PTT Global Chemical's (PTTGC) net profit surged to Thai Baht (Bt) 5.08bn in the fourth quarter on higher sales and gains from its sale of shares of GC Logistics Co (GCL), said the Thailand-based producer.
PTTGC in the fourth quarter of last year approved the sale of a 50% share in subsidiary GCL to Thailand-based logistics and industrial facilities firm WHA Venture Holding Co in a deal worth around Bt2.64bn. Sales volumes increased in the fourth quarter of the year on strong refining operating rates.
"However, the average crude oil price and petrochemical prices declined across all products [in the fourth quarter], reflecting the slow economic recovery," the company said in a statement. On a quarter-on-quarter basis, adjusted earnings before interest, tax, depreciation and amortization (EBITDA) at the polymers and chemicals unit fell by 53% in the last three months of 2023, weighed by poorer sales volumes and higher plant turnarounds.
For the whole of 2023, sales fell by 9.1% year on year due to price decreases in its petroleum and petrochemical products due to the ongoing global economic recession "that has not yet recovered", it said. Petrochemical product spreads declined during 2023, especially in its intermediates business as well as its polymers and chemicals business which was affected by new capacity start-ups and the global economic slowdown.
The company also reported a share of loss from investments at Bt725m in comparison with the gain of Bt2,908 the previous year as the petrochemical business encountered a downturn in overall performance. Earnings at PTTGC's Polymers & Chemicals business declined from the previous year due to the decrease in spread of plastic resins products, especially polyethylene (PE), which declined by 19% year on year, driven by ongoing economic slowdown, high inflation, economic regression, and oversupply, resulting from the continuous introduction of new production capacities from China.
"We expect around 21% year on year growth in EBITDA in 2024 on the back of a higher share of low-cost ethane feedstock, some recovery of petrochemical spreads, and a gradual improvement in the business environment for PTTGC’s specialty chemicals subsidiary Allnex," Japan's Nomura Global Markets Research said in a note on Wednesday.
We remind, credit watchdog Moody's Investors Service has cut the ratings of Thailand's PTT Global Chemical Public Company (PTTGC) because of the company's relatively high debt and weak global demand for petrochemicals, said the agency. PTTGC’s leverage has been driven by weak earnings over the past 12 months, combined with the primarily debt-funded acquisition of resin producer Allnex Holding GmbH, Moody’s said. PTTGC completed the €4bn acquisition of Germany-based Allnex in December 2021.
mrchub.com