Petronas Chemicals Group Bhd., Malaysia’s fifth-biggest company by market value, reported a 38 percent fall in third-quarter profit on lower petrochemical sales and prices.
Net income dropped to 742 million ringgit ($244 million), or 9 sen per share, in the three months ended Sept. 30, from 1.2 billion ringgit, or 15 sen a year earlier, the Kuala Lumpur-based petrochemicals group said in an exchange filing yesterday. Revenue dropped 15 percent to 3.9 billion ringgit, it said.
“The lower revenue comes on the back of both lower prices and lower volumes,” Petronas Chemicals said in the statement. “Feedstock prices did not move in tandem with lower product prices.”
Petronas Chemicals, an arm of Malaysia’s state oil and gas group Petroliam Nasional Bhd., said last month it will book a charge of about 560 million ringgit in the fourth quarter after deciding to discontinue its vinyl business at the end of this year. The resulting drop in production capacity should reduce earnings over the next two years, Teh Kian Yeong, an analyst at K&N Kenanga Holdings Bhd., said in a report Oct. 30.
Teh cut the bank’s target price for the stock to 6.99 ringgit from 7.46 ringgit.
Production was constrained in the third quarter by feedstock limitations in its olefins and derivatives division, Petronas Chemicals said. Plant maintenance disrupted its fertilizers and methanol operations, it said.
Petronas Chemicals shares have underperformed this year, falling 1.8 percent compared with a 4.4 rally in the benchmark FTSE Bursa Malaysia KLCI Index. The stock fell 0.2 percent to 6.09 ringgit yesterday ahead of the earnings announcement.