Petronas Chemicals Q3 net profit slips on higher tax expense

PETALING JAYA: Petronas Chemicals Group Bhd (Petchem) reported a 2.7% decline in net profit to RM891 million for the third quarter ended Sept 30, 2016 from RM916 million in the previous corresponding period, due to higher tax expense.
Revenue for the quarter under review was down by 2.1% from RM3.64 billion to RM3.56 billion, dragged down by lower average product prices.
In a filing with the stock exchange, Petchem said average product prices for the olefins and derivatives segment were lower as they were affected by weaker crude oil price.
Besides that, the group said the decline in methanol price was due to lower demand for fuel additives whilst ammonia and urea prices were affected by oversupply in the market with new capacity additions.
Petchem said its 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.
It noted that the utilisation of the 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 to the previous year,” it said.
For nine months of the year, Petchem’s net profit fell 6.4% from RM2.08 billion to RM1.95 billion on the back of a 1.7% drop in revenue from RM10.09 billion to RM9.91 billion.