Good evening, ladies and gentlemen. I'm sorry for the glitches we're going through, but good evening again, and welcome to the PETRONAS Chemicals Group Berhad Analyst Briefing for the Q3 financial year 2025. I'm Safarah from Investor Relations team, and I will be your host and moderator for this evening. Ladies and gentlemen, thank you for joining us today. Our financial results were made available earlier today and can be downloaded from the Bursa Malaysia website. The same has also been made available on our website, together with today's presentation. Please be reminded that this meeting is being recorded and no other parties have been authorized to record this meeting. Leading our briefing today is Mr. Mazuin Ismail, Chief Executive Officer and Managing Director, PETRONAS Chemicals Group Berhad. He is accompanied by Mr. Azli Ishak, our Chief Financial Officer, and other senior members of the management committee.
As always, we will begin with a brief presentation followed by Q&A. I will now hand over to Mr. Mazuin to start with the quarter's highlights. Over to you, sir.
Thank you, Safarah. Ladies and gentlemen, thank you. Thank you for joining us this evening. Now, let us start with the market highlights for the Q3 of this year. In the Q3 of 2025, global GDP growth demonstrated resilience, registering near 2.6% growth amid uncertainties in the market, particularly from trade tariffs and supply chain pressures, as well as escalating geopolitical risks in the Middle East. However, market remains cautious as the resilience was mainly attributed to some front-loading of trade and investments ahead of tariff changes, which has bolstered the near-term numbers. Similar trend was also observed in the global manufacturing PMI, which, although marginal, had improved into expansion with increase in new orders for consumer and intermediate goods.
On the Malaysia domestic front, we saw the economy grew by 5.2% in the Q3 , a significant improvement as compared to 1% in the Q2 . Nevertheless, the strong Q3 figure was driven largely by domestic consumption due to the disbursement of government-targeted subsidy, which has helped boost consumption. Despite the improvements observed, the chemical sector remains challenging, with subdued demand and oversupply in some key end markets. Now, for PCG, the average group product prices were comparable quarter-on-quarter, with marginal improvement in fertilizer and methanol segment. While the olefins and derivative segment saw a slight decline, specialty chemical segment product prices saw a decline in the Q3 . In the O&D segment, average product prices declined by about 2%, driven primarily by decreases in propylene and ethylene prices amid an oversupplied market and persistent weakness in downstream demand.
In F&M segment, urea and ammonia prices were higher by 14% on average as compared to the previous quarter, as the surge in demand coincides with tighter global supply caused by planned and unplanned shutdowns in the Middle East and Southeast Asia, as well as disruption to the urea export due to gas curtailment in Egypt. This was offset by lower methanol prices following ongoing ample supply, particularly from Middle East. On average, the F&M segment saw an improvement of about 2% quarter-over-quarter. Specialty chemicals segment saw a decline across all product segments, mainly for intermediate products, on subdued demand influenced by the ongoing trade tensions, as well as heightened competition from Chinese manufacturers. Ladies and gentlemen, if we could move on to our performance.
In the Q3 , we recorded 89.5% plant utilization rate, a significant improvement in comparison to 77.4% in the previous quarter on overall better plant performance, despite planned turnaround activity at PC Fertiliser Sabah . The planned shutdown was our largest maintenance activity for the year, and we are glad to share that it has been safely executed and completed as planned. Our total production volume increased by 12% quarter-on-quarter to 2.68 million tons, while our sales volume stood at 2.7 million tons, with volumes from PPC as well as Sarawak Petchem. As a result, we recorded group's revenue of MYR 6.8 billion for the quarter, 5% higher compared to the previous quarter.
Group's EBITDA increased 26% to MYR 497 million on higher product spreads, particularly for urea and ammonia, as well as lower unrealized Forex loss from revaluation of payables at PPC. Correspondingly, EBITDA margin was higher at 7.3%. The group recorded a smaller loss after tax of MYR 291 million, in comparison to MYR 1 billion in the last quarter, due to lower unfavorable Forex loss on revaluation of shareholders' loan to PPC, and the absence of exceptional items recorded in the preceding quarter. Ladies and gentlemen, with that, I will now hand it over to Azli to walk you through the financial performance by segment in more detail. Azli?
Thank you, Chief Mazuin. Ladies and gentlemen, thank you for joining us this evening. Let me take you through the fiscal highlights for the Q3 of 2025, starting with the Olefins and Derivatives segment on page 3 of the deck. In the Q3 , average product prices in the O&D segment declined by 2%, primarily due to the decline in ethylene prices, following persistent bearish sentiment driven by weak derivative prices and subdued demand, as well as lower propane prices due to market oversupply. Operationally, our plant utilization for the segment improved from 86% to 90% on better plant performance. Sales volume rose to close to 1 million tons, or 27% higher quarter-on-quarter, supported by the higher volume from PPC. Subsequently, segment revenue was higher at 21% at MYR 3.2 billion.
Loss before interest, tax, depreciation, and amortization improved at MYR 110 million, mainly contributed to lower unrealized Forex loss on revaluation of PPC's payable. Subsequently, the loss after tax also improved by 30% quarter-on-quarter, at MYR 471 million, against MYR 671 million in the previous quarter, and this is due to remeasurement loss arising from adjustment of timing on trade payables in the preceding quarter. Moving on to the Fertilizer and Methanol segment, as shown on page 4 of the deck. In the Q3 for the F&M segment, urea and ammonia prices rose by 14% on average, quarter-on-quarter, and this is mainly driven by strong demand amid tighter global supply.
The supply constraints were largely due to both planned and unplanned shutdowns in the Middle East and Southeast Asia, as well as reduced urea exports following gas curtailment in the Middle East, particularly in Egypt. However, methanol prices were lower, and this is due to oversupply market condition. Operationally, plant utilization for the segment was higher at 89% in comparison to 73% in the preceding quarter on better plant performance, despite the plant turnaround activity undertaken at PC Fertiliser Sabah during the Q3 . Subsequently, our production volume was higher by 21% quarter-on-quarter, at 1.6 million ton. The segment sales volume was slightly lower quarter-on-quarter, at 1.5 million ton, as part of the production was allocated to build up inventory in preparation for the turnaround at PC Fertiliser Sabah in the later part of the quarter, on the Q3 .
Revenue declined by about 2%, and this is due to lower sales volume, particularly on lower methanol sales. EBITDA for the segment, however, was higher at 4%, at MYR 577 million, and this is due to higher product spread, mainly for urea and ammonia. EBITDA margin improved to 26% during the quarter. In line with higher EBITDA, PAT improved by 16%, at MYR 355 million, compared to MYR 307 million in the Q2 of 2025. Now, let's move to the Specialty segment on page 5, of the deck. In the Q3 of 2025, the Specialty Chemical saw a decline in revenue from MYR 1.5 billion to MYR 1.3 billion.
The segment recorded lower EBITDA at MYR 49 million against the preceding quarter, and this is mainly due to lower sales volume and a one-off gain on sale of emission rights in the Q2 . We registered a decline in sales volume across all business segments, as market turned cautious and customers' demand turned conservative amid oversupplied market conditions. The intermediate segment reported lower contribution margin due to weak demand, primarily on polyols and the OXO segment. The Specialty segment reported lower performance against the previous quarter, and this is attributable to soft demand, mainly for personal care and coating, and advanced polymer solutions, following overcapacity in the market from the Chinese manufacturers. This was partially offset by the engineering fluid segment performance, which showed comparable volume and contribution margin following stable demand from viscosity modifier product.
Silicone reported lower contribution margin from both upstream and downstream sub-segments, following overcapacity from China, which redirected their sales into other regions following the rising entry barriers into the US market. This has also been exacerbated by weak demand during the summer holiday in Europe. Next, let's look at the Q3 performance for the group against the Q2 on page six of the deck. Against the preceding quarter, our Malaysian operation plant utilization was higher at 89.5% on overall better per plant performance, despite the turnaround activity at PC Fertiliser Sabah , as Encik Mazuin has alluded earlier. The production volume increased by 12% quarter-on-quarter, in line with the improvement in our operation, while our sales volume recorded 5% higher at 2.7 million tons, with more volume coming from PPC.
The group recorded 5% higher revenue compared to the preceding quarter at MYR 6.8 billion on higher sales volume. Similarly, EBITDA increased by 26% at MYR 497 million on higher product spread, particularly for urea and ammonia, and lower unrealized Forex loss on revaluation of payables at PPC. Correspondingly, EBITDA margin improved to 7.3% quarter-on-quarter. If you were to exclude the exceptional item, which is inclusive the Forex impact, impairment, and fair value adjustment, the EBITDA for the Q2 would have been around five hundred and thirty-five million ringgit. The group recorded a narrower loss after tax of MYR 291 million, compared to MYR 1 billion in the previous quarter.
The reduced loss was primarily driven by lower unfavorable Forex loss, arising from the revaluation of shareholders' loans to PPC, as well as higher EBITDA. The improvement was also reflected the absence of assets impairment at Perstorp, which was recognized in the Q2 . Loss after tax, excluding exceptional item, stood at MYR 217 million in the Q3 . Now, let's proceed with the cash flow and balance sheet in the next two pages. On cash flows, in the nine months of 2025, we generated cash flows from operation of MYR 2.1 billion, and most of our cash are used for investing purposes are incurred for turnaround preparation costs. Most of our net cash flow from financing activities were dedicated for dividend payment to the shareholders of the company.
On the balance sheet, on page 8 of the deck, total assets were lower by MYR 1.1 billion, and mainly due to the weakening of US dollar against the ringgit, and the impairment of assets at Perstorp. We also recorded lower trade and other receivable, and this is in line with lower revenue and lower other receivable at Perstorp, following the sale of emission rights. This is, however, partially offset by the higher intangible asset by close to MYR 800 million, due to the weakening of Malaysian ringgit against the Swedish krona. Total equity were lower by MYR 1.3 billion, following loss generated during the period, and the dividend that we paid to the shareholders of the company.
Total liabilities were higher by MYR 250 million, and this is attributable to higher borrowing due to net drawdown of revolving credit facilities at Perstorp. That's all for the financial breakdown. I'm handing back the session to Encik Mazuin for the market outlook, as well as the way forward.
Thank you, Azli. Ladies and gentlemen, now let us briefly go through the market outlook. The global market conditions for the chemicals industry are anticipated to remain challenging in the near term, as the industry continues to deal with ongoing oversupply and subdued demand growth, leading to continued pressure on margins. For the O&D segment, ethylene prices are anticipated to remain pressured as supply ramps up with the new capacity coming on stream from China and crackers returning from turnaround, further lengthening the Chinese domestic market while demand remains muted amid weak downstream consumption. Now, if we look at MEG, the outlook remains bearish, with market oversupply due to the resumption of Chinese MEG units, despite weakening market sentiments following news that major downstream polyester producers are considering to reduce their operating rates due to demand concerns.
For polyethylene, prices are anticipated to remain pressured, with increasing supply from new capacities in China and increased availability of competitively priced U.S. cargoes. Demand remains weak, as the market is cautious and purchases are made mostly for hand-to-mouth consumption. For PX, para-xylene, the outlook remains bearish due to high inventories in China, as producers are expected to maintain high operating rates despite slower downstream PTA and PET demand recovery, as some key industries, like the beverage industry, entered its seasonal lull following the end of the summer peak. Now, moving on to F&M segment. We expect that product prices for the F&M segment will be stable, with most support coming from urea. Our outlook for urea is expected to be firm, supported by the issuance of Indian tender, coupled with export restrictions from China, causing short supply in the market.
Ammonia market is expected to be bullish due to ongoing tight supply in the Middle East and lack of spot availability in Southeast Asia, driving the prices higher. For methanol, prices are expected to be stable, buoyed by the gas curtailment in Iran, while downstream demand, especially in the Southeast Asia region, is expected to remain steady. Specialty segment. The key end markets served by our specialty segments are primarily in the building and construction, automotive and transportation, as well as consumer goods. In the building and construction sector, global construction activity in the Q4 remains the weakest sector. The sector was constrained by high financing costs and weak property markets, especially in the U.S., Europe, as well as China. Parts of Asia Pacific show steadier momentum, supported by ongoing infrastructure and housing projects. Turning to automotive sector, global auto demand is easing from mid-year highs.
In the U.S., sales remain solid but are cooling under high financing costs and fewer incentives. Europe is stable, but growth has leveled off as buyers delay big purchases and EV adoption slows. China stays resilient, led by steady EV sales despite price competition. The rest of Asia Pacific shows a mix, mixed picture with weaker exports, but domestic demand remains steady. Global consumer good demand remains steady but cautious, in which U.S. spending is stable, yet price sensitive. Europe's retail activity is broadly flat, supported by everyday goods, and China's recovery is uneven and led by e-commerce channels, while the rest of Asia Pacific shows moderate demand, supported by tourism and festive spending.
Ladies and gentlemen, in summary, we maintain a cautious view as margin pressures persist due to elevated input costs, labor constraints, lingering trade and tariff effects, keeping sentiment conservative as business heads into the year of 2026. Ladies and gentlemen, before we move to our Q&A segment, I would like to reiterate some of our key focus in 2025 and updates as of September. Amid ongoing industry challenges and continued uncertainty in global trade, we continue to focus on enhancing operational efficiency, continuing cost optimization and other initiatives, and actively pursuing opportunities for added value creation. This disciplined approach has contributed to an improvement of over MYR 400 million in EBITDA on year-to-date basis.
For instance, under commercial excellence, we took on initiatives such as vessel subject optimization, as well as undertook a review of sales mix against the best netback, as well as market share and taking into account market dynamics. This is done simultaneously with operational excellence program, where plant operations are assessed against market, ensuring optimum production output that is aligned with demand and supply. On the note of, on the note of demand and supply, we wish to update that we had decided to pause the Creditors Reliability Test at the Pengerang Integrated Complex. That was initially initiated at the end of June this year. The decision was made given the continued weak market conditions, and we will reinitiate the test when the market conditions recover.
In the meantime, our plants remain up and running at the most optimum mode to suit best margins and serve our customers' needs. We are confident that by staying flexible and value-focused, we will be well-positioned to capture new opportunities, with a clear focus on delivering both sustainable and immediate and long-term gains. Through our specialty chemical segment, we have further enhanced our offering with the introduction of our Neptem range of emulsifiers for water-borne alkyds, aimed at reducing volatile organic compounds in paints and coatings. We have also increased our range of Amfinity esters, a plant-based, biodegradable, natural and versatile products for the application in cosmetic industry, suitable for both light as well as rich formulations. Last year, our specialty chemicals business also made a significant progress in its growth strategy with the acquisition of a 20 kilotons capacity esterification plant in Amsterdam.
We are happy to share that in July, we have successfully rolled out the first batch of products, 28 tons of specialty esters on specification, straight to our customers.
... Now, this is a building block in our growth of engineered fluids in the specialty segment, and our team is already nurturing more than 300 active leads with customers who are eager for our high-performance experts in various applications across many industries. On sustainability front, we remain firmly committed to sustainability by continuing our greenhouse gas emissions reduction efforts and developing solutions that support our customers on their sustainability journey, while helping them navigate and comply with evolving regulatory requirements. In fact, I am happy to report that as of today, two of our plants, through our subsidiaries of BRB, as well as Perstorp , have achieved zero greenhouse gas emissions from our Acht and Waspik site operations in the Netherlands. Ladies and gentlemen, we will continue to advance our emission reduction efforts as we pursue our two-pronged growth strategy, keeping sustainability at the core of our operations.
This commitment is essential to position PCG as a competitive and leading player in the chemicals industry. Ladies and gentlemen, that concludes my update for today. Now, let us open the floor for the Q&A session. Thank you.
Thank you, Encik Mazuin. Ladies and gentlemen, as we move into Q&A, please use the Raise Hand function to ask your question. When your name is called, please unmute your line and ask your question. You may also use the Q&A box to ask your question. Now, the first question we have is from Raymond Yap. Please go ahead.
Hi, good evening, gentlemen. Just wanted to ask about Encik Mazuin's comment about pausing the CRT. By running the CRT, I presume that you're running also some of the plants which don't make economic sense to run.
Mm-hmm.
So my guess is that the Q3 loss, since you were running CRT in the Q3 for PPC, was probably larger than what you would have wanted it to be, because you had to run even those plants which are not economic. Could I get a sense of what the PPC loss was, the EBITDA loss was in the Q3 ? And all else being equal, if you hadn't run the CRT, what do you think would have been the loss, if you had run it based on linear programming?
Okay. Oh, okay. Thank you. Thank you, Raymond. Maybe I can provide you first the EBITDA for PPC, yeah. If you were to take out that Forex loss that we had in Q3 , and then this Forex loss typically attributable to PPC, the EBITDA loss from PPC will be around 95%-- MYR 95 million, in comparison to EBITDA loss of around MYR 135 million in Q2 . So in a way, the negative EBITDA at PPC reduces from Q3 to Q2 .
Two-
Yeah. Sorry, I'm going Q2 to Q3 .
Mm.
Sorry.
Mm.
you know, our decision, like what Encik Mazuin mentioned, to the-
Yeah
... CRT, is based on this forecast of market conditions. So if we were to continue running PPC under the current situation, and as we already know, the market oversupply situation, this negative EBITDA, we are afraid, will be even gets bigger.
Mm.
In terms of how much bigger, that one interpretation based on, you know, what the forward curve of the prices are, Raymond, yeah. But we took the initiative rather than we incur for bigger losses because of the current market situation, then we had to make that call to pause the CRT. So I think that that's, it's a more value-focused decision that we take. I'm sure a lot of analysts will appreciate this decision despite the current requirement.
Okay. So the MYR 95 million PPC loss in the Q3 included all the operations of the uneconomic plant. So technically, by pausing it in the Q4 , all else being equal, assuming the prices remain equal, then the technically, the MYR 95 million should narrow further, right, in the Q4 ?
Yes. Yes.
Okay, okay. Actually, could you give us some precise numbers about what was the unrealized Forex loss on the PPC payables, and also the unrealized Forex loss on the revaluation of PPC loan?
In total, for Q3 , the FX loss regards to PPC will be around MYR 25 million. So it's not as bad as what we recorded in Q2 . And this is because of that, you know, the strengthening of ringgit on lesser in Q3 -
Mm
... compared to Q2 , right? So-
Okay
... in that sense, the FX loss that impacted the EBITDA,
Mm
... was only MYR 23, 25 million.
Okay. And half of it is from the shelter loan, and half of it is from the PPC payables, right? Approximately.
Yeah. What I mentioned, MYR 25 million is mainly on the PPC payable that affect the EBITDA. The other Forex loss that affect the PAT is the SAMUR Forex loss and on the Saudi loan.
Mm.
That is about MYR 15 million. In total, the FX loss for PPC at the bottom line level, it would be MYR 40 million.
... Okay, okay. How about the Perstorp loan to the operation Toledo in the U.S.?
It somewhat is also reduced, because the Swedish krona movement against the euro, against the dollar also somewhat muted, in Q3 . In total, the Forex loss for Perstorp related is about MYR 20 million. So if you look at page 19 of the quarterly report, the whole MYR 74 million ringgit is basically the breakdown I just mentioned to you. It is basically PPC payable, shareholders loan, and then Perstorp. Now, with regards to Perstorp, I think, towards the end of September and early October, we have converted some of the shareholders loan that Perstorp Sweden have provided to the US operation, and we've converted. So when we converted to equity, there's no requirement for mark to market anymore.
We hope that by this restructuring, we will mitigate or eliminate, not entirely, foreign exposure, but anything to do with this particular shareholders loan between Perstorp, Sweden and U.S. will be mitigated 100%.
Okay. So my last question is on the utilization of PPC.
Mm-hmm.
Could you give us an idea what it was in the Q3 and compared to the Q2 ?
We, we-
Yeah.
We paused the operation midway, during the Q3 , Raymond.
Mm.
So if you give a full, full utilization, and that will be not reflective. As you know, in Q2 , they were not running at all. And,
Mm-hmm.
So we not a right comparison, if you were to say that.
Okay. So can I say that utilization was very high in the H1 of the Q3 , and then after that, it dropped off because you decided to pause the CRT?
Yes.
Okay.
Yep.
I've been reading in the trade press about the PIC naphtha cracker being offline for a couple of weeks. How is that affecting your production at PPC in the Q4 ?
Yeah, I mean, on that, there are still inventories in ethylene and propylene that we can still use for the production of our PPC. But obviously it will not be sustainable if you were to base on the tanks in inventory in the tank. So that's why the importation is required.
Okay. Okay, sure. Okay, thanks. I'll pass it on to another analyst.
Thank you, Raymond.
Thank you, Raymond. Next, we have Hazmi from CLSA. Please go ahead.
Hey, hi, guys. Just a couple of questions from me. Just start on the income statement. Just trying to reconcile this, right. So I'm, like, looking at the sales was going higher because of the higher plant utilization and whatnot. But I mean, at the gross profit levels, like, flattish and mostly offset by the higher expenses, and there's a lower in terms of other income and higher losses from the associate and JV as well. Can you just give a bit more color on that?
You're referring to income statement in comparison to Q2 ?
Q2 . Correct.
Okay, okay. Yeah, sure. When we compare quarter-on-quarter, I think, like, I mentioned earlier, it's mainly driven by higher volume, and then it's mainly correlate with the higher plant utilization. So if you recall, the plant utilization that we had in Q2 is 77%, and this is mainly due to certain unplanned shutdown, and as well as, if you recall, the incident at, you know, Putra Heights, that affects our urea plant in Gurun, Kedah. So production volume was affected, sales volume was also affected. So, you know, in term of price, I think Jim was earlier alluded that is, you know, below 5% variance. So it's mainly driven by higher sales volume. Yeah.
Right. I mean, just looking at the expenses, like the admin expenses and sales distribution-
Mm.
I think there's some increase as well, right, during the quarter?
Yeah, I think-
Any reason?
This is admin expenses is basically a one-off, so it's basically general admin, administrative within the group. And it's one-off.
All right. So you will see this number coming down-
Yep, coming down.
in the Q4 ?
Yes.
Okay. Are there any other sort of one-off, this, result, quarterly result, that we should be aware of?
No, other than the admin. So I think earlier, you also mentioned losses from the JV, right?
Mm-hmm.
So, one of the JV, the one that contribute most, is our JV with BASF. BASF PETRONAS Chemicals. So I think during the quarter, the Q3 , the contribution was lower because they undertook a plant turnaround at Gebeng. So, and, that's basically the reason for the lower contribution from the PC, 'cause they were not running. And on top of that, we had to incur maintenance costs as part of the turnaround.
Right.
That turnaround has already been completed.
Okay. So this number also we can expect to improve for-
Yeah.
-Q4 ?
Yeah. Yeah.
Right. I mean, just overall throughout the company in terms of operation for both core operation and also the associates and JV, are there any sort of planned turnaround or maintenance that we should know for Q4 ?
...On the Q4 , there's no planned turnaround, but there will be a scheduled maintenance undertaken at Labuan. But that will be a very minimal days. So we anticipate that our plant utilization rate will go above 90%-
Good.
- towards the end.
Yeah. Overall, for Q4 , you expect plant utilization will be higher than Q3 ?
Of course. Yeah.
Okay.
Yeah.
All right, perfect. Another thing, just, on the EBITDA level, you mentions of the improvement quarter-on-quarter is mainly due to better spread and the lower Forex loss. But just if we want to zoom in, excluding the Forex kind of impact-
Mm.
Just on better spread alone, what's sort of like the difference between Q3 and Q2 ? Just wanna understand the, sort of, the impact, which one is bigger in terms of improving EBITDA? Is it more on the Forex part or on the better spread factor?
It's definitely the Forex part, because last year, I mean, last quarter alone, the Forex impact was higher-
Yeah
than to this quarter. So, the EBITDA, both at PAT, main differential, is because of, you know, much lower Forex loss.
Right. So, I mean, if taking out that forex impact, would you say the EBITDA flattish or?
It will, could be a bit flattish, yeah.
Uh.
I mean, as I mentioned earlier, the total EBITDA for quarter three is MYR 497. If you were to take out the exceptional item, the Forex and all that, our EBITDA could be around MYR 535 million.
Wow.
So. Yeah.
Right. And yeah, I mean, just going into, sort of, like, looking forward in terms of outlook, how should we look at for this current quarter, Q4 , and also going into 2026? I mean, because looking at, like, the company, the volatility of the earnings, like, you can go before this last year, like, every quarter, you can reach, like, MYR 300 million-MYR 400 million kind of earnings.
Mm.
Of course, mostly you guys were in the red this year, so going into 2026, I mean, like, internally, just for yourself as well, because you mentioned in terms of all this negative bearish sentiment from most of the segments. Yeah, I mean, like, just wanna hear your thoughts on the outlook.
Rather than giving you an earnings guidance, I will give you some tips with regard to what could be the key drivers that can help you develop your own model.
Yeah.
In terms of plant utilization, next year, we do have certain scheduled plant turnaround activities, next year. It will be quarter one will be turnaround at ABF, Fertilizer Sabah, and that will be a very short turnaround. Q2 will be plant turnaround in Kerteh. That will involve PC Olefins, PC Glycol, PC LDPE and PC Ammonia. So it's because those plants are fully integrated, so when one plant is scheduled turnaround, so it's a coordinated integrated turnaround altogether. And the Q3 , we have PCFK, as well as PC Methanol plant to turnaround. And that will be the summary of quarter for the full 2026 plant turnaround.
We anticipate the plant utilization for the full year, 2026, will be around 88%-90%. Of course, we will contract this turnaround activities, try to steal one or two days extra for us to, you know, get the plant running as soon as possible, and most importantly, to execute this plant turnaround as safely as possible. Yeah. With regards to market outlook, I think Encik Mazuin alluded earlier, we are quite bearish on the olefins and the derivative segment, mainly because of the oversupply situation. As well as we are cautious about the specialty segment. On the contrary, we are quite bullish on the affiliate segment.
As you see, the prices for urea has somewhat catching up in light of the upcoming India planting season, as well as the tight supply within this region. So I, I think it is where the fact that we have a quite diversified portfolio, and we can leverage on the strength of this portfolio to our benefit. I hope that provide you some color, Hazmi.
Yep, definitely. That's very, very helpful. Sorry, just to confirm, in terms of the turnaround plan, for each quarter, it's usually done within the quarter itself, right?
Within the quarter. So in the first plant by plant, certain plant which is bigger will take more days.
Mm.
Sometimes it takes... But on average, it will be around 45-50 days left.
Wow.
So, of course, like what I alluded earlier, if we can plan ahead and then, start to squeeze activities concurrently, we can try as much as possible to complete it, you know, as soon as possible. But, but the most important thing is, you know, safety.
Right. And just on the macro part outlook, I think in the slides you mentioned for olefins, you expect sort of like the bearish margin pressure will go up until Q1 next year. I mean, any reason for that particular sort of like timeline? Is-
Um.
Are there any sort of like, catalysts that are gonna improve the sector in Q2 afterwards, or?
No, actually, the reason why there's such pressure on prices is really the oversupply continues. In fact, as we speak, capacities are still being built and expected to come online, so the pressure will persist. We're also looking closely at demand, whether-
... the demand growth will be sensible. Bearing that, we do hope that it stabilizes. But as we speak, when we monitor, capacities are still being built. So the oversupply pressure is still going to be there.
For throughout 2026, do you think? Or just the-
It's going to be-
The start of.
It's going to be throughout 2026.
Okay. For F&M, also, in terms of your bullish sentiment outlook for the sector, do you think it's similar throughout 2026 as well, or more near-term into H1 ?
Yeah, it's actually going to be throughout.
Okay.
So we are quite optimistic, but, of course, as optimistic as we are, we have also to be cautious. So, we continue-
Mm-hmm.
to monitor the situation. What our team has done in 2025, also closely monitoring in the market, when we have enough flexibility to direct our products to the region where give us the best net back. And that proved to be very useful for us, and we'll continue to do the same for 2026.
All right. Sounds good. And just one last question from me. In terms of the specialty segment, I think you mentioned all these new products that you launched this year. Are these new products how do they look like in terms of their supply-demand dynamics, margins and all that? Because I think you mentioned some of the specialty products have been quite weak in the most supply-demand dynamics, right?
Yeah.
Right. So, the few we mentioned, one is going for the coatings sector. That is quite specialized because we enable the sustainability. It is for the waterborne coating. This is quite specialized in its own, so we do expect a pretty healthy margin coming from this. And we have received quite attention coming from the customer and requiring for the qualification. The other big one that we have is, as Mazuin mentioned, it is going for the personal care, for the cosmetic. That is a bio-based, plant-based emollient. Again, you know, we are in a very special situation because we are not only now supplying the bio-based, we're also the only company that have both for the silicone-based and for the bio-based.
That give us a very special position in there. And with this, customer sentiment going for the natural ingredients, we see this is gonna be a very good position for us to hold a very special the segment, and we also seeing this gonna help us to demand higher margin for that.
The volume, though, is not like commodity at all.
No.
Specialty is actually less volume.
Yeah. So-
Right
... but the volume, we were hoping to, you know, start building that.
Mm.
So that will be our two big platform.
So actually, one thing that, you know, when we acquired the site in near Amsterdam.
December.
The site we acquired in December 2024.
Four.
It took us six months.
Mm
... to actually produce a totally different product-
Yeah
That has not been produced by that facility before. And we got it on spec and onwards to our customer. Now, that gives us also good headway to be very flexible and fast in coming up with new products and getting it to our customers. And we will actually continue to build upon those abilities.
Right. So one thing I probably want to share is, specialty segment is a bit different from the commodity. For the specialty segment, why a specialty? Because we have to work with the customer. The qualification time typically is anywhere from 6 months to 2 years, but that will help us also building the defense mechanism, building the barrier for others to come in. So that's why we're gonna see the qualifications slowly coming in, but once we get into the shop-
Mm
... it is, the switching cost is gonna be pretty high. So that's also some different characteristic coming from the specialty.
Got it. Perfect. All right, that's all from me. Thank you so much, guys. I'll jump back to you.
Thank you, Hazmi. Mohsin, please go ahead.
Everyone, I got three questions. I'll try my best to keep it to three. The first one is just an extension to these new products. The way I understand it, all the specialty tends to go through in a three phase. One is the trial and then qualification, and then finally, when they decide your cost supplier, they will put you under long-term contracts and certain volume.
Mm-hmm.
May I inquire, at which stage are you at when you mention about all these 15 interesting products that won inquiries?
Yes. So it actually depends on which customer, so we are at different... Most of them are in the qualification ca-
Right
Phase, because, like you said, you know this very well. In most of that, we have to work with the customer. You sometimes you have to tailor-made that a little bit to fit the customer needs. So I would say probably 80% of the case that we're in the qualification phase. We do have a few customers that already qualify our product, and we're negotiating with the contract and the volume. So we're pretty confident that we're gonna slowly to see the volume coming in. And not only that, you know, we have more product coming into the pipeline. So yes, we are in the different phases, but majority, we hope to see more coming in, in the 3 to, in the 6 to, 12 months time.
... to see the fruit coming from all the qualifications.
Wonderful. And there was a mention about it being more Western-centric. Would you also get any customers coming from China, Japan, the Eastern front?
Yeah.
because it sounds like part of your customers are Western-based.
You're a very good question. This is very global, but regional, right? We're working with global customers. We do serve regional customers as well. And each product, we have to tailor-made for the local market. So other than the Western customers, we also have customer coming from China, Southeast Asia, Japan and Korea. And also, yes, the greater China area.
Yeah. To make it more prolific, and that's why we set up a Shanghai innovation lab for our specialty chemicals. So the idea is for our potential customers to easily access our innovators, so that we can have a core development space, core development areas for both the customers and ourselves to actually develop new products and new application. So centers like this are super important, and we just set up in Shanghai. Because if you look at innovation, if you look at the patent filing, China is really, really prolific, and expenditure is also increasing rapidly compared to any other regions, be it-
Yeah, they're, they're head and shoulders above everyone in that respect.
That's right. We're trying to tap that exactly, right. So, mind you, one thing, another thing that we observe is really the speed between regions are super different. Chinese timetable is super fast. So that's why we have to actually anchor ourself in China and we have that in Shanghai. Hoping to be able to actually catch the speed and more importantly, getting very close to our customers. Thanks.
I think that's a sensible thing to do. I wish you luck.
Oh, thank you.
We go on to the next question. This one a bit controversial.
Yeah.
But this is probably the worst downturn a petrochemical scene have seen, since I graduated also.
Yeah.
I've never seen the petrochemical industry being this bad.
Yes.
But as management, this is the time to address the skeletons in the closet, the elephant in the room, things that you don't want to do, but this is the time to do that. Your Bintulu Gurun has surpassed its economic life. If you want to... If there's any thought of cutting it and, and move on, I couldn't think of a better time than now.
Hmm.
I just want to ask whether you can share whether it's been discussed-
Okay.
whether it's been thinking or it's still the typical old PETRONAS scene, "No, we started this. We have to maintain," I mean, times are bad. Times are bad.
Yeah.
I just want to know from you, from you guys, can you share this, please?
Okay. I answer generally first. You know, in terms of portfolio, we review our portfolio all the time. Earlier, you noticed that in aromatics, we actually shut down and stop production because this market is not favorable. We continue to assess. So interestingly, when the names that you mentioned, the brands that you mentioned are part of... Because they are our brands, so we look at all of them. But despite the age, they are performing and competing really well, particularly given the current urea prices. We continue. But the discipline is there. We know exactly at what the threshold, then we say that that's enough. We have that discussion and you know, we are guided by, do we create value?
Do we not create value? If we do not create value, we will not be shy to say that, "Hey, you know, that's, that's the end of it." And then, you know, because it's a portfolio, that doesn't mean that we're gonna stop, say, urea production X percentage. Because we have a market position, and we have a market advantage that we want to maintain. So another part of that portfolio discussion, okay, where else can we actually source our urea from? Should we do it ourselves? Can we trade? You know, do we have JV with others? So all these are being discussed all, all, all the time. So we're gonna do that. But at the same time, you are right. This is a critical moment. We are looking at everything we can.
So if you look at our commercial, it's not only the traditional, I sell, you buy. This is a time where we said, "I sell to you, I'll buy some from you," because actually both parties have our own market, our own products, and we're moving this together as a partner. There are swaps and things like that, you know, so for every single opportunity we can, we try to create value.
You know, you-
Um-
You make a good argument, but since listing 2011, there's only one plant that was consolidated, the PVC plant somewhere in the East Coast.
Yeah.
Only one. Only one.
Yeah.
So now it's extraordinary time.
Yeah.
I don't know. I mean, your answer, I've heard it before.
Yeah.
It's a carefully coordinated, honed by PETRONAS answer.
Right.
The bottom line is, there's only been one consolidation since listing, and I would think that this is something else now. I mean, surely you guys have to do something more drastic than before.
... Yes, yeah. I mean, like Mazuin mentioned, we look at this quite often, and then we, we are not shy away from taking drastic action. For example, in Q2 , when our specialties asset needs to be impaired, and we do impairment, right? But thankfully, it doesn't happen so far for our commodities, as you know. You mentioned about ABF. ABF is more than 40 years old, and their plant has been rejuvenated many, many times. So age is not a factor, and for us, it's more value. What we think differently for a slightly older asset is basically how much CapEx to be spent. So maybe for CapEx, for a plant that's being slightly older, we will be very rigorous on spending for the CapEx, right? Yeah.
So I think that's how our behavior different for a new plant compared to an older plant. But ABF grown because of the cost structure. They are still, you know, performing great EBITDA per ton, great EBITDA per year, quarter. So that there's no reason for us to. And then when we do our analysis, it's not for one year. It's more than 10, 15 years economics.
Okay, thank you for that answer. I mean, I trust your judgment very, very. You explain it very well. Thank you so much.
Thank you, Mohsin.
My last one, my last question, probably cheeky, but do you think any particular companies, like petrochemical companies, that you are checking that's gonna die soon, that you think? I mean, the latest one is the story of consolidation of production in,
Yeah
... South Korea, and then later, Japan also said the same thing.
Mm.
But there are so many relics-
Mm
... in Europe. There are so many relics in, yeah, like Europe. Like Europe has all the oldest plants.
Mm.
Do you know, do you hear from any market murmurs that one or two are gonna die? Because we being humble analysts, we don't get insights, we don't. We're not able to buy all the publication of all this industry. But can you share, do you know if there's any stories that you're hearing that plants are gonna close down permanently somewhere around the world?
Yeah. I mean, the fact that we are in the market, we talk with market practitioners, we talk with our customers, we do know the situation of our peers, our competitors. But without naming names, I think we know that some of them may are currently under life support.
Big ones, medium-sized ones or small ones?
Both. Both.
Both.
Uh, somewhat-
I said 3.
Some of them are within Southeast Asia region.
Mm.
Some of them within other parts of Asia. I mean, you mentioned about, you know, rationalization and all that. We keep our eyes open in terms of opportunities, right? I think, but in terms of if you looking towards, are we acquiring them, thinking of acquiring them, I think our focus will be on growing our specialty portfolio. But we are not blindsided by just focusing on the specialties. If there's any opportunistic, you know, proposal, and if it is strategically rationalized, aligned with our two-pronged growth strategy, then we will do so. Yeah.
You know, you know, there are a small list of smaller plants that has been closed in Europe. You know, you can find that list quite easily online.
Yeah.
But bigger ones are tougher. And you know what, in some regions, right, their plant utilization can be as low as 60%, and they're still running. That's actually-
Why?
So, you know, a lot of companies, plants, assets, trying to be as resilient, holding on as long as possible. Time will tell. Our focus at PCG is actually keeping the efficiency very high, and so we're keeping it close to 90. In fact, we are giving pressure to our team. You know, can we do better? That's our focus right now. Of course, our cost needs to be managed really, really well, given the margin outlook that we have. Thanks, Mohsin.
Thank you, Mohsin.
Thank you very much, ladies and gentlemen. I leave it there. Thank you.
Thank you, Mohsin. We are looking at the time. However, we do have a few waiting in line to ask questions, so we'll take the live questions as they are. The questions in the chat box, I believe some of which we have already answered before. Whatever we do not take after this, we will take it up with you online. So, Raymond, you're back. Please go ahead.
Yeah, just a very quick one, about the turnaround for PPC. Is that scheduled for 2027? Just to double check.
It will be later part of 2026.
Yes.
It will be fully fledged in quarter one, 2027.
Yes.
Okay, so it'll start in the late part of 2026 and stretch into H1 of 2027?
Yes.
Yes, correct.
Mm.
Okay. Thanks.
Thank you.
Thank you, Raymond.
Gabriel, you're next.
Hi, can you guys hear me?
Yeah.
Yeah, yeah.
Yeah. Yeah, thanks for doing this. Just a couple of quick questions. The first is, follow-up on the PPC. You guys put on hold the CRT because it's bringing too much losses. I'm just wondering at what,
... chemicals spread levels, will PPC actually be profitable, assuming a full ramp up, like, what are the mid naphtha spreads or PE naphtha spreads, roughly? Yeah.
Okay. It's a bit difficult for me to answer now, because it's all based on integrated linear programming. You know, sometimes it's bad because there's also PPC has few plants. Maybe, you know, currently the EOEG line is probably not the best product to produce. But there's also a need for us to produce ethylene for the HDPE and LDPE and others. But for us to really determine what would be the breakeven, it would be somewhat in the level that we've seen last year, and then on a plant utilization rate of above 85%. So that would be EBITDA breakeven.
Okay, understood. A follow-up on that is, I just want to clarify some of the numbers. The quarterly EBITDA for the Olefins and Derivatives segment is -MYR 110 million.
Yes.
Just now you mentioned about MYR 95 million is the Pengerang site. That means the O&D ex Pengerang is about MYR -15 million?
No, no. 95 is EBITDA loss for Pengerang, excluding FX. So if you were to include FX loss, the negative EBITDA for PPC, it would be around MYR 120 million. And, if you were to exclude from the O&D, so the O&D, EBITDA will be positive.
I see. What's the figure if we exclude the Forex?
MYR 10 million positive EBITDA for O&D, excluding PPC.
Okay. Thank you so much. And my-
Thank you.
My last question is on the F&M side. You mentioned you guys are positive on the sector. But correct me if I'm wrong, the urea prices has corrected a bit since. I'm just wondering, will that affect you guys much?
It has some correction, but only in here commercial. It has some correction for the time being, but we are anticipating another tender in India, and that will make the prices, you know, strengthen again to some extent, because the season in India is now, basically, so they need the urea. So that should be, you know, strengthening the prices like basically again. Yeah. And one thing that we need to-
Okay, thank you so much.
Okay.
Thank you.
Thank you.
Thank you. So we'll have one last one from Kaushal from Macquarie. Kaushal, please go ahead.
Hi, can you hear me?
Yes, Kaushal.
Thank you, management, for the presentation. Just a few questions. The first one is, I know that the dividend payments in nine months to date have been quite low, compared to, you know, the past year. So I'm just trying to understand, you know, how is management thinking about sort of supporting shareholders? Is there a target yield that you're aiming for? Because I recall that last time when asked about share buybacks, that's one- that's something that is not as effective, as you mentioned. So just to understand, what is your- what are your thoughts on this?
Thank you, Kaushal. As you know, our dividend is based on, we are guided by our dividend policy, which is 50%, around 50% of PAT. The dividend that we paid, you know, in August is basically, you know, in the back of, negative PAT. So we took this, you know, extra initiative to still declare dividend despite its financial results. Basically, you know, number one, because we can afford to do so, while still being prudent in our balance sheet, right? And then also to reward our shareholders who has been with us for a very long time.
And then we also take note of, you know, some of the requests that the shareholders have been provided to us, either via one-to-one meeting as well as the side discussion during AGM. So we took all this into consideration, and we formulate this proposal with the support from our board. So, I mean, we don't have any specific target based on yield. It's mainly based on dividend policy and feedback that we receive from our shareholders. With regards to buyback, you know, as I said a little earlier, I think we've made analysis whether buyback could prop up the share price. In the Malaysian context and based on precedent, we don't see that as a effective tool to improve our share.
Based on the precedent that we've seen, barely any share buyback a week after the exercise was done, the share price move is what it ended. So yes, the share price increased three or four days after, but it will be, goes down again back to pre-buyback exercise. And, and based on feedback from certain key shareholders, they would prefer the cash that we have to be distributed via dividend, as opposed to, you know, fund-to-fund share buyback program.
... The question is, I know that you're pausing CRT. Is there some sort of time that you can start or-
Sorry, Kaushal, you're not here.
Mm-hmm. Kaushal, you're breaking up. You need to speak louder or adjust your coverage.
Can you hear me?
It's muffled.
Can you hear me?
Can you try again the question, Kaushal?
Yeah. I, I said I understand the CRT. Is there a timeline when it needs to be restored, or is that up to your discretion?
Okay. And, you know, as we've disclosed in our Bursa announcement, there is this timeline when the CRT needs to be completed, and that will be by 31st December 2035. And, you know, both PETRONAS, Aramco, PCG have ongoing discussion with the bank to consider extending this project completion date to allow us more time to complete the CRT. Yeah, I mean, the reasons are clear, because the market situation doesn't support so.
You know, as you know, the purpose of the CRT is to uplift the guarantee and then, you know, with no CRT, the guarantee remains, and the banks will also not be in an adverse position. The fact that they still can hold on to this guarantee from the sponsors.
Thank you.
Thank you, Kaushal.
All right. Thank you, everyone. In the interest of time, we will call for a stop. Thank you for joining us today. We do take note there were some questions in the Q&A box which we did not read. However, I believe most of the questions have already been addressed. So the questions that have not been addressed, we will reach out to you after the call one by one. So thank you again for joining us. If you have further questions, please email us at petronaschemicals_ir@petronas.com. And if you are publishing any reports, we'd appreciate if you can share them with us. Thank you again, and have a good weekend.
Thanks, everyone. Thank you.
Thank you.