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Petronas Chemicals has outlined a schedule for planned maintenance activities across its plants, including at the Asean Bintulu Fertilizer plant in 4QFY24. — Photo from Facebook/Archibald Frankie Undam

KUCHING (Feb 27): Petronas Chemicals Group Bhd’s (Petronas Chemicals) earnings for financial year 2023 (FY23) came in below expectations at 78 per cent of consensus’ full year estimates.

Petronas Chemicals’ 4QFY23 earnings down by 76.7 per cent year on year (y-o-y) to RM112 million. The lower earnings were mainly caused by lower products spreads and lower sales volume.

MIDF Amanah Investment Bank Bhd (MIDF Research) saw that Petronas Chemicals’ 4QFY23 revenue slipped by 17.1 per cent y-o-y to RM7.2 billion, due to lower product prices and sales volumes.

This was partially offset by revenue contribution from Perstorp.

“Overall plant utilisation rate in FY23 was lower at 85 per cent due to higher plant maintenance activities during the year which resulted in lower production volume.

“The group’s operational outcomes are primarily affected not only by global economic conditions, but also petrochemical product prices which are closely linked to crude oil prices; utilisation rate of production facilities; and movements in foreign exchange rates.”

Petronas Chemicals’ production activities relies on regular maintenance and repair operations, as well as sufficient feedstock and utility supply.

“All in all, we are expecting a slower growth for petrochemicals coming into 2024.”

Kenanga Investment Bank Bhd (Kenanga Research) recapped that its memorandum of understanding (MoU) with Sarawak Petchem for a joint feasibility study for a low-carbon ammonia and urea plant is logical for the group as Sarawak Petchem possesses the advantage due to its proximity to upcoming Kasawari carbon capture facility.

“The company anticipates its overall plant utilisation to exceed 90 per cent in FY24 assuming minimum unplanned plant showdowns, following the completion of significant maintenance activities in FY23.”

Petronas Chemicals has outlined a schedule for planned maintenance activities across its plants – the fertiliser plant in Gurun, Kedah in 1QFY24, Methanol Plant 1 in 2QFY24, Ethylene and Polyethylene plants in Terengganu in 3QFY24, and the Asean Bintulu Fertilizer plant in 4QFY24.

“Polyolefin prices have rebounded to around US$1,000 per MT since the beginning of FY24, following a low of US$900 per MT in 4QFY23, which we consider to be the cycle’s bottom.

“The future recovery of polyolefin prices is closely tied to the economic recovery in China. Additionally, the specialty chemicals division experienced its lowest spreads in FY23 in our view, with initial signs of recovery emerging since the onset of FY24.”

Lower earnings in FY23 for Petronas Chemicals