KUALA LUMPUR, Feb 26 — Petronas Chemicals Group Bhd’s (PCG) net profit shrank to RM1.69 billion in the financial year ended Dec 31, 2023 (FY2023) from RM6.32 billion amid a tough year for the global chemicals industry.

Revenue was slightly lower at RM28.67 billion from RM28.95 billion, it said in a statement today.

“FY2023 was a tough year for PCG, both on the market and operational fronts.

“As we navigated a very volatile chemicals market throughout the year, internally, we faced interruptions at a few of our plants, which led to a weaker performance in our Olefins and Derivatives (O&D) and

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Fertilisers and Methanol (F&M) segments,” managing director/chief executive officer Mazuin Ismail said.

The Specialties segment continued to be impacted by prolonged destocking and intensified competition from Chinese producers.

The group highlighted that moderating economic growth and slower-than-anticipated China recovery weighed on the industry leading to lower product demand and softening prices.

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Concurrently, geopolitical tensions kept energy prices high, resulting in higher feedstock costs and margin compression.

The group registered a profit after tax (PAT) of RM1.8 billion, down from RM6.3 billion in FY2022.

Meanwhile, plant utilisation was recorded at 85 per cent compared to the previous year’s 89 per cent in the face of operational challenges as well as several statutory turnarounds and maintenance activities undertaken during the year.

For the fourth quarter of FY2023, net profit fell to RM112 million from RM481 million, on the back of lower revenue of RM7.21 billion against RM8.70 billion previously.

On the chemicals market outlook, Mazuin reckoned that the challenges seen in 2023 are expected to continue into 2024 as economic recovery is expected to remain sluggish but with pockets of opportunities in various sectors.

“Ethylene prices should see some support later in the year, as consumption improves and drive the demand for polyethylene in packaging applications.

On the F&M side, urea prices are expected to be stable, supported by the planting season in India and the continued ban on urea exports from China.

“Methanol prices may ease as downstream demand is expected to remain soft, likewise for specialty chemicals” he noted.

Mazuin said the chemicals industry is cyclical and expects the current downcycle will turn as the demand catches up with supply.

On growth projects, Mazuin said that performance test runs are currently ongoing at the petrochemical facilities in Pengerang.

Thus, PCG is also looking forward to achieving commercial operations at other new plants this year, namely the melamine plant in Gurun, Kedah, the speciality chemicals plant in Sayakha, India, for the production of pentaerythritol and calcium formate as well as the expansion of the 2-Ethylhexanoic Acid plant in Gebeng, Pahang through a joint-venture company, BASF PETRONAS Chemicals.

“These three facilities, with a combined annual capacity of about 130,000 metric tonnes per annum, mark several milestones in our two-pronged strategy towards achieving sustainable growth,” he added.

PCG also announced a second interim dividend of 5.0 sen per share amounting to RM400 million, payable on March 26, 2024.

The total dividend declared in FY2023 amounted to RM1.0 billion, representing 61.3 per cent of PAT and Non-Controlling Interests. — Bernama