Titan net profit surges 154% in Q3

  • Business
  • Wednesday, 08 Nov 2006

KUALA LUMPUR: The country's largest petrochemical producer, Titan Chemicals Corp Bhd, reported a 154% jump in net profit to RM123.7mil in the third quarter ended Sept 30 from RM48.7mil in the corresponding period last year. Sales rose 25% to RM1.5bil from RM1.2bil previously.  

Managing director Thomas P. Grehl attributed the improved results to near-record high polymer prices and lower feedstock costs, which resulted in better margins.  

Production capacity was “keeping up with demand but not exceeding'', he said, adding that this trend was expected to continue throughout next year. 

“We expect to continue to take advantage of the high demand and good prices,” Grehl told reporters after releasing the company's results yesterday.  

In the third quarter, olefins production rose to 252 kilo tonnes (KT) from 245KT in the second quarter. The company's polymer plants were consistently operating at over 90% capacity.  

Polymer prices were expected to stabilise in the final quarter in line with lower energy costs, Grehl said, adding that the lower inventory levels both in Malaysia and regionally would help support price and demand.  

Net profit in the quarter under review of RM123.7mil was a growth of 309% from the second quarter's RM30mil. Earnings per share improved to 7.07 sen from 3.14 sen in the same quarter a year ago.  

Titan also declared a dividend of 3 sen for the quarter just ended.  

For the first nine months, net profit rose to RM532.1mil from RM307.4mil a year ago, while revenue rose to RM4bil against RM3.4bil a year earlier.  

The group's Indonesian unit, PT Titan, broke even during the third quarter on cashflow basis due to improved margins. Its market share rose to 25% in the third quarter from 8% in the same period a year ago. PT Titan's exports, which were primarily to China, rose marginally to 11% during the third quarter from 9% in the previous quarter. 

Titan Petchem (M) Sdn Bhd vice-president (polymer business) Jay Diau Jia Yih said PT Titan's market share was likely to increase to 45% next year from 25% presently, given that capacity would increase to 300,000 tonnes from 170,000 this year.  

Titan completed the acquisition of PT Titan in April.  

He also said revenue contribution from the Indonesian operations would increase significantly next year. 

Grehl said the group was anticipated to perform better next year, given the growing demand as China was expected to grow 8% to 9% and South-East Asia, 5% to 7%.  

Furthermore, petrochemical companies in China and Thailand had been hit with heavy anti-dumping duties from the European Union, resulting in orders flowing to Malaysia, he added.  

To take advantage of the high demand, the group would look at acquisition opportunities, efforts to remove bottlenecks from its existing crackers and find alternatives to increase capacity, Grehl said.  

He added that Titan's expansion projects were also on schedule.  

Its butadiene plant will be ready for operations by end of next year while its new furnace would be completed by March. The new propylene plant is already one quarter completed.  

Titan Petchem vice-president (petrochemicals and engineering) Wes Vaughan said butadiene was a high demand product and had the highest margins among petrochemical products. 

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