Media: Malaysia’s Petronas Chemicals launches sweeping review after record quarterly loss

Petronas Chemicals Group Bhd is launching a sweeping strategic portfolio review across its entire value chain after posting its largest quarterly loss since listing, underscoring the strain from a protracted downturn in the global petrochemical sector.

The Malaysian producer reported a net loss of RM1.08 billion for the quarter ended 30 June 2025, weighed down by weaker product spreads, hefty unrealised foreign exchange losses and asset impairments. Earnings before interest, tax, depreciation and amortisation (EBITDA) slumped 64% year-on-year to RM395 million, driven by compressed margins and softer contributions from joint ventures, notably Pengerang Petrochemical Company (PPCSB).

Foreign exchange losses surged to RM446 million from RM62 million a year earlier, largely due to the unrealised forex impact from the revaluation of shareholder loans to PPCSB.

Quarterly revenue slid 16% from a year earlier to RM6.4 billion, hurt by weaker prices, lower sales volumes, reduced contributions from joint operations and the ringgit’s appreciation against the US dollar. The olefins and derivatives division — its largest revenue driver — saw plant utilisation drop to 86% from 94%, with revenue plunging 30% to RM2.6 billion. The segment swung to an EBITDA loss of RM251 million.

In response, Petronas Chemicals is accelerating cost optimisation, resizing its workforce, and reassessing stakes in joint ventures and associates as part of its portfolio overhaul. Initiatives within the olefins & derivatives and fertilisers & methanol businesses are centred on boosting sales netbacks, streamlining logistics and aligning turnaround schedules to maximise output. For its specialities segment, the group is sharpening focus on high-value areas such as resins & coatings, personal care, engineering fluids and advanced polymer solutions.

The dismal quarter reflects broader headwinds facing the global petrochemical industry. Margins have been eroded by relentless capacity additions over the past decade — particularly in China, the world’s largest petrochemicals market — which have fuelled a persistent oversupply. Demand growth, meanwhile, has stagnated for much of the past four years, leaving producers grappling with thin margins and mounting balance sheet pressures.

Written: Farid Muzaffar