KUCHING: Petronas Chemicals Group Bhd (Petronas Chemicals) maintained profitability in its first half of financial year 2020 (1HFY20) despite global challenges brought on by Covid-19 and the OPEC+ fallout.
The group registered six-months profit after tax (PAT) of RM678 million, during the period which saw lockdowns across the world and collapse of crude oil prices.
Petronas Chemicals’ agility in responding to the current environment due to the pandemic has enabled the Company to sustain strong operational performance in 1H, achieving plant utilisation rate and sales volume at levels comparable to 1HFY19.
The depressed petrochemical product prices and prolonged industry downcycle, aggravated by uncertain economic outlook, however, imposed pressure on profit margin.
Managing director/chief executive officer, Datuk Sazali Hamzah commented, “Overall, we delivered a resilient performance despite operating in an extremely challenging environment.
“The domino effect of Covid-19 brought down petrochemical prices to historical lows, particularly in April and May. We mitigated the impact by focusing on operational efficiency and capitalising on our strong market presence in this region.
“Coupled with our close collaboration with customers, we were able to maximise production to meet sales and delivery commitments with minimal disruption even during these tough times.”
“We are cautiously optimistic as the market is showing signs of improvement with the reopening of economies, but a meaningful recovery is only expected to occur gradually towards end 2020 into 2021.
“In Petronas Chemicals, we are committed towards enhancing our operational and commercial capabilities, as well as cost reduction efforts, towards softening the impact of persistent low product prices. Our team continues to be vigilant of potential risks or disruptions and simultaneously responsive to market changes,” he added.
Despite current challenges, Petronas Chemicals is forging ahead with its expansion plans. Commenting on the Group’s growth projects, “Pengerang Integrated Complex (PIC) is gearing for start-up in the first quarter of next year”.
“We are embarking on two specialty chemicals projects, namely a butadiene derivative plant in PIC and specialty chemicals plant in Kertih Integrated Petrochemical Complex which are currently undergoing engineering, procurement, construction and commissioning (EPCC) stages.
“In addition, we are building a silicone blending plant in Gebeng, as part of the growth plans for the Da Vinci Group, the recently acquired subsidiary. This will allow Petronas Chemicals to capture the rising demand for silicone-based products within this region.
“As part of our sustainability agenda, we are building a pilot plant to convert second generation palm biomass into chemicals. We are confident that our future-proofing strategy to sustainably expand our core business as well as to develop the specialty segment, will further strengthen Petronas Chemicals’ resilience,” he concluded.