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PETRONAS Chemicals Group (PCG) Q2 2025 Report: Navigating a Turbulent Quarter
Published on: August 14, 2025
PETRONAS Chemicals Group Berhad (PCG), a leading integrated chemicals producer in Malaysia, has just released its financial results for the second quarter ended June 30, 2025. The report reveals a challenging period for the company, marked by operational headwinds, lower product prices, and a significant asset impairment that pushed the group into a net loss. Let’s dive deep into the numbers and what they mean for the company moving forward.
A key highlight from this quarter is the stark contrast with the previous year’s performance, with the company swinging from a substantial profit to a loss. Furthermore, the declared dividend has been reduced, reflecting the current tough operating environment.
Core Data Highlights: A Challenging Quarter at a Glance
The second quarter of 2025 proved to be difficult for PCG. The group’s overall performance was impacted by a combination of lower plant utilisation, which dropped to 77% from 89% in the same quarter last year due to feedstock supply disruptions and maintenance activities. This, coupled with lower product prices and a stronger Ringgit, weighed heavily on the top and bottom lines.
Q2 2025 Financial Snapshot
- Revenue: RM 6.44 billion
- Profit After Tax: -RM 1.05 billion (Net Loss)
- Earnings Per Share (EPS): -14 sen
To put these figures into perspective, let’s compare them with the same period last year.
Q2 2025 (Current Quarter)
Revenue: RM 6.44 billion
Profit After Tax: -RM 1.05 billion
Q2 2024 (Comparative Quarter)
Revenue: RM 7.73 billion
Profit After Tax: RM 809 million
The 17% drop in revenue was primarily driven by lower sales volume and weaker product prices. The swing to a net loss of RM1.05 billion from a profit of RM809 million is even more dramatic, influenced by lower earnings, a significant impairment charge, and unfavorable foreign exchange movements.
Segment Performance Breakdown
A closer look at PCG’s business segments reveals a mixed but generally challenging picture across the board.
| Segment | Q2 2025 Revenue | Q2 2024 Revenue | Q2 2025 Profit/Loss After Tax | Q2 2024 Profit After Tax |
|---|---|---|---|---|
| Olefins and Derivatives | RM 2.65 billion | RM 3.77 billion | (RM 671 million) | RM 458 million |
| Fertilisers and Methanol | RM 2.26 billion | RM 2.13 billion | RM 307 million | RM 459 million |
| Specialties | RM 1.51 billion | RM 1.82 billion | (RM 302 million) | RM 59 million |
- Olefins and Derivatives: This core segment faced the brunt of the downturn, with revenue falling 30%. It swung to a significant loss of RM671 million due to lower product spreads, reduced sales volume, and losses from a joint operation entity.
- Fertilisers and Methanol: This segment was a relative bright spot on the revenue front, posting a 6% increase to RM2.26 billion, driven by higher product prices. However, profitability still declined by 33% to RM307 million as lower product spreads squeezed margins.
- Specialties: The Specialties segment reported a 17% drop in revenue and a loss of RM302 million. This was primarily caused by a substantial one-off impairment of assets at its subsidiary, Perstorp, amounting to RM431 million, which overshadowed any operational gains.
A Look at Financial Health
Despite the quarterly loss, PCG’s financial position remains robust. Total assets stood at RM58.8 billion as of June 30, 2025, a slight 2% decrease from the end of 2024. Net assets per share were RM4.73. The Group’s cash flow from operations for the first half of the year was RM1.3 billion. While this is 21% lower than the same period last year, it demonstrates that the core business continues to generate positive cash flow, which is crucial for funding operations and investments.
Risk and Prospect Analysis: Navigating Headwinds and Future Outlook
PCG operates in a cyclical industry heavily influenced by the global economy. The company identified several key factors that will shape its performance:
- Global Economic Conditions: Demand for petrochemicals is closely tied to global economic activity.
- Commodity Prices: Product prices, especially for Olefins and Derivatives, are highly correlated with crude oil prices.
- Operational Efficiency: Plant utilisation rates are critical and depend on stable feedstock and utility supplies.
- Foreign Exchange: As a major exporter, currency fluctuations can significantly impact earnings.
Looking ahead, the company provided a cautious outlook:
- Olefins and Derivatives: Product prices are expected to remain soft due to balanced supply.
- Fertilisers and Methanol: Prices are forecasted to be firm, supported by seasonal demand for fertilisers.
- Specialties: Demand uncertainty is expected to persist across most end markets.
To counter these challenges, PCG will continue to focus on its operational excellence programs and manage supplier relationships to maintain high plant utilisation levels.
Dividend Announcement
Reflecting the challenging financial performance, the Board of Directors declared a first interim dividend of 3 sen per share for the financial year 2025. This is a notable reduction from the 10 sen per share interim dividend declared in the corresponding period of 2024, a prudent move to conserve cash in the current environment.
Summary and Investment Recommendations
The second quarter of 2025 was undeniably a tough period for PETRONAS Chemicals Group. The headline numbers show a swing to a significant net loss, driven by a perfect storm of lower operational output, weaker market prices, unfavorable currency movements, and a substantial one-off asset impairment. The dividend cut underscores the current pressures on profitability.
However, the Fertilisers and Methanol segment showed some resilience in revenue, and the company’s balance sheet remains solid with positive operating cash flow. The management’s focus on operational excellence is key to navigating this downturn. The outlook remains mixed, with anticipated firmness in the fertiliser market but continued softness in olefins and uncertainty in specialties.
Investors should take note of the key risks highlighted in this quarter’s performance:
- Market Volatility: The group’s earnings are highly sensitive to global commodity price cycles and economic health.
- Operational Risks: The impact of feedstock and utility disruptions on plant utilisation was a clear factor this quarter, highlighting a persistent operational vulnerability.
- One-Off Charges: The large asset impairment in the Specialties segment demonstrates the risk of non-cash charges that can heavily impact reported profits.
- Profitability Pressure: Squeezed product spreads and foreign exchange losses are significant headwinds that are likely to persist in the near term.
Disclaimer: This article is for informational purposes only and should not be considered as investment advice. Investors should conduct their own research and consult with a financial advisor before making any investment decisions.
Final Thoughts
This report paints a clear picture of a cyclical company facing significant headwinds. The large, one-off impairment charge has certainly amplified the loss, but the underlying story is one of margin compression and operational challenges. The reduction in the dividend, while potentially disappointing for income-focused investors, appears to be a prudent financial decision to preserve capital during a period of uncertainty.
Do you think PCG can navigate these challenges and will the firming fertiliser market provide a much-needed buffer in the coming months?
We invite you to share your thoughts and perspectives in the comments section below!
Click here to read more of our analyses on Malaysian public-listed companies.
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