resulted in higher production and sales volumes.

On its prospects, PetChem said the results of its operations are expected to be primarily influenced by global economic conditions, petrochemical product prices — which have a high correlation with crude oil prices, particularly for the olefins and derivatives segment — utilisation rates of production facilities, and foreign exchange rate movements.

“The utilisation of our production facilities is dependent on plant maintenance activities and sufficient availability of feedstock as well as utilities supply.

“The group will continue with its operational excellence programme and supplier relationship management to sustain plant utilisation levels at above the industry benchmark.

“The group anticipates product prices for [its] olefins and derivatives [segment] to improve slightly, supported by restocking activities prior to China’s Golden Week holiday (Oct 1 to 7).

“Fertiliser and methanol product prices are forecast to stabilise amid short supply in the region. For specialties, the group expects weaker sales and earnings development moving forward, in view of slower industrial growth impacting demand,” it said.

At the midday break on Tuesday (Aug 22), PetChem was 3.19% or 22 sen higher at RM7.12 a share, with 2.58 million shares done, giving the group a market capitalisation of RM56.96 billion.