KUALA LUMPUR: Petronas Chemicals Group Bhd
's performance in the third quarter was "severely affected" by forex losses, mainly for its investment in Pengerang Petrochemical Company Sdn Bhd (PPC).
During the quarter under review, the US dollar weakened against the ringgit to 4.107 on Sept 30, 2024, from 4.721 on June 30, 2024, which negatively impacted the group's bottom line.
The group's net profit swung to a net loss of RM789mil from a net profit of RM424mil in the year-ago quarter, translating to a loss per share of 10 sen against an earnings per share of five sen previously.
Revenue during the quarter was RM7.99bil, up from RM6.78bil.
According to PetChem, its profit after tax, excluding the forex loss, is estimated at RM352mil.
PPC is a 50:50 joint-venture company between PetChem and Saudi Aramco located within the Pengerang Integrated Complex (PIC) in Johor.
It is a US dollar functional currency company, with the recent weakening of the greenback resulting in an unrealised forex loss on revaluation of payables of RM536mil recorded in PetChem.
Additionally, PetChem said it provided a US dollar-denominated shareholders loan to PPC, which was also exposed to unrealised forex loss of RM492mil.
However, the group said its commodities segments recorded improvement during the quarter with an average plant utilisation of 92%, which brought up production volumes.
The specialities segment recorded a slight decrease in both production and sales as demand softened amid higher availability of products.
Over the nine months period, PetChem recorded a net profit of RM656mil against net profit of RM1.58bil in the year-ago period, while revenue rose to RM23.21bil from RM21.45bil previously.
PetChem managing director and CEO Mazuin Ismail said the group is gearing up for commercial operations at its petrochemical units in PPC at the year-end.
However, he added that the start-up of the large-scale capital-intensive assets will have material impact to the group's earnings, which includes currency translation effects.
"If the US dollar continues to rebound in 4Q24, we will see partial reversal of the unrealised forex loss," said Mazuin.
He added that the olefins and derviatives segments is seeing some softness on seasonal weak downstream demand amid supply addition from new Northeast Asian capacities.
Meanwhile, the fertiliser and methanol segment is stabilising as key suppliers focus on fulfiling term commitments.
Mazuin added the group remains cautious on the specialities segment given the continued macroeconomic uncertainties.
