Petronas Chemicals Q1 net profit more than doubles, plant shutdowns loom
KUALA LUMPUR (Nikkei Markets) -- Malaysia's state-owned Petronas Chemicals Group Monday said net profit for the first quarter more than doubled from year-ago levels as sales surged. However, the company, the petrochemicals arm of oil-and-gas giant Petronas, gave a mixed outlook for the months ahead.
Net profit for the three months ended March 31 was 1.30 billion ringgit ($299.92 million), a quarterly record, compared with 592.00 million ringgit in the same period last year. Revenue for the three months surged 49% year-on-year to 4.70 billion ringgit driven by higher sales volume and an improvement in spreads, or the difference in price between raw materials and finished products.
Despite Petronas Chemicals' performance, mandatory maintenance shutdowns could reduce output from its plants in the coming quarters, analysts said. The company's plants ran at near capacity in the first quarter.
"We do not expect the plant utilization rate will be sustained in the next few quarters," said MIDF Amanah Investment Bank Analyst Aaron Tan. "The company has already planned maintenance activities...that could take between 50 to 55 days to complete."
In February, Petronas Chemicals cautioned that while it was aiming to sustain its plant utilization level above the industry benchmark, it could be slightly lower than in 2016 due to a greater number of maintenance shutdowns.
For the entire 2016 year, net profit rose 5.4% to 2.93 billion ringgit from 2.78 billion ringgit a year earlier, boosted in part by the stronger U.S. dollar. Revenue for the period climbed 2.4% to 13.86 billion ringgit from 13.54 billion ringgit in 2015.
In the near term, the olefins and derivatives market could soften as demand slows while supply and prices stay stable following a period of restocking, Petronas Chemicals said.
"The fertilizer market is likely to firm on the back of seasonal demand from Southeast Asia and India coupled with tight supply from the Middle East," Petronas Chemicals said. Methanol prices however, could weaken in the near term on lower demand from China, the company added.
Shares of Petronas Chemicals rose 0.6% to 7.27 ringgit on Monday while the benchmark FTSE Bursa Malaysia KLCI gained 0.2%.
--Jason Ng and Gho Chee Yuan
--Nikkei Markets is a real-time financial news service for South East Asia's markets published by Nikkei NewsRise Asia Pte Ltd, a Nikkei and NewsRise joint venture company. Nikkei Markets provides wide companies coverage in the region, including the Nikkei's Asia300 companies.