PETALING JAYA: Petronas Chemicals Group Bhd
’s (PetChem) performance for the financial year ended December 2025 (FY25) is an indication of global economic conditions which have proven to be tough.
The integrated chemicals producer recently announced it suffered a RM2.14bil loss for FY25.
MBSB Research said the industry has been marked by persistent oversupply, subdued downstream demand and weaker product spreads.
“Group earnings were dragged into losses, primarily due to the olefins and derivatives (O&D) and specialty chemicals segments, which were weighed down by pricing pressures, foreign-exchange losses and asset impairments.”
However, the fertiliser and methanol segment remained resilient, supported by stable agricultural demand.
According to MBSB Research, PetChem’s 10% year-on-year (y-o-y) revenue loss came on the back of weaker prices and foreign-exchange headwinds.
“Plant utilisation averaged 88% in FY25, affected by a combination of unplanned disruption, notably a utilities outage at the Kertih Integrated Petrochemical Complex and feedstock supply disruption at PC Fertiliser Kedah,” it said.
It added the group’s loss was significantly below its and consensus expectations, and maintained its “neutral” call on the group with an unchanged target price of RM3.01.
Similarly, Kenanga Research said PetChem’s earnings were below its and consensus forecasts.
On a quarterly basis, PetChem reported a loss of RM305mil, particularly due to losses from Pengerang Petrochemical Company.
Kenanga Research added revenue remained relatively the same, declining by 2.8% due to lower product prices, but this was partially offset by stronger overall plant utilisation of 96% versus 90%.
It is worth noting the group is scheduled to begin a plant turn-around of Asean Bintulu Fertiliser in April 2026, and a major Kertih Complex plant turnaround will also commence in April 2026, indicating a weaker plant utilisation outlook in the second quarter of financial year 2026.
On its outlook for PetChem, Kenanga Research said it expects the group to still be in the red for FY26, albeit lower losses y-o-y as it believes spreads could still improve gradually throughout 2026.
“While China’s anti-involution policy has only shown early signs of cuts and the sectors involved were indirect investments in fixed assets, product prices for O&D division remain weak hovering at about US$900 per tonne,” it noted.
With that, the research house maintained an “outperform” call on the counter with a lower target price of RM4.10 from RM4.70, and cut its FY26 earnings for PetChem by 62% after adjusting for lower US dollar level against the ringgit.
Meanwhile, Hong Leong Investment Bank Bhd (HLIB) Research said it will remain cautious on PetChem’s outlook.
It said demand for O&D products and urea prices remain soft, the latter being affected by buyer purchase delays.
“We are also cautious on the specialties segment due to softer demand in the construction and automotive markets,” HLIB Research said.
With that, the research house has forecast a core net loss of RM327.5mil for FY26 and cut core net profit forecast for FY27 by 88% to reflect sustained weakness in O&D average selling prices and lower sales volumes.
“We maintain our ‘sell’ rating with a target price of RM2.04. We expect the petrochemical sector to remain challenging on the back of China’s aggressive capacity expansion drive, coupled with unexciting demand outlook from the downstream sectors,” HLIB Research added
