Petronas Chemicals' Q1 earnings down 17.8% on strong ringgit, forex losses

PETALING JAYA: Petronas Chemicals Group Bhd's (PetChem) net profit for the first quarter ended March 31, 2018 fell 17.8% to RM1.07 billion from RM1.30 billion a year ago, as the increase in sales volumes and product prices were offset by the strengthening of the ringgit, coupled with the impact of forex losses on its shareholder loans pursuant to the divestment of a 50% equity interest in a subsidiary.
Revenue increased by 5.5% to RM4.95 billion compared with RM4.70 billion in the previous year's corresponding quarter, primarily driven by higher sales volumes and product prices.
PetChem said the results of the group's operations are expected to be primarily influenced by global economic conditions, foreign exchange rate movement, utilisation rate of 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 be stable in the near term, drawing support from ample supply availability, on the back of healthy downstream demand and firm feedstock prices.
It expects the fertiliser segment to soften due to end of purchasing season for key markets and high inventory level in Southeast Asia. Methanol prices are also forecasted to soften in the near term owing to lackluster downstream demand from derivatives and methanol-to-olefins, compounded by sufficient supply within Southeast Asia and Northeast Asia.
At the noon break, PetChem shares were up 2 sen or 0.23% to RM8.71 on some 2.35 million shares done.