PetChem Q4 earnings slightly up

PETALING JAYA: Petronas Chemicals Group Bhd's net profit for the fourth quarter ended Dec 31, 2017 rose 1.8% to RM1.01 billion from RM987 million a year ago in line with higher earnings before interest, tax, depreciation and amortisation, partially offset by higher tax expense arising from recognition of deferred tax liabilities and higher depreciation at Sabah Ammonia Urea (Samur).
The group’s revenue increased 20% to RM4.74 billion compared with RM3.95 billion in the previous year's corresponding quarter mainly due to strengthening prices, further supported by higher sales volumes, partially offset by weakening US dollar.
For the full year period, its net profit increased 42% to RM4.18 billion from RM2.93 billion a year ago in line with higher revenue.
It has declared a second interim single tier dividend of 15 sen per share, amounting to RM1.2 billion to shareholders for the year ended Dec 31, 2017.
The group recorded higher revenue of RM17.41 billion, which increased 26% from RM13.86 billion in the corresponding year on the back of improved product prices and higher sales volumes, as well as the impact of strengthening US dollar.
The results of the group’s operations are expected to be primarily influenced by global economic conditions, utilisation rate of its production facilities and petrochemical products prices, which have a high correlation to crude oil prices, particularly for the olefins and derivatives segment.
"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 level at above industry benchmark," it said.
The group foresees the olefins and derivatives market to strengthen in the near term, drawing support from limited supply due to regional turnarounds, supported by healthy demand for upcoming festive season and higher feedstock prices.
The group expects the fertiliser segment to be firm as a result of limited supply in the Middle East and supported by return of demand in Asia. Methanol prices are also forecast to strengthen owing to healthy downstream demand and tight supply in China.