Asset write-off dents Petronas Chemicals Q2 results

PETALING JAYA: Petronas Chemicals Group Bhd saw its net profit for the second quarter ended June 30, 2016 slip 17% to RM462 million from RM557 million in the previous corresponding period, mainly due to assets write-off amounting to RM241 million in relation to the cancellation of its elastomers project.
Revenue for the quarter was down by 3.12% from RM3.31 billion to RM3.2 billion.
The group has proposed to declare an interim dividend of 7 sen per share.
In a filing with the stock exchange, Petronas Chemicals said it is of the view that its operations to be primarily influenced by global economic conditions, utilisation rate of our production facilities and petrochemical products prices which have a high correlation to crude oil prices, particularly for the olefins and derivatives segment.
It said the utilisation of its production facilities is dependent on plant maintenance activities and sufficient availability of feedstock as well as utilities supply. “With improved plant maintenance programme and supplier relationship management, the group aims to achieve better plant utilisation for 2016 compared with the previous year,” it noted.
Segment-wise, Petronas Chemical expects the market olefins and derivatives market to be stable given tight supply in the region amidst weak economic outlook and slow end-product demand.
For the fertilisers and methanol, it foresees the segment’s feedstock supply reliability for 2016 to improve with additional gas supply from upstream via a new pipeline.
“The fertiliser market is expected to remain challenging in view of ample supply coupled with weaker demand. Methanol price may also remain challenging as a result of weak crude oil prices,” it added.
Petronas Chemicals’ six-month earnings dropped 9.29% from RM1.16 billion to RM1.05 billion on the back of a flat revenue of RM6.35 billion compared with RM6.45 billion in the same period a year ago.