Chandra Asri reports higher revenue

By Romel S. Gurky

IDX-listed logistics and fuel distributor firm PT Chandra Asri Petrochemical Tbk reported Thursday that net revenues last year increased by 5.2 percent to US$2.54 billion from $2.42 billion in the previous year.

The company said in a statement that the stronger revenue was primarily attributed to higher realized average sales prices, primarily for ethylene, polyethylene and polypropylene.

The higher prices were partially offset by lower sales volumes mainly due to lower production volumes due to planned shutdown of the butadiene plant (90 days for turnaround and maintenance/TAM, and tie in works for debottlenecking to increase plant capacity by 37% to 137 kilo tons per annum), scheduled operational activities of furnace revamp (capacity creep, 2 furnaces) and TAM of styrene monomer plant (2 trains).

As a result, the cracker operating rate was 96 percent, lower compared to the same period last year of 99 percent; the butadiene plant operated at 79 percent compared with 117 percent in 2017; and the styrene monomer plant operated at 89 percent against 105 percent in 2017. Meanwhile, polyolefins plant were operated at full rates.

Cost of revenues increased by $280 million, 14.9 percent higher from $1.87 billion in 2017 to $2.15 billion in 2018, mainly due to higher feedstock costs, primarily naphtha, which increased by some 30 percent from $500/ton to $650/ton in 2018 on the back of higher Brent crude oil prices by 31 percent year-on-year. As a result, gross profit was lower by $155 million, 28.4 percent lower than 2017.

EBITDA declined by 27 percent to $401.7 million from $550.3 million for 2017 largely due to lower sales volume coupled with lower petrochemical margins, driven by moderating chemical margins and rising crude oil prices.

As a result, net profit after tax amounted to $182.3 million, lower by 42.9 percent from the 2017 figure of $319.2 million.

Total assets increased by 6.2 percent from $2.99 billion in 2017 to $3.17 billion in 2018 largely due to higher capital investments for the company’s expansion and plant improvements such as new polyethylene plant, MTBE/ B1, second cracker complex and others, partially offset by lower cash and cash equivalents.

Company President Director, Erwin Ciputra, commented: “2018 was a challenging year amidst global economic uncertainties from rising interest rates, the China US trade war, geo-political tensions, and volatile crude and feedstock prices, resulting in moderating petrochemical margins. We continue to deliver on our expansion plans to increase our annual production capacity to 3,458KT from 3,301KT, with the successful startup of the synthetic rubber plant joint venture with Michelin with a capacity of 120KT in August 2018; and a 37% increase in our Butadiene plant to 137KT.

We achieved a 2018 EBITDA of US$401.7 million, reflecting above mid-cycle industry margins of 16%. We continue to maintain strong liquidity and financial flexibility, with a cash balance of US$726.7 million at year end. We raised Rp1 trillion from our IDR Shelf Bond Program that was favorably oversubscribed; and also secured new financing from the Japan Bank for International Cooperation (JBIC) in recognition of our strong track-record.

The company’s market position remains strong and we continue to deliver best-in-class safety performance and high plant utilization rates.

Going forward, we remain optimistic about the long-term outlook of Indonesia’s growing domestic demand. Currently, more than 50% of demand is still being fulfilled by imports. In 2019 we are focused on completing our new 400KT/year Polyethylene plant and expanding our Polypropylene plant by 23% to 590KT/year, by the end of the year. This is fully in line with our strategy to support the government’s objective to reduce imports, and further integrate downstream”. (*)