MOL Q3 petchems earnings fall 90% on lower margins

MOSCOW (MRC) -- MOL’s third-quarter clean current cost of supplies (CCS) earnings before interest, tax, depreciation and amortisation (EBITDA) for its petrochemical division fell by 90%, year on year, said the company.

The company said its margins for petrochemicals had slumped by 34% during the quarter, year on year. Despite this, earnings before interest and tax (EBIT, or operating profit) more than doubled.

MOL’s petrochemical integrated margin fell to €438/tonne in Q3 2022 from €600/tonne in Q2 2022 and EUR663/tonne in Q3 2021. The quarter-on-quarter decline was mainly attributed by the company to lower polymer/monomer spreads.

Q3 2022 petrochemical product sales stood at 303,000 tonnes, versus 367,000 tonnes in the same period of last year and 277,000 tonnes in Q2 2022.

Petrochemical sales increased quarter on quarter following the completion of planned Q2 2022 maintenance. Overall MOL, an integrated oil, gas, and petrochemicals group, recorded a net profit of Hungarian forint (Ft) 322.3bn (USD775.0m) in the third quarter, equivalent to a gain of 113% from Ft151.4bn in Q3 2021.

Third-quarter group net sales were up 78% year on year to Ft2.88tr. MOL said the estimated impact of fuel price regulation and windfall taxes on the group across central and eastern Europe amounted to approximately USD1.18bn in Q1-Q3 2022.

It added the potential introduction of the EU’s solidarity contribution by individual member states would be set to make a further negative impact on MOL’s profitability.

As MRC reported earlier, MOL Group (Budapest, Hungary) has recently announced that Rossi Biofuel (a joint venture wherein MOL Group and Envien Group are the 25-75% owners) inaugurated a new plant in Komarom, Hungary, which will significantly increase the biofuel production volume in the country. With this investment, MOL Group and Envien Group launched a technology in Europe that can boost greenhouse gas savings by more than 85%. With a capacity of 50,000 tons per year, the plant is the first in Europe to use the RepCat technology offered by Austrian firm BDI-BioEnergy International GmbH, which is highly flexible in terms of raw materials - it allows the processing of greasy wastes of different types and origins, such as used cooking oils, trap grease, animal fats or residues from vegetable oil production. Biodiesel produced in this way is one of the most climate-friendly fuels.

We remind that in March 2021, MOL became a biofuel producer through the realization of an investment in the Danube Refinery. Bio feedstock will be co-processed together with fossil materials increasing the renewable share of fuels and reducing up to 200,000 tons /year CO2 emission without negatively affecting fuel quality.

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MOSCOW (MRC) -- AdvanSix’s Q3 adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell 57% year on year, said the company.

Despite the 18% decline in volumes, sales rose 7% as market-based pricing was favorable, driven by higher pricing across the company’s ammonium sulphate and nylon product lines.

Raw material pass-through pricing was favourable by 4%, following a net cost increase in benzene and propylene, both inputs to cumene, which is a key feedstock for the company's products.

Earlier it was written, AdvanSix announced a preliminary update on its 3Q 2022 planned turnaround activities and its expected 3Q 2022 financial results. The company expects 3Q 2022 adjusted EBITDA to be in the range of USD31 M to USD34 M.

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MOSCOW (MRC) -- Huntsman third-quarter (Q3) sales and earnings before interest, taxes, depreciation, and amortisation (EBITDA) fell, year on year, as business becomes “increasingly difficult” across the globe, especially in Europe, said the company.

CEO Peter Huntsman said Europe has been the hardest hit region from surging energy prices, adding the current crisis and an energy ‘new normal’ could cause lasting damage to European chemical's global competitiveness.

The company’s polyurethanes (PU) division posted the most negative results, with sales and EBITDA falling; this division produces chemicals such as polyols, methylene diphenyl diisocyanate (MDI), as well as thermoplastic polyurethanes (TPUs) and coatings, among others.

The divisions called Performance Products and Advanced Materials, however, increased sales and earnings during the third quarter.
Despite the hit in Q3, Huntsman’s January-September sales and earnings remain higher than in the same period of 2021.

CEO Huntsman painted quite a catastrophic picture of the EU economy, which has been badly hit by the war in Ukraine and soaring energy prices. He linked the current woes to the long-term competitiveness of European chemicals production, as now more than ever before, the production of chemicals in Europe comes at a high price as surging utility costs hurt energy-intensive sectors.

Huntsman said on Friday it will implement further cost savings programmes which are to go “above and beyond” the company previously announced savings. "The global business environment has become increasingly difficult with growth slowing across many of our end markets. Specifically in Europe, the inflationary impact from record high energy prices combined with declining demand is pressuring our European facilities and margins in ways no one anticipated ... A 'new normal' will not include favourable energy prices and competitiveness the EU once enjoyed,” said the CEO.

“To mitigate these market conditions, in the short term, we have significantly reduced our production rates … [and] we are committing to further realign our cost structure above and beyond our previously announced cost optimisation programs with additional restructuring in Europe.” He fell short of giving more Europe-specific details. However, he said the company has already identified, globally, $40m in potential restructuring to the end of 2023.

In September, Huntsman slashed its Q3 guidance due to Europe’s woes; the company’s CEO, meanwhile, warned in August that high energy costs and the inability to pass them onto customers were threatening the future of methylene diphenyl diisocyanate (MDI) manufacturing in Europe.

We remind, Huntsman Corporation announced the start of commercial operation of a new methylene diphenyl diisocyanate (MDI) splitter at its Geismar site in Louisiana. The USD180 million splitter gives Huntsman the ability to produce more high value, differentiated grades from the crude MDI manufactured at the plant, thereby enabling growth in key customer applications.
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MOSCOW (MRC) -- Abu Dhabi Chemicals Derivatives Company RSC Ltd (“TA’ZIZ”) and Reliance Industries Limited (RIL), have agreed to launch TA’ZIZ EDC & PVC, a world-scale chemical production partnership at the TA’ZIZ Industrial Chemicals Zone in Ruwais, said Transportandlogisticsme.

The new joint-venture will construct and operate a Chlor-Alkali, Ethylene Dichloride (EDC) and Polyvinyl Chloride (PVC) production facility, with an investment of more than USD2 billion.

Representing the first production of these chemicals in the UAE, the project will enable the substitution of imports and the creation of new local value chains, while also meeting growing demand for these chemicals globally.

The TA’ZIZ Industrial Chemicals Zone is a joint venture between Abu Dhabi National Oil Company (ADNOC) and ADQ.

The project builds on ADNOC and Reliance’s long-standing strategic partnership and is Reliance’s first investment in the MENA region.

The signing of the joint venture terms, which are subject to regulatory approvals, was witnessed by His Excellency Dr. Sultan Ahmed Al Jaber, UAE Minister of Industry and Advanced Technology and ADNOC Managing Director and Group CEO and Reliance Industries Chairman and Managing Director, Mr. Mukesh D. Ambani.

The joint venture terms were signed by Mr. Khaleefa Al Mheiri, Acting CEO of TA’ZIZ and Mr. Kamal Nanavaty, President Strategy and Business Development of Reliance Industries Limited.

We remind, Abu Dhabi National Oil Co (ADNOC) plans to build a steam cracker in Ruwais, in line with its goal of more than doubling the chemical production capacity at the TA’ZIZ Industrial Chemicals Zone. A feasibility study on the project is under way, with the design phase set to commence in the first quarter of 2023, ADNOC said in a statement on 3 November.
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MOSCOW (MRC) -- The Q3 results of Brazil’s federal oil firm Petrobras exceeded expectations, but the market is cautious about the future of the company under president-elect Luiz Inacio Lula da Silva, Sidney Lima, analyst at Top Gain, told BNamericas.

Petrobras reported recurring net income of USD8.8bn and revenues of US$32.4bn, up 164% and 40% year-on-year. Lima highlighted that all areas improved, including E&P, which grew 47%, diesel (71%), gasoline (22%) and derivatives (24%).

"But there is caution with the change of government. [Lula’s Workers’ Party] defends using Petrobras as a social policy, so there’s uncertainty about the stability of the company's cash flow," Lima said.

Another point of contention is the anticipated distribution of dividends, which totaled 43.7bn reais (US$8.63bn) in the third quarter. One day after the publication of the results, the public prosecutor’s office requested the suspension of dividend payments, alleging risks to financial sustainability.

The night before, oil workers federation FUP and the association of oil minority shareholders of Petrobras (Anapetro) said they would take legal action to prevent the distribution of dividends, which, in the accumulated total for the year, already amounts to 180bn reais – compared to a net profit of 145bn reais in the period.

Mahatma dos Santos, a researcher at oil association Ineep said the increase in fuel prices and the reduction in exploration costs allowed Petrobras to practically triple the volume of dividends distributed.

"Not even the decline in production and marketing of derivatives this quarter [compared to the same period in 2021] changed the company's strategy of prioritizing the generation of value for its shareholders," he said in a statement.

Claudio Araujo Pinho, a lawyer specialized in oil and gas, said that the distribution of dividends this year does not agree with the law on state-owned companies, undermining the possibility of future investment and ignoring its social function.

According to Pinho, the board might not endorse the anticipated Q3 distribution of dividends once Lula takes office in January. "This will demonstrate the low governance of the current state-controller of Petrobras," he told BNamericas.

Flavio Conde, analyst at Levante Investimentos, underlined that the dividend distribution was split, contributing to the public accounts of the Bolsonaro government and to Lula's early term.

"It seems little to close the fiscal deficit of 2023, but all help is welcome," Conde told BNamericas.

We remind, Petrobras said it has signed a contract to sell the REMAN refinery in the northern state of Amazonas for USD189.5 MM to Ream Participacoes S.A., a subsidiary of distributor Atem. In a separate filing, however, the company formally known as Petroleo Brasileiro SA said it had failed to secure a buyer for the Abreu e Lima (RNEST) refinery after the interested firms declined to offer a bid. Petrobras said it would end the sale process, and analyze its next steps.

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