Our website is made possible by displaying non-intrusive online advertisements to our visitors.
Please consider supporting us by disabling or pausing your ad blocker.
In the third quarter of 2024, PETRONAS Chemicals Group Berhad (PCG) reported a loss after tax of RM762 million, primarily due to unrealized foreign exchange (forex) losses totaling RM1.1 billion. These losses were mainly attributed to the depreciation of the US dollar against the Malaysian ringgit, which affected the revaluation of payables and shareholder loans in their joint venture, Pengerang Petrochemical Company Sdn Bhd (PPC).
Excluding the impact of these forex losses, PCG's profit after tax for the quarter was estimated at RM352 millions.
Looking ahead, the possibility of PCG regaining profitability in the coming quarter will depend on several factors:
Foreign Exchange Movements: If the US dollar stabilizes or appreciates against the Malaysian ringgit, the company may experience reduced forex losses or potential gains, positively impacting profitability
Operational Performance: In the third quarter, PCG achieved a plant utilization rate of 92%, up from 89% in the previous quarter, leading to increased production and sales volumes.
Market Conditions: Global demand for petrochemical products and prevailing market prices will play a crucial role in revenue generation.
Analysts have suggested that PCG might be approaching a turning point, indicating potential for a rebound in the industry.
In summary, while forex fluctuations significantly impacted PCG's recent financial performance, a combination of favorable currency movements, sustained operational efficiency, and improved market conditions could enable the company to return to profitability in the upcoming quarter.
On February 1, 2025, President Trump announced new tariffs as part of his "America First Trade Policy." These include a 10% additional tariff on imports from China and a 25% tariff on goods from Canada and Mexico, with Canadian energy resources facing a lower 10% tariff. These tariffs are set to take effect on February 4, 2025. In response, China has vowed to take the matter to the World Trade Organization.
These developments could exacerbate the oversupply issue in China's chemical industry, as increased tariffs may reduce China's exports to the U.S., leading to a surplus of chemical products in the domestic market. This oversupply can result in decreased prices and profit margins for companies like Petronas Chemicals Group Berhad (PCHEM).