KUALA LUMPUR, June 25 – PETRONAS Chemicals Group Berhad (PCG) has announced its financial results for the first quarter of the Financial Year Ending 31 December 2023 (1Q 2023), reporting a Profit After Tax (PAT) of RM536 million. Despite global economic uncertainties and softening consumer and manufacturing demand, PCG demonstrated financial resilience with an 11% increase in PAT compared to the previous quarter. During 1Q 2023, the group faced challenges such as declining average product prices, particularly urea, as well as higher utilities and fuel costs.
However, PCG’s financial performance remained strong, showcasing its ability to adapt and navigate through market fluctuations. Key highlights of PCG’s 1Q 2023 results compared to the previous quarter include a 13% decline in revenue to RM7.6 billion due to lower sales volume caused by weak demand in the face of global economic uncertainties and declining energy prices. Earnings Before Interest, Taxation, Depreciation, and Amortisation (EBITDA) decreased by 38% to RM1.1 billion, primarily attributed to lower sales volumes, reduced product spreads, higher utilities and fuel costs, as well as pre-operating costs from a joint-operating company.
The EBITDA margin also declined to 14%. Despite these challenges, PCG achieved an 11% increase in PAT to RM536 million. This was driven by higher contributions from joint ventures and associates, particularly BASF PETRONAS Chemicals Sdn. Bhd. (BPC), which experienced higher spreads from acrylic and increased sales volume. The sales volume of basic chemicals declined by 9% in 1Q 2023, mainly due to maintenance activities at various facilities, resulting in a plant utilization rate of 96% compared to 100% in the previous quarter.
Managing Director/Chief Executive Officer, Ir. Mohd Yusri Mohamed Yusof, acknowledged the challenging start to the year but highlighted the resilience displayed by PCG. While there were positive movements in selected regions, the overall chemical sector remained cautious due to volatile energy prices. Looking ahead, PCG maintains a cautious outlook for 2023, considering recent developments in the US banking sector, the Russia-Ukraine conflict, and slower-than-expected recovery in China.
However, the company anticipates a decrease in gas and utilities costs in the coming quarters. PCG will continue to focus on optimizing plant efficiency and commercial excellence to mitigate the potential impact of an economic downturn. Ir. Mohd Yusri emphasized PCG’s sustainable growth plan for both basic and specialty chemical value chains, as the chemical industry is projected to grow by approximately 3% annually.
The company is committed to capturing future demand in expanding industries such as pharmaceuticals, automotive, and construction. Regarding the Pengerang Integrated Complex (PIC), PCG expects to bring its petrochemical plants on board in the fourth quarter of the year, following the gradual start-up and progress in commissioning works. Furthermore, PCG announced the divestment of a 25% equity interest in PETRONAS Chemicals Fertiliser Sabah Sdn Bhd (PCFS) to Sabah State Government’s wholly owned company, SMJ Sdn Bhd.
This strategic move solidifies the joint commitment to ensure the long-term sustainability of PCG’s East Malaysian business operations. PCG remains focused on its growth strategy and is determined to overcome challenges, capitalize on market opportunities, and contribute to the sustainable development of the chemical industry and communities it serves.
