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PetChem: Next specialty chemical M&A crucial for future positioning

PetChem: Next specialty chemical M&A crucial for future positioning

22 Sep 2022

Petronas Chemicals Group Bhd (PetChem) said its next merger and acquisition (M&A) within the specialty chemicals platform is crucial for the company’s future positioning as the group eyes customers from industries including the food and healthcare sectors as end markets for its products.

“The next M&A for specialty chemicals platform is crucial for our future positioning,” PetChem said in its latest corporate presentation in conjunction with CGS-CIMB ESG Day 2022 on Sept 21.

Such speciality chemical pathways, PetChem said, include the likes of food, feed and nutrition, industrial additives, as well as surfactants, household, industrial and institutional (HI&I), and personal care.

As such, PetChem has ventured into its first specialty chemicals platform under the silicone space, where the group has set up a new silicone blending facility in Pahang.

With a capacity of 8,000 metric tonne per annum, the plant produces silicone gum blend, silicone antifoam and silicone emulsion, which cater for personal care as well as food and beverage (F&B) market segments. Its target markets are Asia Pacific, the Middle East and Africa.

Besides that, the group has also acquired Da Vinci Group BV, the holding company for the Netherlands-based lube oil additive manufacturer BRB International BV for US$182 million in cash in May 2019.

Meanwhile, PetChem said the proposed acquisition of Perstorp Holding AB fits as a growth platform for the group to expand its specialty chemicals portfolio.

“Perstorp’s portfolio is within PetChem’s preferred end markets such as paints and coatings, construction, automotive, personal care, food, feed and nutrition,” it said.

To recap, PetChem in mid-May, announced that it wants to take over Perstorp, a leading specialty chemicals group from Financière Forêt SARL for a base purchase of €1.538 billion (approximately RM7.018 billion) cash.

The Perstorp group currently derives more than 80% of its revenue from the 18 preferred chemical segments identified by PetChem, including surfactants, specialty polymers, specialty films, plastic additives, coatings, preservatives and biocides, and pre/probiotics.

PetChem chief executive officer Mohd Yusri Mohamed Yusof stated in August that the group expects to complete the transaction in acquiring Perstorp in early 4Q2022.

Separately, PetChem said the group’s overall plant utilisation is commendable despite heavy turnaround and maintenance activities.

According to PetChem, its plant utilisation from 2018 to 2021 is over 90%, which is deemed to be world class.

The group also said that its operations are sustainable with having stable feedstock supply as it has close relationships with suppliers. Its improved earnings are also due to its higher production efficiency, the group claimed.

Looking ahead, PetChem would continue its focus on executing growth strategy while maintaining financial fundamentals through business growth, as well as prioritised capital investment, beside cost discipline and optimisation.

As at 4.23pm on Thursday (Sept 22), PetChem’s share was down four sen or 0.46% to RM8.57, bringing the group a market capitalisation of RM68.6 billion.

Source: The Edge Markets