Petronas Chemicals pushes ahead with two-pronged strategy

  • Corporate News
  • Tuesday, 16 Jun 2020

From left: Petronas Chemicals MD/CEO Datuk Sazali Hamzah, chairman Datuk Md Arif Mahmood and chief financial officer Rashidah Alias

KUALA LUMPUR: Petronas Chemicals Group Bhd will push ahead with its two-pronged strategy to sustain its strength in basic petrochemicals and to diversify into derivatives and solutions.

Its managing director and CEO Datuk Sazali Hamzah said on Tuesday the strategy would enable it to deliver sustainable long-term growth for its business and add value to its customers and also benefit from higher margins.

“We also aim to deliver incremental value through the expansion of our portfolio, ” he said in the company's statement which was issued after it held its 22nd AGM which was held on-line.

He said the Covid-19 pandemic and Opec+ fallout have heightened economic as well as market uncertainties.

“Product prices will generally remain under pressure in this difficult environment. We believe that these challenges are temporary and the market will gradually recover towards the end of the year and into 2021.

“Hence, it is imperative that we remain resilient as we face the full impact of the pandemic and subsequent economic downturn. We are confident that our strong fundamentals will take us through this challenging period, ” he added.

Commenting on the diversification into derivatives, he said Petronas Chemicals acquired Da Vinci Group (DVG), the world’s largest independent producer and formulator of silicones, lubricant oil additives and chemicals.

This would provide Petronas Chemicals a ready-made business in high-growth end markets such as personal care, coatings, construction and healthcare. The acquisition would also open Petronas Chemicals to new markets and customers, further expanding its geographical footprint.

“Our Pengerang Integrated Complex (PIC) petrochemical project is another platform to provide further growth opportunities in derivatives and specialty chemicals. We are gearing for full start-up towards commercial operations.

“However, this will depend on how the market recovers from the pandemic, ” he added.

Sazali said Petronas Chemicals also achieved two final investment decisions (FIDs) for the development of a butadiene derivative plant in PIC and a specialty chemicals plant in Kertih Integrated Petrochemical Complex (KIPC).

This will enable the group to move across the value chain and get closer to its end users, effectively bringing it closer towards becoming a total solutions provider.

Commenting on the FY19 financial performance, he said Petronas Chemicals sustained best-in-class plant utilisation rate at 92% despite undertaking one of its most intensive plant turnaround programmes.

As a result, it sustained high production volume at 10.4 million tonnes per annum (tpa).

Petronas Chemicals also attained world-class level of order fulfillment reliability at 97% up from 93% in 2018. Consequently, Petronas Chemicals recorded high sales volume at 8.4 million tpa comparable to that of 2018.

“This achievement comes as a result of Petronas Chemicals’s continuous focus on effective plant reliability and turnaround strategies, coupled with collaborative efforts with our suppliers and vendors to ensure supply chain efficiency.

“Moving forward, we aim to attain operational and commercial performance in 2020 that is comparable to 2019, ” Sazali said.

In FY19, Petronas Chemicals posted profit after tax of RM2.8bil and it declared a total dividend of 18 sen or RM1.44bil translating into a dividend payout ratio of 51.2% of profit after tax and non-controlling interests.

The AGM was chaired by chairman, Datuk Md Arif Mahmood, who is also Petronas executive vice president & CEO downstream, together with Sazali and chief financial officer Rashidah Alias.

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