KUALA LUMPUR (May 29): Petronas Chemicals Group Bhd (KL:PCHEM) said on Wednesday that its first quarter net profit rose 26% from a year earlier, thanks to foreign exchange gain, as well as on lower energy and utilities costs.

Net profit for the three months ended March 31, 2024 (1QFY2024) was RM668.00 million compared to RM532.00 million over the same period a year earlier, Petronas Chemicals said in an exchange filing. Revenue for the quarter, however, slipped 0.8% year-on-year to RM7.50 billion, from RM7.56 billion.

“The group anticipates product prices for olefins and derivatives to stabilise on steady demand amid sufficient supply, post regional plant turnaround activities,” Petronas Chemicals said.

Fertiliser product prices will be subdued on lower fertiliser demand, following delayed planting season, while ample supply will keep a lid on methanol prices, the company said. For specialties, Petronas Chemicals expects “modest recovery in certain end markets”.

Plant utilisation rate — a measure of output as a percentage of its total capacity — was lower at 87% in 1QFY2024 versus 96% in the corresponding quarter last year mainly due to higher statutory turnaround activities that cut into production and sales volumes.

“Our immediate attention is focused on ensuring our production capacities across all segments are optimised and run smoothly,” said Petronas Chemicals managing director Mazuin Ismail.

The company has scheduled statutory turnaround for five of its plants in both the olefins-and-derivatives and fertiliser-and-methanol segments this year, he said. Statutory turnaround activity typically involves shutting down some of its refineries' operations for maintenance or upgrades.

Broadly, the company remains cautious of ongoing geopolitical tensions that are contributing to the volatility in energy and feedstock prices as well as the uncertain macroeconomic environment, Mazuin flagged.

“In addition, we are mindful of the potential impact of new capacities entering the market, contributing to an oversupply situation that will likely continue to keep pressure on product prices and margins,” he added.

No dividend was declared.

At noon trading break, shares of Petronas Chemicals were down 0.6% to RM6.76, valuing the state-owned company at RM54.08 billion ahead of the results announcement.