PETALING JAYA: Petronas Chemicals Group Bhd (PetChem) has recorded its highest net profit since its listing for the financial year ended Dec 31, 2018 (FY18) with a 19.2% growth year-on-year (y-o-y) to RM4.98bil.
This was on the back of a higher earnings before interest, taxes, depreciation and amortisation of RM7bil, further supported by a lower tax expense.
Revenue for FY18 grew 12% y-o-y to RM19.6bil, driven by a higher production and sales volume, coupled with improved average product prices.
PetChem sustained an excellent operational performance with a plant utilisation rate of 92%, notwithstanding the heavy statutory turnaround activities completed at several of its major plants during the year.
Average product prices were higher during most of 2018, lifted by the buoyant crude oil prices then.
In a statement yesterday, PetChem managing director and CEO Datuk Sazali Hamzah said: “I am pleased to report another solid year for PetChem as a result of effective implementation of our operational and commercial strategies.
“It also reflects the group’s capability and dedication in achieving excellence through planning and focused execution, particularly during heavy turnaround activities,” Sazali said.
He also pointed out that the group’s petrochemical plants at the Pengerang Integrated Complex (PIC) were progressing well at 96% project completion.
The plants are expected to commence commercial operations in the second-half of this year.
Going forward, the demand outlook for petrochemical products remains strong in the Asia-Pacific region, despite the currently softening petrochemical product prices.
“With our strong operational performance, combined with new product offerings from PIC, PetChem is well-positioned to address market challenges,” he said.
The board of directors of PetChem have declared a second interim dividend of 18 sen per share for FY18 in view of the strong performance.
This amounts to a dividend payout of RM1.44bil, payable in March 2019.
On a cumulative basis, PetChem’s total dividend for FY18 stands at 32 sen per share or RM2.56bil, making it the highest payout of the group.
According to AmInvestment Bank, PetChem’s higher revenue for FY18 on a y-o-y basis was due to higher product prices, a slight one-percentage point improvement in its plant utilisation rate to 92% and the full-year contribution of Petronas Chemical Fertiliser Sabah (formerly Sabah Ammonia Urea plant) in May 2017.
“Together with a five-percentage point reduction in the effective tax rate to 10%, FY18 core net profit climbed 23%.
“This is the group’s best earnings performance since its listing in 2010,” it said in a recent note.
The research house has also raised PetChem’s FY18 to FY20 earnings by 12% to 3% as FY18 net profit exceeded expectations, coming in at 9% to 15% above AmInvestment Bank and consensus estimates.
AmInvestment Bank has upgraded its recommendation on PetChem to a “buy” from a “hold”, with a higher fair value of RM10.40 per share, based on an unchanged FY19 enterprise multiple (EV/Ebitda) of 10 times.