KUALA LUMPUR: Petronas Chemicals Group Bhd (PCG) reported a net loss of RM789 million in the third quarter, a stark contrast to the net profit of RM424 million during the same period last year. The loss was primarily attributed to unrealised foreign exchange (forex) losses amounting to RM1.1 billion.

According to BERNAMA News Agency, even with the recorded losses, PCG’s revenue for the quarter increased to RM7.986 billion, up from RM6.784 billion in the previous year. Over the nine-month period, the company registered a net profit of RM656 million, supported by revenue of RM23.213 billion, as disclosed in its stock exchange filing.

In a separate statement, the group revealed a loss after tax of RM762 million for the quarter. This loss was mainly influenced by unrealised forex losses arising from the revaluation of payables at its Pengerang Petrochemical Company Sdn Bhd (PPC) and a shareholders loan to PPC. The US dollar’s weakening against the Malaysian ringgit from 4.721 on June 30, 2024, to 4.107 on Septe
mber 30, 2024, significantly impacted these valuations.

PPC, a joint venture between PCG and Saudi Aramco located in Johor, operates with a USD functional currency. The forex movement resulted in an unrealised forex loss on revaluation of payables amounting to RM536 million, recorded by PCG. Additionally, a US dollar-denominated shareholders loan provided to PPC resulted in an unrealised forex loss of RM492 million. Total forex losses for the third quarter, including RM86 million from other operations, amounted to RM1.1 billion.

For the nine-month period, PCG reported an eight per cent year-on-year increase in revenue to RM23.2 billion, largely due to higher sales volumes and contributions from PPC. However, EBITDA declined by 10 per cent to RM2.8 billion, mainly due to negative earnings from PPC and increased operating costs. Profit after tax fell by 53 per cent year-on-year to RM750 million, with an estimated PAT of RM1.7 billion excluding forex losses.

The third quarter saw a mixed commodities chemicals
market due to factors such as inflation, seasonal shifts, and feedstock movements. While prices for urea and mono-ethylene glycols were supported by supply tightness, weak downstream demand reduced methanol and polyolefins prices. The industry continues to face challenges from China’s slower-than-expected economic growth, affecting prices and spreads.

Mazuin Ismail, PCG’s managing director and CEO, commented on the financial impacts caused by the forex fluctuations, particularly from the group’s investment in PPC. He noted improvements in the core business’s operational performance due to higher plant utilisation in Malaysia, contributing to increased sales volumes. The group aims to commence commercial operations at its PPC petrochemical units by the end of the year, marking a significant milestone in its strategy to enhance its basic chemicals business and diversify into speciality chemicals.

Ismail highlighted that the start-up of large-scale, capital-intensive assets like PPC would materially impact ear
nings, including currency translation effects. He indicated that a US dollar rebound in the fourth quarter of 2024 might partially reverse the unrealised forex losses experienced in the third quarter.