Petronas Chemicals Boosted By Quarterly Growth In Profit

Petronas Chemicals Boosted By Quarterly Growth In Profit

Kuala Lumpur, 27 May – PETRONAS Chemicals Group Bhd posted another record quarterly profit in the first quarter of Financial Year Ending December 31, 2022 1Q 2022 on the back of higher product prices and continued strong demand.

The Group’s 1Q 2022 PAT of RM2.1 billion represents 41% year-on-year improvement compared to 1Q FY2021, while surpassing 4Q 2021 PAT of RM2.0 billion by 2% quarter-on-quarter.  

The solid financial performance is mainly attributed to higher prices across all product segments, especially ammonia and urea, underpinned by elevated energy prices amidst continued strong global demand and supply disruptions.   

Key quarterly highlights comparison 

Revenue increased 42% year-on-year to RM6.6 billion boosted by higher average product prices, fueled by a combination of continued high demand unmet due to prolonged supply disruptions; and higher crude oil and natural gas prices resulting from geopolitical crisis. 

Earnings Before Interest, Taxation, Depreciation and Amortisation (EBITDA) margin was comparable at 37% (1Q 2021: 36%) due to the higher product spreads. 

EBITDA and PAT increased by 43% and 41% year-on-year to RM2.4 billion (1Q 2021: RM1.7 billion) and RM2.1 billion (1Q 2021: RM1.5 billion) respectively, in line with improved margin coupled with higher earnings contribution from specialty chemicals unit, BRB International.

Sales volume remained high in 1Q 2022 at 1.9 million metric tonnes despite lower plant utilisation rate of 87% (1Q 2021: 90%) as a result of higher statutory turnaround and maintenance activities. 

Commenting on the results, Managing Director/Chief Executive Officer, Ir Mohd Yusri Mohamed Yusof says, “We are delighted with the strong start to the year. 

“Compared to a year ago, average product prices are higher by 20% to 60%. While we observed some seasonal moderation of prices in certain products compared to 4Q 2021, product prices remain firmly robust as Russia-Ukraine conflict continues to escalate, further supported by strong demand.” 

“Despite market volatility and supply chain challenges, PCG’s vigilance and commercial excellence strategy enabled the Group to meet sales target even as certain cities in China were under lockdown for several weeks,” he adds.

More on quarterly growth

Updating on the Group’s growth projects, Yusri said “We have commenced start-up operations at Pengerang Integrated Complex as planned in early May and the commissioning activities are progressing accordingly.” 

Last week, PCG announced the acquisition of Perstorp Holding AB, a global leader in sustainable specialty chemicals for a base purchase consideration of €1.538 billion.

“The acquisition of Perstorp is a major milestone for PCG in establishing a key platform to diversify into the specialty chemicals industry and capture new growth opportunities.

“This acquisition will also provide us critical talent, know-how, technological platforms and proven customer channels to address the pressing needs of the market for more sustainable solutions,” Mohd Yusri says. 

The acquisition is a major addition to a series of investments made by PCG to develop a Specialty Chemicals segment that will complement its existing gas-based commodities business.

In 2019, PCG acquired BRB Group, which specialises in silicone-derived chemicals. Between 2020 and 2021, PCG embarked on several greenfield projects via strategic partnerships with established international chemicals companies.

“The specialty chemicals segment is expected to drive PCG’s goal to generate additional 30% revenue from non-traditional business by 2030,” he says. More on Petronas @BusinessNewsMy