PETALING JAYA: Petronas Chemicals Group Bhd (PetChem) will be paying RM800mil in special dividends as the group’s latest quarterly net profit surged to a record high, driven by stronger petrochemical product prices.

       PetChem announced a special dividend of 10 sen per share for the financial year ending Dec 31, 2021 (FY21), to be paid on Dec 30. This is to commemorate the 10th anniversary of its listing, celebrated in 2020.

       The special dividend is in addition to the first interim single-tier dividend of 23 sen, amounting to RM1.84bil, already paid on Sept 30 this year.

       PetChem, which has suffered declining earnings over the past two financial years, bounced back stronger with supernormal profits in the first nine months of FY21.

       This was thanks to the rise in crude oil prices which boosted its bottom line.

       Petchem Petronas Chemicals

       In the third quarter ended Sept 30, 2021, PetChem’s net profit surged over four-fold to RM1.96bil, as compared to RM471mil in the previous corresponding quarter.

       The group also said that it maintained a high earnings before interest, tax, depreciation and amortisation of 37% in the third quarter.

       “The extended rise in crude oil prices, coupled with a prolonged tight supply environment, had resulted in high product prices during the quarter.

       “This was further supported by the group’s sustained operational excellence and effective cost management,” PetChem said in a statement yesterday.

       Brent crude oil prices have increased by over 50% year-to-date. However, its prices have been declining from this year’s peak of US$86.40 (RM361.45) per barrel on Oct 26 to about US$78 (RM326.31) per barrel at the time of writing.

       The petrochemical producer’s revenue in the third quarter of FY21 also jumped by 67% year-on-year (y-o-y) to RM5.77bil.

       This was largely due to higher product prices in tandem with the improving crude oil price, tight supply and healthy demand from global economic recovery.

       Breaking down by segments, PetChem said its olefins and derivatives business posted a revenue of RM3.2bil in the third quarter of FY21, up by RM1.1bil or 57% y-o-y.

       “The segment recorded lower plant utilisation rate, production and sales volumes as compared to the corresponding quarter mainly due to higher level of maintenance activities,” it said.

       As for the fertiliser and methanol segment, revenue increased by RM1bil or 83% y-o-y to RM2.3bil in the third quarter.

       “The segment’s operational performance recorded higher plant utilisation rate as compared to corresponding quarter mainly due to better plant performance.

       “Production and sales volumes were also higher,” it said.

       Commenting on the group’s performance, managing director and chief executive officer Datuk Sazali Hamzah said PetChem had initially expected the market recovery to be moderate in the third quarter of 2021 onwards.

       However, product prices remained relatively high, following Hurricane Ida in August that disrupted supply in North America and the prolonged downtime in Middle Eastern urea plants amid demand recovery as Covid-19 restrictions eased.

       “Although polymer prices were lower by about 5% compared to the second quarter of 2021, urea and methanol prices grew strongly by about 25% and 10%, respectively.

       “Through our operational and commercial excellence, we performed well by optimising our production and sales against market movements,” he said.

       Cumulatively, for the first nine months of FY21, the group’s net profit increased by over four-fold to RM5.29bil from RM1.16bil in the previous corresponding period.

       Revenue also rose by 52.5% y-o-y to RM16.05bil in the nine-month period.

       The olefins and derivatives segment recorded a 49% y-o-y or RM3bil increase in revenue to RM9.1bil.

       Meanwhile, the topline of the fertiliser and methanol segment for the nine-month period improved by 59% y-o-y or RM2.3bil to RM6.1bil.

       On its prospects, Sazali said the current market conditions augur well for PetChem.

       “We may see some reduction in demand due to the resurgence of Covid-19 infections and China’s policy to reduce energy intensity and limit total energy consumption.

       “Nonetheless, other offsetting factors such as the natural gas shortage in Europe and Opec+ production decisions may continue to support crude oil prices and, in turn, the prices of our products,” he said.

       On the Pengerang Integrated Complex, Sazali said the petrochemical facilities are scheduled to commence operation in the first quarter of 2022.

       “We look forward to this event as our commercial team has secured customers who are ready to offtake our products. It will be an exciting start to the new year for PetChem,” he said.