Petronas Chemicals Records Loss Of RM789 Mln In 3Q On Unrealised Forex Loss

KUALA LUMPUR, Nov 20 (Bernama) -- Petronas Chemicals Group Bhd (PCG) recorded a net loss of RM789 million in the third quarter compared to a net profit of RM424 million in the same period last year, dragged down by unrealised forex losses of RM1.1 billion.

However, revenue for the quarter jumped to RM7.986 billion against RM6.784 billion.

However, for the nine-month period, the integrated chemicals producer registered a net profit of RM656 million on the back of revenue of RM23.213 billion, according to its stock exchange filing.

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The group, in a separate statement, said it recorded loss after tax of RM762 million for the quarter, which was “mainly driven by unrealised forex losses on the revaluation of payables at Pengerang Petrochemical Company Sdn Bhd (PPC) and the revaluation of a shareholders loan to PPC.”

“During the quarter, the US dollar weakened against the Malaysian ringgit to 4.107 on 30 Sept 30, 2024 from 4.721 on June 30, 2024. Excluding the impact of forex loss, the group’s profit after tax (PAT) is estimated at RM352 million,” it said.

PPC is a 50:50 joint-venture company between PCG and Saudi Aramco located within the Pengerang Integrated Complex (PIC) in Johor. “PPC is a USD functional currency company and the recent weakening of the greenback against the local note resulted in unrealised forex loss on revaluation of payables of RM536 million, recorded in PCG,” it said.

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Additionally, PCG said it provided a US dollar-denominated shareholders loan to PPC “which was also exposed to an unrealised forex loss of RM492 million due to the unfavourable forex movement.”

“Including forex losses from other operations of RM86 million, total forex loss during the third quarter is RM1.1 billion,” it added.

Cumulatively for nine months, the group said revenue improved eight per cent year-on-year to RM23.2 billion compared to 2023, largely due to higher sales volumes including contributions from PPC.

However, earnings before interest, taxation, depreciation and amortisation (EBITDA) declined 10 per cent year-on-year to RM2.8 billion, attributed to negative earnings recorded by PPC due to unrealised foreign exchange loss on revaluation of payables as well as higher operating costs, it added.

It said profit after tax (PAT) contracted 53 per cent year-on-year to RM750 million and excluding the impact of forex loss, the group PAT is estimated at RM1.7 billion.

The group said during the third quarter, the commodities chemicals market was broadly mixed, on factors such as ongoing inflation, seasonal supply-demand shift and feedstock movement.

“Supply tightness supported prices for urea and mono-ethylene glycols while weak downstream demand put downward pressure on prices of methanol and polyolefins. The industry continues to contend with the effects of China's slower-than-anticipated economic growth and weakness in key demand drivers, keeping prices and spreads under pressure,” said PCG.

Commenting on PCG's performance, its managing director/chief executive officer Mazuin Ismail said the group’s financial performance for the quarter was severely affected by the adverse movement of the US dollar against ringgit “primarily from our investment in PPC.”

“Operationally, the performance of our core business improved in the third quarter as we recorded higher plant utilisation at our Malaysian operations, contributing to higher sales volumes. We have completed all performance test runs at our petrochemical units in PPC and are currently gearing up for commercial operations, targeted by the end of the year,” he said.

He added this will be a significant milestone for the group in delivering part of its long-term strategy to strengthen its basic chemicals business and selectively diversify into derivatives and speciality chemicals.

Apart from that, “the molecules available from the naphtha-based chain will allow them to expand their offerings beyond the current portfolio including to go further downstream for more specialised and innovative products.”

“Nonetheless, it is foreseeable that the start-up of these large-scale capital-intensive assets will have a material impact on the group's earnings, which includes currency translation effects that we saw during the quarter. If the US dollar continues to rebound in the fourth quarter of 2024, we will see a partial reversal of the unrealised forex loss.”

-- BERNAMA