KUALA LUMPUR, Aug 22 — Petronas Chemicals Group Bhd saw a declining net profit of RM628 million in the second quarter ended June 30, 2023 (2Q 2023) from RM1.87 billion in the same quarter last year.

Revenue, however, was higher by eight per cent — or RM530 million — at RM7.11 billion, largely due to higher sales volume and the inclusion of revenue contribution from a recently acquired subsidiary, but partially offset by lower product prices, the company said in a Bursa Malaysia filing today.

The company, which is involved in manufacturing, marketing and selling a variety of petrochemicals, saw its basic earnings per share depreciate to 8.00 sen from 23.00 sen previously.

Managing director and chief executive officer Mohd Yusri Mohamed Yusof said Petronas Chemicals faced extreme external challenges in the 2Q 2023.

"Our plants in Labuan and Sabah had unplanned shutdowns following a temporary disruption of gas feedstock supply which reduced our production and sales volume. This added further pressure on the margin compression we have been experiencing since December 2022 due to lower prices and spreads for most products,” he said in a statement.

The group declared a dividend of eight sen per share, amounting to RM640 million, payable on September 21, 2023.

Mohd Yusri said as a result of the drop in crude oil prices and China’s lacklustre demand recovery, average prices of polymers declined by about seven per cent quarter-on-quarter with other olefins and derivatives having a similar trend.

Ammonia and urea prices, which have been undergoing price correction since second half 2022 (2H 2022), continued to decline into 2023 on oversupply concerns.

Commenting on the 2H 2023 outlook, he said product prices improved with an upward trend in crude oil prices and restocking activities in the recent weeks.

"Despite this, we anticipate margins to remain under pressure. We still have to contend with higher operating costs, slowing global economic growth and increased competition from new capacities coming on stream, particularly in China and the US.

"Several of our plants are scheduled to undergo statutory turnarounds and maintenance activities. Hence, we anticipate a slight drop in production volume. We remain focused on maintaining operational and commercial excellence to sustain our financial resilience,” he concluded. — Bernama